Thursday, October 30, 2008

All that glitters...


Like that old song lyric: "Don't push me cause I'm close to the edge."
UPDATE: Saturday, February 21, 2009 (Yikes) 'Comments' are the best!
And so it continues to go (but not for long)

UPDATE: Thursday November 13, 2009
I have been running a fitness center for 27 years and only been blogging since 3/17/07; and never have I gone back to a two-week old post to add an update (a day or two maybe, but never this long)

My sitemeter tells me I’m getting almost a dozen visitors a day to this particular post because you did an internet search for “leading edge fitness Amherst” or “Golds becomes the leading edge” or something similar.

And that only further proves my point! The local boys who originally founded Golds five years ago were supposed to be so hip, so cool, so cutting edge (maybe that’s where the new name comes from) using the Net, Facebook, email interaction with customers, etc.

But this name changed occurred so suddenly nobody thought ahead to take out a domain name under “the leading edge Amherst” and fill it with content so that when you did your search they would come up number one rather than my humble critique?

Original post: 10/30/08
Changing your name from the gold standard of health club franchises (not that there are all that many in the industry, as about 85% of fitness facilities are Mom-and-Pops) “Golds Gym” to “The Leading Edge” is kind of like that McDonalds in Hadley changing its name to “Billy Bob’s Burgers”.

And, of course, it has nothing whatsoever to do with paying the annual 5% of gross revenues franchise fee. Even at “only” 1,500 members paying $40/month that still amounts to a yearly overhead of $36,000.

When Golds first opened five years ago they revealed an astonishing target of 3,000 members. I say astonishing because if you added up the entire membership of established Health Clubs this side of the river (Hampshire Fitness, Kidsports, Ultimate Fitness and
Amherst Athletic Club) it would not total much more than 3,000.

But considering “Video To Go” located adjacent to Golds and about four or five times smaller in square footage was paying $5,000 per month rent (so you can imagine what Golds is now paying), they really do need that many members to break even.

And yeah, after Golds opened Kidsports and Ultimate Fitness closed--but the owners of Hampshire Fitness sold out to Perry Messer, owner of the oldest club in the Valley ‘Northampton Athletic Club’, and about as experienced a pro as you can get.

A recent Gazette article revealed that membership of both Perry’s clubs now number “about 3,500”. So the largest, oldest two clubs in the Valley combined barely exceed what Golds—I mean ‘The Leading Edge’-- all by itself needs to survive.

In an email to employees they herald “opening a second club in Greenfield soon!” Interestingly ‘Video To Go' moved to Greenfield (to escape the high Amherst rent and cutthroat competition from Blockbuster Video) and lasted less than a year.

And since the conditions placed on Newmarket Center in 1985 calls for sign review/approval by the Planning Board, you gotta wonder if the sign changes were recently approved.

One woman's experience

Previous post on the death of Ultimate Fitness

33 comments:

Anonymous said...

My daughter just joined Planet Fitness for $10 a month with no enrollment fee. Larry, you're the expert. What is the business model that can pay rent, staff, utilities and advertising on $10 a month from its members?

LarryK4 said...

Hadley has a water/sewer rate that is about 30% above Amherst's (which is way to high).

So if your daughter follows American College of Sports Medicine guidelines and works out five times per week and takes a shower and drinks water and flushes the toilet once per visit then she costs them more than $10 per month in just water/sewer fees.

In short, no successful business model I know of other than they hope to sell 1,000 memberships and have 900 of them NEVER show up.

Just for the record: average monthly fitness fees nationwide are about four times that--and for good reason.

Oldest expression in the book: "If it sounds to good to be true..."

Anonymous said...

my gym doesn;t provide showers. how exciting. inside baseball.

ARHS '76 said...

All that glitters is gold

Zeppelin Rules!

Anonymous said...

Golds/Edge charges $30 a month for an early access membership - I can't go there after 2:00 pm.

It also opens at 5:00 am. Always.

AAC opens at 6:00 am. Several times the morning would sleep late and not show up until after 6:30.

Also the Edge is very clean. AAC not so much.

LarryK4 said...

Sounds to me like you have not been at AAC for two or three years.

So keep going to The Edge (although Greenfield might be a bit of a long drive)

Anonymous said...

I was the marketing guy at Gold's Gym 2005-2007, during the time I was there, our membership was OVER 3,000; and we had a much more interesting range of memberships. I don't know why Pete Earle (one of the owners of Gold's) switched to Leading Edge. I wonder if his partner Joanne (former family attorney in Hadley) is still involved?

