Glance through the windows of any New York City gym and you’ll see a familiar pandemic-era workout routine: people dressed in fitness attire and masks, spaced a few feet apart while using cardio machines and weights.
The rooms appear much less busy--and not just because of capacity limits. A lot of customers are still too afraid of the virus to come back, or decided it wasn’t worth the cost, according to Dan Gallagher, the CFO of Crunch Holdings, a New York City-based health club chain.
“I think we could say overall we’re down about 35%,” he estimated. “Whether they’re on freeze or cancelled right now. So I’m billing 35% less members today than I did this time last year.”
The fitness industry has been devastated by the pandemic. Last year, as many as 6,800 health clubs closed permanently in the U.S., according to a 2021 report from International Health, Racquet & Sportsclub Association. That’s a loss of $20.4 billion in revenue and 1.4 million jobs, it said.
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But while the restaurant industry got more than $28 billion in the new federal stimulus package, those in the fitness industry believe there isn’t enough aid to help gyms that lost members and revenue when they were forced to close and reduce capacity during the pandemic.
The fitness industry is now seeking 30 billion dollars through what’s called the Gyms Act, with grants worth up to $25 million. Helen Durkin, an executive vice president with the International Health, Racket and Sports Club Association, said that “would cover payroll, rent or mortgage payments” along with utilities and interest on debt.
Durkin said she thinks gyms were left out of pandemic relief because they never had as strong a lobbying presence in Washington as restaurants. Disclosure records show her association spent more than $200,000 on lobbying last year, more than in prior years. But it was still left out of the latest stimulus. It’s now doing more outreach to members of Congress and the public.
The Gyms Act has bipartisan support from more than 60 members of Congress. But Diane Hart, president and executive director of the National Association for Health and Fitness, who also supports the act, said that might be a tough sell in D.C.
“My concern is they've already spent so much money with this last covid stimulus bill, which did not receive bipartisan support,” she noted. “Another $30 billion for this would be a difficult challenge.”
Hart runs her own fitness center in Albany and has spent the past couple of years lobbying for the PHIT Act. This would let people pay for memberships and exercise equipment through pre-tax flexible spending accounts.
That could help independent gyms, studios and franchises in addition to chains. Assaf Gal owns three Crunch franchises in the Norwood section of the Bronx, Rochdale, Queens and Flatbush, Brooklyn that did qualify for payroll protection from the first stimulus. He said he used the money to keep some employees, but he fell behind on rent at two locations.
“We were completely incapable of paying bills in a timely manner that we have become accustomed to, all of our revenue completely evaporated for six months,” he explained.
He also said he was surprised that liquor stores were considered essential services, and able to remain open throughout the pandemic, while health clubs were closed. “Being fit and being ready to take on life with a high immunity and being well is something that’s extremely important,” he said.
Gallagher, of Crunch, said the Payroll Protection Program in the first stimulus package passed by Congress, known as the CARES Act, had limits based on the number of employees, and gyms rely heavily on part-time trainers and instructors. “If you have over 500, you're not eligible for most of the programs,” he said. “And that's unfortunately Crunch.”
Meanwhile, hotel and restaurant chains won exceptions to the PPP limit on 500 employees.
The gym industry hasn’t always come across as sympathetic during the pandemic. Town Sports International, which owned New York Sports Club and Lucille Roberts, was forced to settle a lawsuit brought by State Attorney General Letitia James for billing customers while clubs were shut. Town Sports International and other chains, including Gold’s, filed for bankruptcy and now have new owners. And some gyms were fined for ignoring pandemic-related hygiene rules.
Many big chains, including Equinox and Crunch, are owned by even bigger companies. Crunch was bought in 2019 by a big investment firm. Gallagher said that certainly helped them weather the storm. But he said that doesn’t mean chains aren’t hurting.
“We have leases and we have landlords that work with us,” he explained. “But across the industry, there's no recipe for landlords to say they're going to cooperate with you.”
New York didn’t allow gyms and fitness centers to reopen again until September, at 33% of their normal capacity. Indoor group fitness classes were still not allowed, but on Wednesday Governor Andrew Cuomo announced they can resume on March 22nd at reduced capacity.
Gym owners believe there will be a strong market for their services once restrictions are lifted and their former members can get back into working out.
Anthony Battaglia said not being able to go to a gym between March and September took “a severe mental toll” on him because he normally works out almost every day. The 27-year-old accountant said he got by exercising at home with dumbbells and elastic bands. He now goes to Crunch Fitness in Fort Greene, Brooklyn, and said felt safe because masks are required, equipment is wiped down frequently, and there are temperature checks plus contact-tracing and social distancing rules.
Kezia McShine, who joined the same club last fall, agreed and said there was another incentive.
“The quarantine 15 thing is happening,” she laughed, referring to the weight gain people have been complaining about since the pandemic forced them to limit so many activities. She predicted more customers would come soon to work off the weight.
“I really think people are going to be like, “Well.. Gotta do something to fix this now!”