Case | HBS Case Collection | November 2005 (Revised December 2016)

Bally Total Fitness (A): The Rise, 1962–2004

by John R. Wells, Elizabeth A. Raabe and Gabriel Ellsworth

Abstract

From a single, modest club in 1962, Bally Total Fitness had grown to become—in management’s words—the “largest and only nationwide commercial operator of fitness centers” in the United States in 2004. Bally had faced its share of challenges, but the last couple of years had proven particularly difficult. Competition in its markets had intensified, Bally’s stock price had collapsed, the company had restated earnings to the chagrin of shareholders, and the U.S. Securities and Exchange Commission had begun to investigate Bally’s accounting procedures. Under the direction of Paul Toback, CEO since December 2002, Bally had revisited its unique approach to pricing and selling health-club memberships, boosted the accountability of club managers for profitability, launched new efforts to help club members meet weight-loss goals, altered its marketing message, and begun to strengthen its internal control systems. Toback and his team were committed to increasing the number of Bally members and maximizing revenue per member. Would Toback’s efforts restore Bally’s battered stock price, stave off companies that were rumored to want to buy the company, and enable Bally to remain a major player in the industry?

Keywords: Bally Total Fitness; fitness; gyms; health clubs; chain; Securities and Exchange Commission; Paul Toback; weight loss; exercise; contracts; personal training; retention; Accounting; Accounting Audits; Accrual Accounting; Finance; Advertising; Business Growth and Maturation; Business Model; For-Profit Firms; Customers; Customer Satisfaction; Public Equity; Financing and Loans; Revenue; Revenue Recognition; Geographic Scope; Multinational Firms and Management; Health; Nutrition; Business History; Lawsuits and Litigation; Management; Business or Company Management; Goals and Objectives; Growth and Development Strategy; Marketing; Operations; Service Delivery; Service Operations; Public Ownership; Problems and Challenges; Business and Shareholder Relations; Business Strategy; Competition; Corporate Strategy; Expansion; Segmentation; Trends; Cost Management; Profit; Growth and Development; Leadership Style; Five Forces Framework; Private Ownership; Opportunities; Motivation and Incentives; Competitive Strategy; Health Industry; United States; Illinois; Chicago;

Citation:

Wells, John R., Elizabeth A. Raabe, and Gabriel Ellsworth. "Bally Total Fitness (A): The Rise, 1962–2004." Harvard Business School Case 706-450, November 2005. (Revised December 2016.)