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Entries in John McCarthy (12)

Wednesday
Feb222017

What Do Members Expect from a Health Club?

When someone buys a membership to your health club, it’s crucial to meet—and ideally exceed—their expectations in order to keep them as a long-term, satisfied club member. 

Nobody knows more about health club member expectations, behavior, and retention than John McCarthy, the former executive director of IHRSA, who has authored several IHRSA publications on these topics. In particular, IHRSA’s Guide to Membership Retention: Industry Lessons on What – and What Not – To Do, which was sponsored by TechnoGym and was published exactly 10 years ago, is still incredibly relevant and valuable for any club operator, whether new or seasoned.

Here are some key excerpts from this guide...

Continue reading "What Do Members Expect from a Health Club?"

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Friday
Dec232016

Happy 80th Birthday to Fitness Industry Legend John McCarthy

December 23, 2016 is a special day for our industry. Believe it or not, John McCarthy turns 80 years young today! 

John McCarthy (right) at the BASH for Augie’s Quest with current IHRSA President & CEO Joe Moore (left) and Augie Nieto (center).

John is, of course, the former executive director of IHRSA. He was one of a group of individuals that contributed to the launching of IHRSA in 1981. A former tennis club owner and director of the New England Indoor Tennis Association, John was named the first executive director of IHRSA and served in that position until 2006. During his 25 years of leadership, he was responsible for establishing IHRSA as the largest trade association in the global health club industry. Since his retirement, John has remained very active in the industry, most notably with Augie's Quest, the initiative to raise money in the fight against amyotrophic lateral sclerosis (ALS).

Two of IHRSA’s most prestigious awards are named after John, including the John McCarthy Industry Visionary Award, which is given to an individual or company who has made an unprecedented or unique contribution to the advancement of the industry as a whole, and the John McCarthy Merit Scholarship, which is given to someone with a demonstrated passion for, and absolute commitment to, the industry's future.

We are lucky to have many of John’s pearls of wisdom preserved in IHRSA publications such as The IHRSA Health Club Business Handbook and How to Prevail in Competitive Markets.

Today, in honor of John’s birthday, IHRSA members can download a complimentary PDF of Best of John McCarthy: Thoughts on Industry Growth, Competition, and the Club Business. (Please contact store@ihrsa.org if you need assistance with your IHRSA Store member login.) 

What comes to mind when you hear the name John McCarthy? Let us know in the comments section. And on behalf of the entire IHRSA team, happy 80th, John!

Friday
Apr152016

Best Practices: Health Club Financing Options

The following post was written by John McCarthy for our Best Practices series

Question: I’m planning to open a health club. What are my options with respect to financing? 

John McCarthy: The main sources are debt financing from conventional lenders, private investors, landlords and equipment suppliers, and private equity funds. 

For debt financing, lending institutions are currently financing at rates ranging from 5% to 8%, for periods of three to 15 years—depending on your history, the quality of the collateral, the projected debt coverage ratio, the predictability of cash flows, the business experience of the ownership group, the expertise of the operating team, and the general economic environment. Personal guarantees are usually required. 

Private investors expect—within five to seven years, at most—annual cash-on-cash returns of 7% to 14%, depending on the current rates of return. Often, they require an option to be cashed-out of their entire investment within a specified number of years. A seven-year return on investment (ROI) is common. 

Where vacancy rates are high, landlords are often willing to help with build-out costs, although this may lead to much higher rental rates. Nearly every fitness equipment company offers attractive equipment leasing arrangements. 

Finally, private equity funds may finance leading regional players. Generally, they expect to cash out of their investment within five to seven years, and to average a compound ROI of at least 20%. 

John McCarthy
Executive Director Emeritus
IHRSA
Weston, MA

Thursday
Mar102016

3 Positive Indicators for the Health Club Industry 

Though there are many similarities between the club industry and other retail, hospitality, health-promotion, and leisure-time businesses, the health and fitness industry is distinctive in many ways—and several favorable factors bode well for the sector’s growth, according to The IHRSA Health Club Business Handbook: The Ultimate Investor and Operator Guide to Gyms, Studios, and Fitness Centers.

Here are just three of the many positive indicators The Health Club Business Handbook (HCBH), sponsored by ABC Financial, identified for the health club industry.

