HOW TO MAKE SURE YOUR GYM DOES NOT CLOSE

Michael Skapinker
Sunday, February 03, 2008


The northern winter still has a way to run, but already there are signs of hope. The days are lengthening, the daffodils have poked their heads above the ground and you can once again have a lane to yourself in the swimming pool.

The new year's resolution crowd has abandoned the health clubs. They arrive as the year begins and soon go. We will not see them until September, when they return filled with a post-holiday determination to slim down and tone up, before disappearing again a fortnight later.

If you are a regular health club user, it is easy to be irritated by the temporary hordes puzzling over the machines or swimming, heads up, in the middle of the lane. Easy, but short-sighted, because irregular members make gyms possible for everyone else.


The economics of health clubs are simple: you need thousands of members who never come. The
gym could never accommodate them all if they did.

By paying their dues and seldom appearing, inactive members ensure health club owners have enough money to invest in aerobics halls and squash courts, while keeping membership fees at reasonable levels for the regulars.

There are other businesses where the owners count on only a small proportion of the customers using the service. Insurance is one; those DVD rental clubs where you pay a fee and order films one at a time are another.

Gyms are different because they require expensive sites, cannot outsource beauty treatments to Asia and need constant investment if their premises are not to look shabby.

London's gentlemen's clubs work on the same principle, except that shabby premises appear to be mandatory and the members do not see each other naked (at least not at the ones I have been taken to).

Gerald Ratner, the British businessman who ran a successful health club after losing his jewellery empire when he described some of
its products as “crap”, says about
30 per cent of his members dropped out each year.

Some clubs attempt to limit the attrition rate by telephoning inactive members and asking whether there is anything the club can do for them. Mr Ratner never thought this was a good idea as it might remind them that they were wasting their money.

It is a constant battle to attract new members, he says, and some clubs resort to desperate measures. He recalls seeing a gym representative outside Cape Town airport tearing banknotes in half, giving one piece to passing strangers and promising them the other if they came to look around. They did not even need to join.

He preferred to rely on discounting the joining fee (but never the monthly membership) and showing prospective members the heated outdoor pool. People demand a pool, he says, but most do not use it. Many clubs waive the joining fee altogether.

Mr Ratner estimates that about 5 per cent of his members used the gym every day and 50 per cent at least twice a week. That left half in that essential group who sign up but rarely come.

Two Californian academics, Stefano DellaVigna and Ulrike Malmendier, studied three US health clubs and discovered that 80 per cent of members used the gym so infrequently that they would have been better off paying the $10 fee for each individual visit. Many also left substantial gaps between their last visit and cancelling their membership.

In their paper (you can find the web address at www.ft.com/skapinker), the academics concluded either that the gym members were making “time-inconsistent choices” or that they had “limited cognitive abilities”.

Of course, some people say the same about gym members. It is one thing to pay to use a swimming pool or a tennis court, but most of us know you could get half the benefit of the other facilities by walking up the stairs and all the benefit by running up them.

In his recent autobiography, Mr Ratner recalls taking his father to show off his club. Ratner Sr, who had never been to a gym before, looked at the members pounding away on a treadmill before asking: “What are they trying to achieve?”

No matter. Regular members go because they think it does them good, but they should not take their clubs for granted. Many gyms are having a difficult time. Most UK clubs are “in distress or struggling”, a banker told the Financial Times in November.

In the US, national chain Bally Total Fitness spent two months in Chapter 11 bankruptcy protection last year after its New York Stock Exchange listing was suspended.

Clubs need more help from the regulars to attract new members. My own club is offering a mountain bike to anyone who persuades two friends to sign up. This is silly. If we were happy riding mountain bikes around the city we would not need the gym.

Far better to offer anyone who introduces new members the free run of the place when it is closed to everyone else. The other members will not mind. They are never there.