THE WEEKLY HOWL IS IN MERGERS & ACQUSITIONS

Going High: It’s no secret that the middle of the gym market has been getting squeezed on one end by low cost operators like Planet Fitness and on the other end by high-end operators like SoulCycle and CrossFit. The company that has probably been the hardest hit by this is Town Sports. The operator of the New York/Boston/Philadelphia/Washington Sports Club gyms has watched its financials and stock price plummet over the last couple of years. Town Sports tried to morph into a low cost operator with the BFX brand but discovered that there is a lot more to it than just lowering your prices. Now TS is trying to shift to the high-end by acquiring TMPL, the gym chain founded by David Barton.

The flagship Manhattan location will continue to operate under the TMPL brand and will remain committed to excellence and unparalleled member services under the TSI umbrella. Since taking the role of CEO of TSI in 2016, Patrick Walsh has transformed its range of offerings within the portfolio utilizing acquisitions and overhauls to enhance and further the portfolio as well as the trajectory of the company.  

"David Barton is an iconic name in the fitness industry and acquiring TMPL was an obvious decision. It fits into our continued growth strategy and gives TSI a new foothold in the luxury market," says Walsh. "David is a visionary, and we're excited to see what the future holds working together."

TMPL fuses innovation and luxury for an intelligent approach to fitness that is effective and addictive. TMPL's metabolic analysis delivers each member individualized exercise and nutrition programming to condition each person's metabolism to more efficiently alter body composition. Additional TMPL amenities include a 25-meter saltwater pool with dedicated aqua classes, 20 tons of free weights, digitally programmed equipment, virtual reality cycle studio with immersive 30-foot video wall, steam room and sauna. 

              TMPL is definitely in the luxury gym segment, competing with Equinox. That is a good place to be right now. And it appears that Town Sports has converted its BFX locations into boutique competitors. This is undoubtedly the right strategy for Town Sports even though it appears that they came to it through the process of elimination. I don’t think that it’s wise for mid-market gyms to attempt to get into the low cost game. It’s much harder than it appears and much different than what those companies are used to doing. This is the right path for Town Sports.

Just a fad: Planet Fitness is on top of the world. It’s one of the few publicly traded fitness companies and the stock price is going up. But does that mean that the CEO doesn’t have the hottest of takes about boutique fitness? Of course not! From The Street:

"The studio space grew extremely quickly, maybe too quickly," Rondeau, who joined Planet Fitness in 1993, tells TheStreet. "One thing I look at with studios is that most of those concepts are very faddy -- the problem with those studios is if you are a spinning studio, you are always going to be a spinning studio, you aren't going to turn that into a treadmill studio tomorrow, it is what it is."

Rondeau is quick to praise OrangeTheory Fitness. Its studios incorporate different exercises and the space could be tailored to go after new training trends.

              Cycling classes aren’t a fad. They have been popular for years. There are a lot of stupid ideas floating around the fitness industry and there are a lot of fads. But that doesn’t mean that everything is a fad. Cycling and yoga are not fads. There may be too many boutiques right now but that is a function of low barriers to entry and too many people rushing into the space. Why bring it up?

In fact, Rondeau thinks Planet Fitness is benefiting from the rise of "faddy" gym studios. 

"Where we benefit is that those studios you mostly need an appointment, and if there isn't space available you aren't working out that day," Rondeau says. "So if you are late at work you need a secondary gym option, so why not buy a $10 membership at Planet Fitness so you can still work out."

              That makes sense but I don’t see a lot of overlap between the average Planet Fitness member and the average boutique fitness customer. Don’t the Planet Fitness commercials make fun of the kind of person that goes to SoulCycle?

Moral obligation: Eating disorders are a serious problem. They affect millions of people and pose serious health risks to its sufferers. Eating disorders are often accompanied by exercise addiction. Does this mean that gyms are obligated to identify eating disorders in their members and offer assistance? From BuzzFeed News:

Between 40% and 80% of anorexia nervosa patients are prone to excessive exercise in their efforts to avoid putting on weight, according to the International Journal of Eating Disorders.

Yet research by BuzzFeed News has found that some of the UK's largest gyms have no specific policies in place when it comes to members who have the condition, including PureGym, DW Fitness First, Virgin Active, and Better.

Top eating disorder charities told BuzzFeed News that gyms have a “moral responsibility” to bring about change, and have proposed a range of measures that they say should be put in place to help people get the support they need — even if that means preventing them from exercising altogether.

“Gyms need to recognise that over-exercise is a part of the illness and take steps to safeguard members,” said Jane Smith, chief executive officer of awareness organisation Anorexia and Bulimia Care (ABC).

              It’s an interesting article but they never differentiate between different types of gyms. In a boutique gym, you are paying for personal attention and it’s reasonable to expect that employees should observe members’ well-being. But in a big box gym, you’re not paying for personal attention. That’s why big boxes are so much cheaper. There are even gyms like Anytime Fitness where members use a keypad to let themselves in.