It's not surprising that Planet Fitness is not doing so well. The equipment is terrible, there's on personal training or exercise classes, both options available at Gold's as part of a basic membership. Sure it's on a bus line, but so is Gold's, and Gold's is right down the street from UMass.

A lot of money went into purchasing and installing the custom logo and lit letters on the Gold's roof. I'm surprised to see the change, but perhaps its for the best.

Anonymous said...

I recently spoke with the manager of Planet Fitness about the upcoming changes facing Amherst/Hadley fitness scene. She said the owners are very aware of the new UMass facility. They expect to lose some of the on-campus students, but are still banking on the off-campus kids. The way they see it, once someone leaves school for the day, why would they go back for an hour workout.Even though every off-campus student knows he/she is paying for the center as part of their tuition, it's just not worth it. There's limited parking and you can bet between 4:00 p.m. and 9:00 p.m. the place will be packed with both students and faculty.

Planet Fitness has it's own parking lot and is $10.00 a month, always. It's open Mon-Fri 24 hours,Sat and Sun 7:00 a.m. to 7:00 p.m. and more important, it is cleaned constantly. The place is spotless, unlike other clubs in Amherst.

No, what she said they're really worried about was the soon coming 24 Hour Fitness chain. Although nationally, their memberships run about $25.00 a month. But with all the growth in fitness clubs in the area, she said they plan to target the Amherst and Hadley residents with promotions and specials.

You gotta love competition. It's what this country's all about.

God Bless America.

LarryK4 said...

Hey Former Gold's Marketing Guy:

Yeah, well then you missed the guys from Boston (who own 4 or 5 Golds Gyms franchises there) pulling out after only one year in business. That should tell you something.

Joanne Delong, a Hadley middle-aged attorney with no fitness experience whatsoever, bought out the Boston guys who knew what they were doing (hence their sellout after only one year)

She was also Pruddy Gomez ‘s attorney, who ran a controversial bar in Amherst center and was shut down by the town for all sorts of violations. Turns out she owned the condo space (in the old “Plumbley’s Building”) he was doing business in, and probably used if for collateral to buy out the Boston guys.

Interestingly Golds then announce d they were opening a Tanning Salon in that downtown Amherst spot as a satellite business. Then, mysteriously, a few weeks before the Grand Opening faulty wiring traced to the Tanning Salon almost burned down the entire building.

My electrician once told me with a laugh that one of the reasons Golds opening was delayed five years ago is because the y used an unlicensed handy man to do the wiring and the Amherst building inspector caught it. His licensed company had to go in at the last minute and save their butts.

So I always kind of wonder about the fire apparently caused by faulty wiring at the downtown Tanning Salon (that never opened)

Yeah, Golds is right next to Umass and I would be willing to bet today (their membership is half what is was when you were the marketing guru) about half the remaining members are Umass students.

Soooooo when that $50 million Umass Recreation Center opens (only a half-mile down the road) from “The Edge”, probably nest year, ALL of those students will disappear. Why pay for something you can get for free on campus. Golds, The Edge or whatever the hell they call themselves next year (how about “Mudd”) will disappear overnight-- as will Planet Fitness.

LarryK4 said...

Yeah, other Anon (cheapskate member of Planet Fitness):

And you gotta love the thought of someone getting seriously injured or dying on a machine at 3:30 AM with no employees around.

End of business.

Anonymous said...

On planet fitness:

No grunting? No squat rack? No power rack? No thanks... I don't know how anyone works out in there. Judgment free zone my arse... If I were in there grunting, they'd be judging me like there was no tomorrow.

I'll take Universal Health and Fitness any day, open at 4am quality equipment, nice people. No contest. At least on my side of the river.

LarryK4 said...

Yeah, as I said Perry does a great job with Northampton Athletic Club and those folks do a great job as well.

And Northampton is certainly BIG enough for those two clubs. Hadley and Amherst on the other hand...

Anonymous said...

Now that you are posting signs. Why not post a picture of your sign - the broken one on the outside wall. It shows how well your club is maintained. Did you ever get the full wall mirror fixed? It was only broken 2 and half years.

LarryK4 said...

Well, unlike Golds, my permit is still good for the outdoor sign (my name has not changed in 27 years).

And yeah, this morning I fixed my sandwich board sign out front on Rt 116 that somebody ran over with a car or truck a few weeks ago and also stole the full-color banner next to it (but I'm sure you would know nothing about that)

Anonymous said...

