Rich Jackim, a Managing Partner at Sports Club Advisors will be speaking to owners of sports and social clubs at the 2020 Sport and Social Industry Association Conference to be held in Cancun, Mexico in February.
Rich will share information about the mergers and acquisitions market for sports and social clubs. He will also discuss how to value a sports and social club and over a dozen things that can be done to enhance the value of a sports and social club. As part of his presentation, he will be sharing details of two transactions in the sports and social industry that he was involved in and the lessons that can be learned, as buyers or sellers, from those transactions.
Rich Jackim has been involved in four transactions in the sports and social industry, including two on the sell-side and two on the buy-side. He has also prepared valuations for four other sports and social clubs.
Rich is the author of the critically acclaimed book, The $10 Trillion Opportunity: Designing Successful Exit Strategies for Middle Market Business Owners, which was an Amazon Best Seller the year it was published.Read More
According to the 2018 IHRSA Profiles of Success report, the health & fitness club segment posted revenue growth of 5.8% and membership growth of 2.8%.
A total of 115 firms, representing 12,289 clubs, participated in the IDS. As this report will show, club performance results varied by segment. Clubs part of a chain reported greater revenue growth (+7%) than independent clubs (+2.8%). On the other hand, independent facilities posted a retention rate of 72.4%, while clubs part of a chain indicated a retention rate of 66.7%. The smallest segment of clubs generated significantly less revenue per individual member ($479.70) in comparison with larger clubs ($975.30).
Based on data gathered in the annual Industry Data Survey (IDS), the 2018 IHRSA Profiles of Success provides benchmarks and other operational and financial data for select leading clubs. Included are key metrics such as revenue, membership growth and retention, traffic, payroll, non-dues revenue, and EBITDA. Club reinvestment and profit center analysis as well as income statement and balance sheet data are also provided.
For a copy of the complete report visit the IHRSA Store.Read More
Sports Club Advisors has developed an index of publicly traded health & fitness companies to establish financial benchmarks and valuation metrics for the health, sports & fitness industry. We have organized the companies in the index based on the sub-industries within this category.
Fitness Clubs: Many of the well known fitness clubs such as Golds Gym are privately owned, however Planet Fitness completed an IPO in August 2015.
Planet Fitness, Inc. (PLNT)
Town Sports International Holdings, Inc. (CLUB) (owns and operates fitness clubs in the Northeast and Mid-Atlantic regions, including the Boston Sports Clubs, New York Sports Clubs, Philadelphia Sports Clubs and Washington Sports Clubs)
Fitness Equipment Manufacturers: Included in this section are companies that manufacture and sell fitness equipment.
Brunswick Corporation (BC)
Nautilus Inc. (The) (NLS)
Gaiam Inc. (GAIA) (manufactures and sells Yoga products (mats, bags, etc.), fitness products, balance balls; workout, yoga & wellness videos)
Wearable Technology: Wearable technology is the rage right now and promises to transform the way consumers and fitness clubs think about fitness. As a result, there are an increasing number of companies producing health and fitness trackers and health monitors including Fitbit (FIT) that completed IPOs in 2015.
BioTelemetry Inc. (BEAT)
DexCom, Inc. (DXCM)
Fitbit Inc. (FIT)
Weight Loss: Anyone who has ever tried to loose weight is likely to recognize the public companies in this sub-sector.
Medifast Inc. (MED)
NutriSystem Inc. (NTRI)
Weight Watchers International Inc. (WTW)
Health Food and Nutrition Stores: These companies operate health oriented retail stores. Two examples include:
GNC Holdings, Inc. (GNC)
Vitamin Shoppe, Inc. (VSI)
Nutritional Supplements: These companies develop and manufacture nutritional supplements. Examples of these companies include:
Herbalife Ltd. (HLF)
Nu Skin Enterprises, Inc. (NUS)
USANA Health Sciences, Inc. (USNA)
Sports Club Advisors provides business valuations for all types of sports, fitness and leisure businesses. Our valuations have been used in strategic planning, divorce settlements, shareholder disputes, and purchase price allocations. The founders of our firm have written two books on business valuation. Contact Us if you would like to learn more about our valuation services for fitness clubs and health and leisure industry.
