The U.S. Health Club Industry in 2004

In 2004, the $16.8 billion U.S. health club industry continued its strong record of growth. There were almost 27,000 health clubs in the United States, up from 6,700 two decades earlier, and these clubs claimed 41 million members, over 14% of the U.S. population. Nearly 67 million people used these clubs in 2004. As the industry grew, many large chains began to emerge, opening new outlets and buying up smaller chains and independents. Most industry observers believed the growth and consolidation would continue, providing many opportunities for investors. However, few health club chains were publicly listed, and the leading listed company, Bally Total Fitness, was under U.S. Securities and Exchange Commission investigation for accounting irregularities. Yet this investigation did little to dampen enthusiasm for the new personal health phenomenon, and rumors abounded of private equity deals in the offing. The key question for investors seemed to be how best to take advantage of the opportunity.