Flywheel Studios Said Near Sale to New York Sports Clubs Owner

(Bloomberg) -- Flywheel Sports, the operator of spin boutiques beloved by fitness-obsessed Wall Streeters, is close to selling its studios to the owner of New York Sports Clubs, part of a chain with 630,000 members.

Town Sports International Holdings Inc. may announce a purchase as soon as next week, one of the people said, asking not to be identified discussing the private talks. Negotiations to potentially sell Flywheel’s at-home bike business to other bidders are continuing, the people said.

Town Sports plans to offer its members access to Flywheel studios as part of a premium package, with an eye toward increasing the company’s $464 million in annual revenue, the people said. Flywheel, known for its high-intensity indoor cycling classes, was taken over by creditor Kennedy Lewis Investment Management last year and has been working with Houlihan Lokey to explore strategic options.

A price for the transaction couldn’t immediately be determined. Town Sports’ stock-market capitalization is about $50 million. An investment fund owned by Town Sports Chief Executive Officer Patrick Walsh recently boosted its holdings, purchasing 2.8 million shares from one of the company’s largest shareholders, according to regulatory filings.

Representatives for Town Sports and Flywheel had no immediate comment.

Town Sports has also approached existing lenders in recent weeks to refinance its borrowings, which come due next year.

Flywheel was co-founded in 2010 by Ruth Zukerman, one of the founders of SoulCycle, and soon emerged as a darling of the Manhattan fitness scene. The company has more recently focused on expanding into the at-home bike business alongside competitor Peloton Interactive Inc. Peloton sued Flywheel in 2018, alleging that the firm copied its technology as it seeks to ward off smaller rivals. That case is contested and ongoing.

New York Sports Clubs began operations as a cluster of squash clubs in the 1970s before introducing exercise classes and expanding up and down the U.S. East Coast. Town Sports operated about 190 fitness studios at the end of September with a majority located in the New York metropolitan area.

©2020 Bloomberg L.P.