According to a recent study released by Dr. Lisa Neirotti, a professor at George Washington University, travel sports or “sports tourism” is an $8-billion industry that accounts for 14% of all tourism. As a parent with two children who competed at the national level in high school, a good share of our time and household income was spent on traveling to tournaments around the country. But sports tourism doesn’t stop with youth sports. The adult travel sports segment is growing too as seen by record numbers at regional marathons and tennis tournaments around the country with many adults traveling long distances to compete.
Sports Club Advisors believes there are 10 trends that will affect the future of the travel sports industry in 2017 and beyond:
#1 – Facility Development. Designing and building a “premium” facility is becoming increasingly important to make the experience memorable and enjoyable for all participants, from athletes to spectators. The recent development of premier indoor and outdoor soccer facilities around the country is evidence of this.
#2 – Ownership Structures. In the past local communities, sports commissions, or counties have financed, owned and operated facilities. However, increasingly, we are seeing that well-run privately operated sports facilities create better overall experiences and are more successful. We expect more public-private partnerships to develop over time.
#3 – Social Media. Social media is not just for marketing events. It has become a tool to provide real time updates and highlights during events, changes in schedules and VIP sightings. Due to flexibility, convenience and cost, apps have replaced the printed flier or guide.
#4 – Volunteers. Many events are run by a combination of paid employees and volunteers. A pending lawsuit filed by a volunteer alleges she should have been paid for her work at a sporting event. The outcome of this case could have massive implications on the way events are organized and staffed, not to mention the economics of sporting events.
#5 – Partnerships. We are increasing seeing groups partner to create a world class sporting venue. Public private partnerships have been around for a long time, but we are now seeing partnerships between owners and concessionaires, service providers, sponsors, sports equipment manufacturers, etc. We expect this trend to continue.
#6 – Sponsors. In the long-term, sponsor involvement is more important than a sponsor’s money. It is arguably more valuable to have the Chicago Cub’s name associated with a baseball tournament or camp than to have their financial support. Through well planned involvement, the sponsor will get more out of the experience and so will you. Get to know your sponsors and let them get to know you before you ask for money.
#7 – Bid Fees. Host cities are less willing to pay bid fees, and are instead looking for a financial partnership with event organizers. This shared risk-reward model is becoming more common every day. In addition to diversifying risk, many host cities want a share in the financial results (just the upside) of the events they host.
#8 – Housing. Securing adequate hotel space for events and negotiating rebates and commissions with hotel operators is likely to become more of a challenge. At least one major hotel brand is exploring capping commission and rebate programs. The challenge of protecting rate integrity and of tracking room blocks and rebates (especially in smaller communities) may force the industry to revisit how housing is secured for travel sports events.
#9 – Helping Others. The most successful events have a charitable side to them that make participants feel good about competing. From charity runs to playground clean-ups these events do well by helping others. The question is, “How can we engage our target market and create a positive impact on our community.”
#10 – Creating Experiences. The NCAA Women’s Final Four slogan, “It’s More Than Three Games” says it all. Athletes, young or adult, and spectators at events want their trips to be an experience for the entire family. That means event organizers need to plan supplemental activities for family members to do (apart from the sporting event or competition) that will create memories. This is equally true for world-class running events to youth travel gymnastics tournaments. The more you invest in creating a memorable experience for all participants, the more successful your event and facility will be.
About the Author: Rich Jackim is a licensed attorney, an experienced investment banker, a sports industry entrepreneur and the managing partner of Sports Club Advisors, Inc. Sports Club Advisors is a boutique mergers and acquisitions firm that provides financial advisory services to clients in the sports, fitness and leisure industry. Rich may be reached at firstname.lastname@example.org.Read More
OCTOBER 12-14, 2016 CHICAGO, ILRead More
Several private-equity firms have been aggressively investing in boutique fitness chains, including yoga, spin and barre studio fitness centers. These moves illustrate the growing popularity to investors and consumers alike, of workout classes that aren’t tethered to traditional gyms and monthly membership fees.
