Bally Total Fitness

In: Business and Management

Submitted By gatotharyadi
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Bally Total Fitness – Case Summary

Bally Total Fitness is born in 1962 and become leading firm in US Health club industry. Since 2002, Paul Toback as CEO has did a lot of intervention to avoid Bally from banckrupcy.
Consumer demand for health club has been arise in USA. By 2004 US health club industry took in revenur of $ 14.1 billion with more than 26.000 health club operated in the United States, compare in 1987 only 11.800 health club (Exhibit 1). The demand cause Americans become more concern about their health since two third of adult population categorized as overweight and nearly one third as obese. The motivation to join health club are a disire to lose weight, to get in shape, to meet people or to reduce stress. The frequency of health club attendance in 2001 has arise compare to 1987. The people visited health club more than 100 days per year in 1987 only 31% become 41 % in 2001 (Exhibit 2). More people in younger age has increase as member in health club 12.3% in 2001 compare to 1997, and people in age 45-54 also increace 11.5% as well as age 55+ increase 13.1%.
Most club equipped facilities with aerobic and weight machines. Some health club provide swimming pool. Total capital required for 40.000 – 50.000 square-foot health club was roughly $1.5 million, with $500.000 in equipment alone. Smaller health club can be built with cost $144.000 to buy equipment for 10.000 square-foot.
Health club format in United States : * Owner-operated clubs : Operated by their owners. Has many location as chain health club. Centralize procurement, program design, marketing, finance, accounting and collections. * Franchised clubs : Succesfull health club concept franchised to multiple investors who paid a fee to franchisor. Franchisees received professional advice and advertising support and enjoyed the purchasing power of a large chain. * Design and…...

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