Item URL – Read More
Item Image –
Item Description – Social distancing amid the COVID-19 outbreak forced non-essential businesses to close down across the United States. Now, many struggle to remain afloat as expenses pile up with little to no revenue in sight. Even some of the most well-known companies aren’t immune to the financial impact of coronavirus.While an emphasis was placed on industries hit the hardest, like travel, hospitality, and retail, the changes have also caused hardship in other sectors – like fitness. Gold’s Gym is a long-standing chain of fitness centers founded by Joe Gold in 1965. Originally established in Venice Beach, California, the brand owns over 700 locations. Now the treadmills, weight machines, and fitness classrooms have fallen silent. The equipment remains unused since Gold’s closed after the emergence of COVID-19.Gold’s Gyms aren’t the only ones affected. Other well-known brands in the industry were also forced to shut down including LA Fitness, SoulCycle, Equinox, and Orangetheory Fitness.Total Disruption Weighs Heavy on Gold’s GymGold’s Gym International Inc. is asking for court protection from its debts. The filing was submitted in Dallas, Texas, where Gold’s is headquartered. The company lists $100 million in assets and liabilities in court documents.Once the COVID-19 pandemic took hold, Gold’s Gym was forced to close its fitness studios to help contain the spread of the virus. Several locations were already struggling to cope with debt before this unexpected disaster made its way around the globe.“This has been a complete and total disruption of every one of our business norms, so we needed to take quick, decisive actions to enable us to get back on track,” the company stated in its prepared remarks. Billionaire Robert Rowling owns TRT Holdings Inc., which spearheaded a group that purchased Gold’s Gym for $158 million in 2004. Rowling’s company began in the energy industry and is also the owner of Omni Hotels & Resorts in Dallas. Gold’s Files for Chapter 13 BankruptcyGold’s Gym is asking for Chapter 13 bankruptcy protection. The process will involve permanently closing 30 company-owned locations, including studios in Colorado Springs, Alabama, and St. Louis.TRT Holdings Inc. is the majority shareholder for Gold’s Gym. The group is in talks with the company to see if they can reach terms for a debtor-in-possession and exit loan to survive restructuring.More information on the proceedings can be found under the case Gold’s Gym International, Inc. 20-31319, U.S. Bankruptcy Court, Northern District of Texas (Dallas).Gyms with the Gold’s name owned by franchisees will not be affected. The bankruptcy filing only applies to company-owned locations which make up approximately 10% of the 700 studios who carry the brand.COVID-19 Isn’t the End for Gold’s GymGold’s Gym is facing the same challenges that many other companies are currently coping with during COVID-19. They filed for Chapter 13 bankruptcy today, but also want to emphasize that they plan to continue operating as a business in the future.The company issued a statement explaining that “We have been working with our landlords to ensure that the remaining company-owned gyms reopen stronger than ever coming out of this pandemic.”“To be clear, the filing should not impact our licensing division, it is not associated with any of our locally-owned franchise gyms, nor will it prevent us from continuing to support our system of nearly 700 gyms around the world. While the COVID-19 pandemic certainly impacted our company-owned gym operations, we expect the filing will have no further impact on current operations.”Some locations have also adopted other ways to keep clients fit and continue generating revenue. Virtual workouts and classes are offered online. Local Gold’s franchises in Middletown, Carmel, and Fishkill, New York provide members with online workouts through the Gold’s AMP app. The Middletown gym announced plans on its Facebook page to release an in-home workout series for members and guests that would be led by P90 and P90X creator and celebrity trainer Tony Horton.While virtual training may not be a complete solution, it helps boost interest and revenue by giving members more value during the coronavirus shutdown.Gold’s pre-negotiated plan outlines the restructuring process with plans to revive its business by this August. The company will try to reopen its locations during bankruptcy once they are permitted to as social distancing restrictions are lifted.Embracing a New Reality After COVID-19Coronavirus has created a new reality for people all over the world. Businesses that once relied heavily on physical locations and on-site interactions must get creative to get through. The fitness industry, which was reportedly worth around $94 billion in 2018 and served 183 people worldwide according to the International Health, Racquet & Sportsclub Association, is now struggling to pay its debts and sustain membership counts.Many, like Moda Yoga, offer free classes through Instagram Live to people in France, Australia, Canada, and the United States. Others, like Gold’s and SoulCycle, hope to wait out the pandemic and reopen once it is safe to do so. Soul Cycle is selling bikes for $2,500 with plans to release on-demand virtual classes later in 2020.Fitness instructors push to find new and better ways to reach their audiences when they can’t meet face-to-face.Julie Verhage is a group instructor at Equinox. On April 1st, she discussed continuing to host live training in her building and using Lysol and latex gloves for safety. She stated that she has received inquiries from startups asking her to lead virtual workout sessions so that “they can still have team bonding while everyone is working remotely.”The desire for human interaction is strong right now. Gyms that can survive the pandemic will likely continue to have a member base that will use traditional in-person services. However, building confidence in the public to return to these places may take time. That means filing for bankruptcy may become the last resort for many in the fitness industry.