I was looking to join one of the gym's around the Amherst area. Hampshire Fitness and Gold's (The Edge)are about the same price, $499 per year.They each have their good points.
The Edge offers an early bird rate of $360 a year. The hours are between 5:00 a.m. and 2:00 p.m. and like an earlier blogger said, it's very clean. Hampshire Fitness has a pool, tennis and basketball courts.It's also in the process of an upgrade of the entire gym.


Many of my friends and neighbors have switched to the $10 a month Planet Fitness simply because of the financial crunch were all facing. Actually, in December, P.F. offers a $99 per year special with no sign up fee.I know they don't offer classes.I know I can't put a 150 lb. dumbell in each hand.But they do have plenty of treadmills, ellipticals, weight machines,etc.It's hard to resist that $8.25 a month.

To be honest,I've always tried to steer clear of the chain market.So, my question to the Amherst Athletic Club ownership is, do you have any promotions, special rates or discounts that would lower your $450 per year membership price? If I'm paying that price, I might as well spend $50 more for use of Hampshire's pool, tennis and basketball courts.

Sorry to sound like a "cheapskate", but like many other Amherst residents, I've got a family to support and times aren't what they used to be.

LarryK4 said...

Well…some health club owners are also trying to support a family in
this trying economic time.

We offer a 20% family discount (and we were the first in the valley to extend it to same sex households twenty years ago) or a senior discount of 10% but the only membership specials I do is $99 for ten weeks (not the entire year)

Let’s say I decided to match Planet Fitness $99 per year. Currently I have a little over 100 hard-core, long-time members who renew at the annual rate (I think the day I opened my doors 27
years ago it was $199 or so). And four or five times that many who
do one month, three month or way-less- frequently, six month
memberships.

Obviously all 100 annual members are going to renew at $99 rather than the current $449. So that means if I earn your business with this move you need to bring me 349 of your friends to accompany you just to bring me back to where I was with my original 100 members renewing at normal rates.

And now instead of having 100 customers to service, I have 450 (for the exact same revenue). And of course now my long-time members who can come in almost anytime and get on their favorite machine with no waiting suddenly have to fight for those machines.

In our South Amherst Village Square location about 4,000 people live within walking distance. (And most of my annual members come from that demographic). Since Hampshire Fitness, on the Amherst/Belchertown border, is only $50 more why would you join me?

Location mainly, the wait to get there--but also waiting in line for machines once you are there. Plus we have machines that nobody else in the Valley has such as the original Stairmaster Gravitron that works your entire upper body in less than five minutes (and I purchased two addition ones and stripped them for spare parts so I can be sure this one will run forever)

We also have the commercial Nautilus Treadclimber 916 (all 700 pounds of it) that really does burn twice the calories of a normal treadmill). The new Virtual Reality bike from Expresso Fitness, that almost makes working out fun.

And our Keiser strength circuit provides the fastest, safest strength training of any machines on the market.

So if your time is valuable…

Let’s analyze Planet Fitness pricing.
They supposedly spent $1.1 million to renovate and equip their Hadley Mall location. If you borrow $1.1 million your
mortgage payment is around $10,000 per month. At $10 month you need 1,000 clients just to pay that mortgage.

Then there’s Mall rent, a minimum of $30/sq ft.
And since Planet Fitness is 15,000 square feet that’s $37,500 per
month. But let’s be conservative and say ONLY $20,000 per month, so that would be another 2,000 clients just to cover rent. Now you’re up to 3,000.

Then there’s electricity. Mine is about $700 per month but I’m three
times smaller and not open 24/7 so they must be five or six times mine. Water/Sewer: mine is about $1,500 per year but Hadley is 33% more expensive per unit than Amherst and obviously they have ten times my membership so there are another 200 $99 memberships.

And we have not even gotten up to advertising and labor.

Anyone keeping track? And if they really could get that many members would the building inspector or Fire Chief allow such a crowd at 5:30 PM when most folks want to show up?

When Amherst College spent $7 million renovating its fitness center ten years ago my AC student memberships went from an average of 25 per semester down to 1.

So when Umass opens that $25 million Recreation Center…

Anonymous said...

"So when Umass opens that $25 million Recreation Center…"

There’s no crying in fitness. You will either be cooked or you will have to invest in your business like any other entrepreneur. It's not 1985 anymore. There are more fitness options in the valley than ever. You will have to carve out something unique in what you offer or you’re finished. Time to upgrade.

LarryK4 said...

Fortunately I have never considered Umass students as my main market (but still love to see them when they walk thru the door). Thus when the exercise science/sports management folks opened up ‘The Body Shops’ all around campus 15 years ago and charged two or three times less going rate, I was not overly concerned.

