N.Y. Sports Clubs Members Get New Bills From Struggling Gym
N.Y. Sports Clubs Members Get New Bills From Nearly Bankrupt Gym
(Bloomberg) -- Members of New York Sports Clubs, the fitness chain that warned it’s close to bankruptcy, woke this week to find that an automated monthly charge for dues has been fully reinstated as the gyms partially reopen.
The club’s owner, Town Sports International Inc., billed its members for full September dues despite the gyms’ limited operating hours and reduced capacity. The charges are drawing ire from some members and facing fresh scrutiny from the New York attorney general, who in April struck a deal forcing the company to credit thousands of members for the weeks they’d been barred from the facilities during the early stage of the pandemic.
New York Governor Andrew Cuomo gave fitness centers in the state the OK to reopen, though locations must limit capacity at 33%, require masks and meet strict ventilation guidelines. With gym-going hardly back to normal, some members were surprised to face full dues charges on short notice.
John Seravalli, a member of a New York Sports Clubs gym near the Port Authority Bus Terminal, said he hasn’t set foot in the gym since early March. On Tuesday, Seravalli was notified that his monthly $79.99 dues were charged. When he went to the location to cancel his membership at 4 p.m. Wednesday, he found the gym closed and the doors locked. The 32-year-old tried calling the club but wasn’t able to connect with a company representative.
“It would be nice to get a heads-up before the charge went through, or for the company to correspond with its members individually,” Seravalli said.
New York Sports Clubs posted on its website and social media accounts to tell members it would resume billing when locations reopened. Eleven of its gyms in Manhattan are opening this week, a representative for the company said Wednesday.
Bankruptcy Risk
Some upset members contacted New York Attorney General Letitia James. James is looking into the new claims, said spokesman Fabien Levy, as an investigation into the company’s billing practices early in the pandemic was never closed.
Pandemic-related closures hit the chain hard, but even before Covid-19, Town Sports was struggling to adapt to changing tastes that had consumers gravitating from mid-priced gyms to alternatives like boutique fitness studios. The company said Tuesday that it may file for bankruptcy “in the near future” to restructure its debt if negotiations with lenders fail.
Some of Town Sports’ peers have succumbed to the challenges brought on by Covid-19. Gold’s Gym International Inc. sought court protection from its creditors in May. In June, 24 Hour Fitness Worldwide Inc. filed for bankruptcy, unable to keep up with its own debt payments with gyms shut nationwide.
Early in the pandemic, Town Sports was sued for charging membership fees even after facilities were shuttered in March. The complaint cites more than a dozen Yelp and Facebook postings from club members complaining about the charges and urging the company to freeze memberships or suspend fees while the gyms were closed. The company later struck a deal with James to stop charging members while they were barred from the gyms, and instituted flexible cancellation policies.
The company abided by the settlement and gave members additional cancellation options through the end of April, but has returned to its policy of cancellations in-person or by mail, said the representative, who asked not to be named discussing the matter. As long as the gyms are open, members will get charged typical fees.
Mikael Merritt, 43, is a member of New York Sports Club’s Scarsdale, New York location. He said he emailed the company on March 17 asking for details about the closure but received no response. He was charged dues on April 1 and again on Tuesday.
“I was surprised by the lack of communication,” Merritt said. His gym doesn’t open until Saturday. “I want to go back, especially if I’m being charged. If I cancel, I worry about the fines.”
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