Gym Chains Wrestle With Debt Even as Fitness Industry Is Growing
Gym Chains Wrestle With Debt Even as Fitness Industry Is Growing
(Bloomberg) -- It’s midday, mid-January at a New York Sports Club in Manhattan. Weights are clanking. Classic rock is pumping. Sweat is sprouting. A steady stream of customers files in and out.
Despite the buzz of the busiest time of year, debt problems are bedeviling the fitness business, especially middle-market gym chains such as parent company Town Sports International Holdings Inc. and its peer, 24 Hour Fitness Worldwide Inc.
Gyms have benefited from economic expansion. More Americans than ever have memberships. But popularity aside, middle-tier operators “don’t have the same price advantage of a low-cost gym or the competitive advantage of a boutique fitness option,” said Emile Courtney of S&P Global Ratings.
They’re up against luxury operators like Equinox Holdings Inc., with its eucalyptus-scented towels and debt that trades at 100 cents on the dollar. By contrast, Town Sports and 24 Hour struggle with customer turnover and their loans are sold at discounts of more than 20%.
To contact the reporter on this story: Katherine Doherty in New York at kdoherty23@bloomberg.net
To contact the editors responsible for this story: Rick Green at rgreen18@bloomberg.net, Bob Ivry
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