Bally Expands In the Upscale Market

Bally Total Fitness Holding made a deeper dent in the upscale fitness market with its $90 million acquisition of CRUNCH Fitness, the gym that invented disco yoga and underwater bicycling. CRUNCH operates 19 facilities in New York, Atlanta, Miami, Chicago, Los Angeles, San Francisco, Mission Viejo, Calif., and Tokyo and offers a line of CRUNCH-branded products. The company caters to young urban professionals, with its unconventional classes. It is the eighth-largest U.S. fitness chain, with about $75 million in sales in 2000. Bally, the country’s largest fitness center operator, has more than 380 gyms in 30 states and in Canada. Most of its locations do business as Bally Total Fitness centers while a handful of its gyms operate as upscale Bally Sports Clubs and Pinnacle Fitness centers. Bally already has a strong presence in the mass fitness market, and with the CRUNCH deal, it is adding to its toehold in the upscale fitness market. Analysts note that Bally now has an opportunity to convert its higher-end facilities to CRUNCH gyms. Bally’s revenue exceeded $1 billion in 2000. CRUNCH opened its first aerobics studio in a basement in East Village in New York City in 1989. The basement studio had no locker room, faulty air conditioning, and was frequently broken into after hours. Yet what this trendy spot lacked it made up for with energy and innovative classes. Analysts at CIBC World Markets believe that CRUNCH, based in New York, offers Bally a strong growth avenue. Despite slowing sales of new gym memberships, they say, Bally has been able to retain members at above-industry averages. They add that the sluggish economy provides opportunities for Bally to acquire smaller, less well-capitalized fitness club companies at attractive prices.