In 2015 Boston-based Great Hill Partners purchased YogaWorks, which operates 29 yoga studios in California and New York, from Highland Capital Partners. Great Hill paid approximately $45 million for the company, according to people familiar with the deal.
Also last year, CorePower Yoga received an investment from private-equity firm Catterton Partners, which enabled them to add about new 20 locations. CorePower Yoga now operates about 100 yoga studios around the U.S.
“Right now we are seeing a shift away from traditional gyms towards more specialized programs, as consumers want their workout routines to be more fun and engaging,” said Sports Club Advisors partner Rich Jackim, who added that his firm’s research indicates that yoga and boutique fitness class attendance is up 12% over a year ago. Sports Club Advisors is an M&A firm that puts together deals in the health, fitness and sports club sector.
Jackim said buyers like boutique fitness clubs that offer unique programming and have strong brand recognition. For example, YogaWorks, in addition to its studios, also runs a yoga school that has trained thousands of yoga instructors worldwide, according to its website.
Private-equity firms often buy companies to serve as “platforms”, which they then grow aggressively by making a series of add-on acquisitions over 4-6 years, before selling or taking the company public. With Great Hill’s acquisition of YogaWorks, Jackim said he expects to see a consolidation in the yoga sector over the next five to six years. Right now, the yoga sector is highly fragmented with between 7,000 and 9,000 yoga studios in North America, most of which are independently owned and operated.
Investors are also racing to close deals in other areas of the fitness sector in addition to yoga. In April last year, private-equity firm Catterton Partners, the firm that invested in CorePower Yoga also invested in the indoor cycling studio, FlyWheel. Flywheel’s main rival is SoulCycle, whose parent, Equinox Fitness, is owned by a private-equity group called Leonard Green & Partners.
Flywheel also offers a ballet-inspired class known as FlyBarre that’s similar to one offered by Pure Barre, which is backed by South Carolina-based buyout firm WJ Partners.
According to Sports Club Advisors the number of new locations that boutique fitness chains have opened has increased by 450% between 2010 and 2015. That makes boutique fitness chains the fastest-growing segment of the $22-billion-a-year U.S. health-club industry, according to the mergers and acquisitions firm.
“We’re seeing a good response from the private-equity community when successful boutique fitness clubs are finding a financial partner to provide growth capital and accelerate their expansion plans,” said Jackim. “There is significant capital available for proven fitness industry entrepreneurs, the challenge is finding the right partner and negotiating the right terms.”
Sports Club Advisors is a mergers and acquisitions firm that advises clients in the sports, fitness and leisure industry.Read More
Ever wonder what professional athletes do when it’s time to retire before they’re 40? With the competitive drive to win, combined with lots of free time and, usually a very healthy balance sheet, for many the answer is to pursue a second career as an entrepreneur or in private equity.
In this post we take a look at a few professional athletes who have retired and made the cut to get into the exclusive world of private equity. Among those who have made the move are one of the greatest goalies in NHL history, a two-time NFL MVP, and a member of the 1992 Dream Team to name a few.
Gary Fencik—Partner, Head of Business Development at Adams Street Partners
After a rewarding career as a safety for the Chicago Bears during the ’70s and ’80s, Gary Fencik was a member of one of the most powerful defenses in NFL history. Now he’s in charge of business development for a private equity firm with more than $27 billion in assets under management .
Steve Young—Co-Founder, Managing Director at HGGC
As an NFL quarterback, Steve Young was a two-time MVP who won three Super Bowls with the San Francisco 49ers. After retiring in 2000, he earned a law degree, tried politics and helped launch a successful private equity firm. HGGC has more than $2.4 billion in assets under management with a portfolio that includes tech companies like Selligent and Serena.