The new $25 million Recreation Center—or whatever the final price becomes-- (paid for with my tax dollars) still falls into that category. But if they start selling membership for an outrageous low fee (to compete with Planet Fitness, for instance) to just anyone, that will be another story.

One of the reasons given for the $10 million upgrade to the Campus Center Hotel is to better compete with Curt Shumway’s new hotels in Hadley.

Anonymous said...

Just my opinion so take it for what is worth. I've been working out in all kinds of gyms for better than 35 years and have hung out in just about every local gym mentioned so far. I've done cardio with the ladies and hanging and banging with the big boys.
If I was in it for the money I would bank on the quiet non-obtrusive gym. Now before everyone gets their panties in a bunch over what I just said, I think allot of what the non-judgmental gyms try to eliminate is the clowns that lift weights and feel as if they have to make noises that I can compare to mountain gorillas fighting over the last banana! In most cases these people aren't even lifting enough to condone that much hysteria. I worked out with people that could bench well over lbs and dead lift lbs with no more than breathing noise and a whisper of grunting strain, and no they were not professional lifters. You have to admit most of the population in gyms are normal folks that want to try and get/stay in shape not lift big weights or feel somehow sub-standard to the environment around them.

Dale

Anonymous said...

Larry,

I doubt if the $25 million Recreation Centerwill make any difference in your business. How many of your current members would be eligible to work out there? Probably not many. And, they would have to pay for parking. It ain't free at UMass baby.

LarryK4 said...

Yeah, as long as they limit membership to actual Umass students (the ones who pay for it via their activity fees) then it will not hurt me a bit.

In fact, it will help me--as the former Golds now 'Close to the Edge' and Planet Fitness will die overnight (because they DO rely on Umass students)

Anonymous said...

Larry, I think your last statement is invalid. I am a member at Edge, and have been there for 3 years, and I would say students make up only 10-20% of their members. While the new UMass facility may take some of these students away, I doubt that it'll have any long term effect on the health clubs in the area. In the US, something like only 1 in 12 people have a health club membership. I don't know if that statistic translates to Amherst, but considering the number of year-round residents here, don't you think that there's plenty of growth possible for all of the clubs in the area?

LarryK4 said...

Plenty of growth? Only at another clubs expense. Like Planet Fitness for instance: how many former Golds (and yes former Amherst Athletic Club and Hampshire) members now work out there for $10 month (where the consume more than that in basic utilities). And again, how many of them are students? A lot.

Even if you are correct (and maybe you go to the Edge at a different time) and only 20% are students. The new Recreation Center will take them all.

And in the last election Question 1 would have cut 40% of the state's revenue and that was considered the worst thing since Hitler (or that other Son of a Bitch)

Anonymous said...

Planet Fitness doesn't offer any kind of Day Care for my child. Golds/The Leading Edge offers child care @ 10.00 a month, can't beat that and their staff is great !

LarryK4 said...

For sure.

But three weeks ago they fired one of their more trained child care staff, and informed sources tell me it was because she was complaining about overcrowding and safety in the Day Care program.

Again: you get what you pay for.

Anonymous said...

She may have said that she left for those reasons, however I don't belive those were the true reasons. After having a close encounter with my daughters safety, I would tend to believe she was let go and not so much of her own accord.

Anonymous said...

She may have said that she left for those reasons, however I don't believe those were the true reasons. After having a close encounter with my daughters safety, I would tend to believe she was let go and not so much of her own accord.

Anonymous said...

the childcare at leading edge has really gone downhill since it started. there is a lot of turnover of staff; there has been frequent overcrowding with kids, up to 15-20 kids with one care provider this spring; toys, equipment, etc break and are not replaced; management has said that they already spend too much $ on the childcare room to spend anymore. (staff can use the childcare services totally for free). It's a shame though. Imho, management spends lots of energy and $ upgrading its fitness equipment (they charge members an annual fee for facility upgrades), and not one cent on the childcare space.

LarryK4 said...

Yeah, that is a clear violation of state law for childcare (number of kids to adult provider)

Probably not the only law they have broken over the past year or two.

Anonymous said...

Leading Edge childcare isn't subject to state childcare regs because care is provided only when a parent is still on site and for less than 2 hours/day per child. Regulation-wise, it's comparable to church daycare during services, or drop-in while you shop mall daycare, neither of which are regulated either.

LarryK4 said...

Well that's, errrr, reassuring.

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