1. Historically, the industry has been relatively resilient during economic downturns. Whereas, in such downturns, most retail and hospitality businesses experience contraction, the health club industry has proven more resilient. To be specific, when the economy has been strong, same-store sales at many mature clubs have increased annually an average of 4% to 6%; when the economy has been weak, same-store sales at the majority of clubs have continued to grow at a rate of 2% to 4%. However, the 2008–2010 recession had a material impact on the club industry, particularly on member attrition levels.

2. The industry generates attractive and above-average “free cash flow.” Free cash flow can be interpreted in a number of ways. Often, 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. Applying this definition, free cash flow for retail businesses falls only in the range of 2% to 5%, or even less. For the health club industry, on the other hand, free cash flow often falls into the 5% to 12% range, with some leading operators exceeding these levels.

3. The industry enjoys “annuity-like” features. In most retail, hospitality, and leisure-time businesses, whenever a purchase is made, the customer pays for the product or service, and then leaves, having no further financial commitment. However, in the health club industry, a member commits to an annuity-like arrangement. The health club member agrees to pay every month, irrespective of variations in season or club usage. Admittedly, a significant percentage of members (35% to 45%) continue to pay only for a short period, ranging from three to 11 months. But many other members (40% to 50%) continue with their regular monthly payments month after month, and year after year. Many clubs have more than 50% of their membership with tenures of three years or longer.

HCBH is organized into 11 sections, each featuring graphs culled from industry research or from the private collection that the author, John McCarthy, IHRSA’s executive director emeritus, has gathered over the course of his career.

“This is the best updated guide the club industry has had since the previous recession, and is a wonderful example of IHRSA making effective use of relevant research findings,” said Rick Caro, president of Management Vision, Inc., a Manhattan-based consultancy. “It’s the ideal resource for a developer, or someone who’s thinking about buying a club, or a current owner who may be considering selling. It can also serve as a tool to help owners evaluate future options, such as new clubs, refinancing, or introducing a minority investor into the business.”

Read the full “A Textbook for the Times” article in the March issue of CBI.

Thursday
Jan282016

New Resource: The IHRSA Health Club Business Handbook 

Today we released our Health Club Business Handbook: The Ultimate Investor and Operator Guide to Gyms, Studios and Fitness Centers, a resource aimed at helping existing and potential club owners, managers, and investors understand the key factors that affect the success of a health club company.

Authored by John McCarthy, retired former executive director of IHRSA, the ABC Financial Services-sponsored Handbook is the long-awaited update to McCarthy’s The Guide to the Health Club Industry for Lenders and Investors.

“The IHRSA Health Club Business Handbook provides club owners with critical information needed to understand the operational considerations and market conditions that can make or break their businesses," said Jay Ablondi, IHRSA’s executive vice president of global products. “It also provides lenders, investors, venture capitalists, and others with the financial performance indicators, consumer demographics data, and industry overview that will help them properly evaluate a club investment."

This publication is organized into 11 sections, each featuring charts and graphics from industry research or from the private collection that the author, a 44-year veteran of the industry, has gathered over the course of his career. Sections include:

  • The Health Club Industry at a Glance - a summary of industry growth, consumer demographics, public companies, and the largest franchises in the U.S.;
  • Facilitating Industry Growth - an exploration of demand and supply drivers, market readiness, and financing options;
  • Evaluating a Loan or Investment Proposal - an examination of factors to consider when developing or investing in a health club, including start-up costs and operating capital, success factors, and return on invested capital;
  • Formula and Measures - an analysis of key performance indicators and recommended guidelines;
  • Industry Prognosis: The Next 10 Years - an in-depth overview of economic, legislative, consumer, and related factors that impact the future of the industry. 

The IHRSA Health Club Business Handbook is available at a cost of $99.95 for association members, or $199.95 for non-members. 

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Monday
Oct272014

McCarthy Honored at Club Industry Show

John McCarthy, one of the original IHRSA founders, was awarded with the Club Industry Lifetime Achievement Award last week at the Club Industry Show in Chicago.

McCarthy was honored for his many decades of commitment and vision in the fitness industry when he is awarded with the Club Industry Lifetime Achievement Award. He is still involved as an advisor to many companies, including Cybex International, North Castle Partners and Healthtrax International.

"John is the perfect recipient for the award," sad Joe Moore, IHRSA president and CEO, said last month. "His dedication to IHRSA and the Industry is legendary, and his leadership of the BASH for Augie's Quest has led to unprecedented research about ALS. This is a well deserved honor."