Kerry Kittles—Associate at Ledgemont Capital Group
The former NBA wing took a bit of a different path to Wall Street. Rather than founding his own office, Kittles went back to get his MBA at Villanova (the same school where he played college basketball) before catching on as an associate at Ledgemont. Kittles is also an advisor to Fantex, a platform that lets users trade stock in the brands of professional athletes.
David Robinson—Co-Founder at Admiral Capital Group
A 7-foot-1 NBA champion, Robinson retired from professional basketball and jumped into the private equity field by co-founding Admiral Capital Group, an investment group focused on real estate but with investments in companies like online ticket marketplace ScoreBig and sporting goods retailer Academy Sports + Outdoors.
Detlef Schrempf—Partner at Coldstream Capital Management
A native of Germany, Schrempf spent much of his basketball career in the Pacific Northwest and now works for Bellevue, WA-based Coldstream Capital. After joining the firm in 2007, the former three-time NBA All-Star has worked primarily in business development; sourcing new deals for his PE firm.
Muhsin Muhammad—Managing Director at Axum Capital Partners
Instead of catching passes, Muhammad, a former NFL wide receiver, is now sourcing deals, making investments and helping manage a portfolio companies at Axum, a private equity group based in North Carolina. During his pro football career, Muhammad was probably best known for his 85-yard catch in Super Bowl XXXVIII which is still the longest touchdown in Super Bowl history.
Mike Richter—Founder, Managing Partner at Healthy Planet Partners
Many consider Mike Richter, a member of the U.S. Hockey Hall of Fame, to be one of the best goalies in history. Each year the NCAA awards the best goalie in men’s hockey the Mike Richter Award. Mike has been busy in retirement, earning a degree from Yale, getting involved in politics, and starting his own environmentally focused private equity group called Environmental Capital Partners.
Zoltan Mesko—Former Intern at Graham Partners
Zoltan Mesko, the Romanian native and former New England Patriots kicker has an interesting story. During the 2011 NFL lockout, the University of Michigan graduate worked for the private equity firm Graham Partners. Mesko took what he learned there and now that his playing career is over, is working at IBM in its Business Intelligence & Predictive Analytics division.Read More
There are roughly 1,052 companies in this sector that manufacture a range of sporting and athletic goods, including balls, bags, clubs, gloves, skates, protective equipment, boards, fishing gear and other supplies. These finished products are then marketed to wholesalers and retailers. According to IBIS World Reports, athletic & sporting goods manufacturing sector had total revenues of approximately $9.1 billion and net profits of approximately $398 million for a net margin of 4.4%.
Revenues and profits in the Athletic & Sporting Goods Manufacturing sector are expected to continue to grow as consumers become more health-conscious, which will stimulate demand for athletic equipment. As a result industry revenue is expected to increase at an annualized rate of between 0.5% to 1% and grow to $9.3 billion, as manufacturers benefit from strong demand from downstream markets. In addition, high rates of obesity will likely translate to heightened healthcare expenditures. Therefore, the government will likely invest in schools’ physical education programs and pass legislation to promote healthy lifestyle choices.
Trends in sports participation influence demand for different types of sporting equipment. While an overall rise in the number of consumers participating in sports bodes well for the sector, changing consumer preferences for certain types of sports will also affect demand. For example, as more consumers participate in equipment-intensive sports, such as hockey and scuba diving, industry revenue will reap the benefits of more equipment sales. That said, participation in sports is expected to decline slightly over the next five years as the population ages.Read More
The fitness, sports and health club sector has been attractive to buyers and investors for a long time. As proof, valuation multiples for health and fitness clubs tend to be higher than for traditional retail or leisure-related businesses and are currently at an all-time high.
Based on conversations with hundreds of buyers, we have distilled the top four reasons buyers and investors find the sports, fitness and leisure sector to be so attractive.
- Low Volatility. Historically, the fitness industry has been resilient during economic slowdown. While many retail and hospitality businesses experience significant contractions during a slowdown, the health & fitness club sector has proven to be more insulated from macroeconomic factors. To be specific, when the U.S. economy is strong, same-store sales at many established clubs have increased at an average of 4% to 6% per year; and when the economy is weak, same-store revenues at most clubs continued to increase a rate of 2% to 4% per year. However, major economic setbacks like the 2008–2010 recession still had a material impact on the fitness club industry, albeit to a lesser extent than other retail and leisure related businesses.
- Growing Market. Overall fitness club membership has been increasing steadily for decades. This trend is expected to continue to increase as an aging population realizes the importance of exercise and there is increased awareness that physical inactivity and obesity are a growing healthcare challenge.
- The Business Model is “Scalable”. To buyers this means that once the business model is proven on a small scale, it can be expanded easily and working capital requirements do not increase significantly. So for example, once you have proven your club is profitable with 1,000 members it’s relatively easy to grow to 5,000 members without a requiring proportional investment in working capital.
- Above Average Cash Flow. The fitness club sector generates attractive “free cash flow” compared to other businesses. Free cash flow can be defined in a number of ways. Usually it’s defined as cash flow after all operating expenses (including rent and/or debt service), interest expense, taxes, maintenance CAPEX, and working capital investment. Using this definition, free cash flow generated by most retail businesses is between 2% and 6%. However, in the fitness club sector, average free cash flow is more typically between 5% and 12% range, with some well-run operations exceeding this range.
- Recurring Revenue Model. The most common reason buyers say they like fitness clubs is because the business model generates “annuity-like” revenues. In most retail, sports, and leisure-related businesses, once a customer pays for a product or service they have no further financial commitment. However, in the fitness club industry, when a member joins a club they agree to pay every month, irrespective of variations in season or club usage. Despite the fact that a significant percentage of members (35% to 45%) continue to pay only for a relatively short time (three to 11 months), a significant number of members (40% to 50%) continue to pay their monthly dues month after month, and year after year. Buyers particularly like the fact that many well-run clubs have 50% or more of their members who have been members for three years or longer.
Right now it’s a seller’s market. There are relatively few well-run clubs available for sale compared to the level of demand. As a result, valuations for health & fitness clubs are up 25% over where they were three years ago. To understand the value of your club, request a Free Opinion of Value today.Read More
DiVentures Scuba and Swim Centers is growing again with the addition of two locations in the Madison, Wisconsin area. On August 9, 2017, DiVentures acquired Madison Swim Academy (MSA) with locations in Fitchburg and Sun Prairie in a transaction arranged by Sports Club Advisors. These are the fifth and sixth DiVentures locations across four states.
DiVentures plans to enhance both properties’ facilities–including adding a state of the art dive pool for onsite scuba training at the Fitchburg location. By building upon an already solid swim program, these expansions will make the location a go-to for all aquatics enthusiasts.
DiVentures founder Dean Hollis saw the philosophy between the two companies aligned, and is eager to enhance the two MSA properties:
“We’re excited to be growing with such a great group and are proud to carry on our shared dedication to learning, safety and fun in the water. The future holds great things for our newest team members and customers, including building improvements, a dive pool for scuba training and much more. We look forward to being a part of the Madison community.”
Kim Rufenacht, MSA former co-owner will stay involved through at least November, to ensure a smooth transition and to provide coverage while Emily Lindow, Director, is on maternity leave.
“The decision to dedicate more time to family and step back from ownership at MSA was one that I thought about for a while, but it’s the right one. With DiVentures stepping in, I have full confidence MSA’s two locations are on their way up. This is a great thing for swimmers and divers in our community.”
Rich Jackim, managing partner of Sports Club Advisors, represented Madison Swim Academy and arranged the transaction. Sports Club Advisors is a boutique mergers and acquisitions firm that represents buyers and sellers of sports, fitness and leisure related businesses. Sports Club Advisors is an affiliate of Jackim Woods & Co., a middle market investment banking firm.
DiVentures provides full-service swim and scuba experiences, focusing on safety and fun in the water. Our passion for aquatics is reflected in everything we do and our team is committed to enhancing your experience on land and in the water. We are dedicated to unparalleled customer satisfaction and community involvement. Please visit www.diventures.com for more informationRead More