Thursday
Aug282014

Reflections on IHRSA/Fitness Brasil beginnings during opening remarks

Waldyr Soares, president of Fitness Brasil, opens the 15th IHRSA/Fitness Brail Latin American Conference & Trade Show.The opening remarks at the 15th IHRSA/Fitness Brasil Latin American Conference & Trade Show saw Fitness Brasil President Waldyr Soares reflect on how far the event has come.

He said it started a little more than 15 years ago when he traveled to Boston to meet with IHRSA’s John McCarthy (executive director) and John Kersh (head of International) to forge a partnership. The inaugural show was held in a closed parking lot.

Soares went on to single out the many supporting institutions, including SEBRAE, the Brazilian support of micro and small businesses through empowerment, promotion and development.

He also talked about the future of Fitness Brasil. Two programs on the docket are a 360-hour course for instructors to work with the aging population and Project MOVE (similar to IHRSA’s Let’s Move). Also in the works is CRIANCA ESPERANCA, a 24-hour TV show to raise money for children’s well-being.

Soares finished he introduction by giving bottles of champagne to all of the partners.

Thursday
Jul312014

IHRSA's Augie's Quest efforts gets gold star ... actually, award

Augie, Lynne, Elvis and Las Vegas performers during the 2013 BASH for Augie's Quest.IHRSA’s connection with Augie’s Quest is to both support further research for a cure of ALS, Lou Gehrig’s disease, and fitness pioneer and friend, Augie Nieto. It certainly is not done for any awards or recognition. 

Recently IHRSA was recognized by ASAE – an association that supports and represents associations – with its Power of A Gold Award for its role as facilitator in bringing the fitness industry together to support Augie’s Quest, which funds research and drug development to end ALS.

Read on for more on the ASAE award.

Thursday
Jul102014

Glaeser garners McCarthy Scholarship to attend Institute

Michele Glaeser, general manager at Adventure 212 Fitness in Stevens Point, Wisc., has been awarded the 2014 John McCarthy Merit Scholarship to attend the 2014 IHRSA Institute.

Glaeser's application and references clearly demonstrate her passion for, and absolute commitment to, the health club industry's future, as well as her service, sales, and leadership skills. 

“Thank you, thank you, thank you for selecting me to be this year’s recipient!,” Glaeser said. “I am more than thrilled about this experience and am looking forward to it with graciousness!”

Glaeser will join approximately 80 additional health club professionals who will be attending the Institute, IHRSA’s highly regarded education and training program for club professionals, Aug. 5-8 at the Kenan-Flagler Business School at the University of North Carolina at Chapel Hill.

The IHRSA Institute is where club leaders learn to manage more effectively. The Institute’s three full days of “graduate-level” education is led by a faculty to include industry experts as well as university professors to provide a balanced structured curriculum. With an attendee limit, small class sizes are guaranteed in order to facilitate interaction and lively discussion.

The 2014 Institute Curriculum includes small class lectures, roundtables, group networking activities, and workouts. Core courses include Strategic Planning, Financial Management, Marketing Strategies, Sales Management, Staff Hiring, Training & Retention, Member Experience, Engagement & Retention, and Profit Center Management. New courses include Social Media & Digital Strategies, Personal & Group Training Management, Industry Trends, Research & Benchmarking, Health Promotion, Community Service, and Day-to-Day Legal Issues. Lectures on Leadership and Entrepreneurship will be taught by Kenan-Flagler Business School Professors.

MindBody, NASM, SPRI and Star Trac are exclusive sponsors of the 2014 Institute.

For more information, visit ihrsa.org/institute.

 

Thursday
May152014

Scholarship available for IHRSA Institute

For those who are not aware, IHRSA offers a way to help you get to the IHRSA Institute.

The John McCarthy Merit Scholarship, named for IHRSA's first executive director, includes full registration, program materials and handouts, social and networking events, lodging, and meals, as well as a $500 travel stipend. That is a $2,850 value.

Rick Devereux, IHRSA's former director of Operations and Marketing, originally conceived the scholarship and was responsible for the fundraising that helped established the fund. He wanted to establish this scholarship to honor McCarthy for his passion about the need for the education the Institute provides.

The Institute, back for the first time since 2009, will be Aug. 5-8 at the Rizzo Conference Center on the University of North Carolina campus.

Deadline to submit the materials for the scholarship is June 6. Go to ihrsa.org/awards to download the application and reference questionnaire.