The closest parallel that I can think of is with alcohol. Bars have a responsibility to not over-serve customers. That makes sense because you are paying a premium to have someone serve you a drink. But what about a super-market where an alcoholic goes to purchase beer? Do they have a responsibility to not sell alcohol to someone with a drinking problem? Not that alcoholism isn’t a serious problem but super-markets are not designed to provide a lot of personal attention to its customers. Big box gyms are also not designed that way. I fully support training all employees to identify eating disorders but I still don’t think that there should be an expectation that big box gyms should save its members from themselves.

Wise in defeat: Dick Costolo, the former CEO of Twitter, announced that his latest startup is closing up shop. It was a fitness app that tried to use accountability between groups of friends to help people achieve their fitness goals. People were signing up but it wasn’t working as Costolo had hoped. From Business Insider:

They were supposed to use the app to check in with their friends, notice when they missed workouts, offer support to get back on the bandwagon, make plans to meet up and so on. 

That sounds like a great idea, but it turns out, people find it hard to offer this kind of support, even to friends who have agreed to be workout buddies. 

To make matters worse, the app triggered a psychological phenom known as the "abstinence violation effect" (AVE).

That's when people hide from their support group when when they fail to meet the group's expectations, instead of turning to the group for help. 

Chorus tried all sorts of things to overcome AVE: having trainers on the platform that could answer questions, allowing people to do one-day challenges, encouraging chatting, and encouraging posting a weekly plan. But people wallowing in the depths of AVE would turn off the notifications. 

            This is disappointing and not because I thought that Chorus sounded like a great idea. I just like the idea of consumer tech people like Costolo turning their attention to fitness. These guys are experts at interweaving psychology into their products. Don’t believe me? Take a look around and see everyone glued to their smartphones. That’s not an accident. I like to see the fitness industry develop that skill set. We’ll see what Costolo does next but I suspect that it won’t related to fitness.

Fitness trackers: We’re still at the point where it doesn’t seem like fitness trackers have been “solved”. So we’re seeing companies put out wristbands and smartwatches and rings and smart clothing and now…glasses. Sure, why not? From Business Insider:

I've been waiting for the perfect fitness tracker. I'm into the concept, but I don't like wearing a watch or wristband all day every day. 

Ideally, a fitness tracker wouldn't get in my way while I type, and would be something I wouldn't mind wearing on a daily basis. It wouldn't feel like a chore to wear, and I wouldn't have issues remembering to wear it in the first place. 

So I was intrigued when VSP Global, a network of eye-care companies, came out with a fitness tracker in the form of prescription glasses. The Level smart glasses are starting to roll out in select areas, and — since eyewear is having a bit of a moment in terms of style and affordability — they couldn't have come at a better time.

              Is this meant for people who don’t like to work-out? Because otherwise why would you want your eye glasses to be your fitness tracker? I could see this if all you’re doing is counting your steps but if you’re doing any strenuous then this seems horribly inconvenient. This doesn’t feel well thought out. It feels like VSP Global saw a lot of buzz around fitness trackers and wanted to throw something against the wall to see if it would stick.

National Security: The U.S. military is the most powerful fighting force that the world has ever known. But there are cracks in the foundation of that machine: the DOD is finding it harder and harder to find qualified recruits. One major cause is that it’s getting tough to find kids who can meet the physical standards of military service. From Military.com:

"The U.S. military is already having a hard time attracting enough qualified volunteers. Of the four services, the Army has the greatest annual need. The Army anticipates problems with meeting its 2018 goal to enlist 80,000 qualified volunteers, even with increased bonuses and incentives," according to the report.

Frost, the commander of the Center for Initial Military Training, has called the inability to man the military "the next existential threat we have."

Frost said the Army introduced the Occupational Physical Assessment Test, or OPAT, in part, to encourage recruits to begin physically training for the Army before they report to basic training. The test was introduced early last year for new Army recruits and soldiers changing military occupational specialties.

It measures a recruit's physical aptitude through four events -- a standing long jump, seated power throw, deadlift and interval run -- in much the same way that the Armed Services Vocational Aptitude Battery, or ASVAB, measures mental aptitude.

Before the OPAT, the Army did not have a true physical entrance requirement, Frost said. "Quite frankly, it was the strength that it took you to open the door to the recruiting center."

It's too early to know for sure, but Frost said there is some evidence that the test is having an impact by ensuring recruits are physically prepared for the rigors of the Army jobs they want. Since the test was introduced last year, the Army lost 1,400 fewer soldiers to attrition during basic training than past averages.

McGurk said the OPAT also could have a deeper impact, helping to change a mindset among recruits.

In the past, someone might have joined the Army assuming that 10 weeks of basic training and anywhere from four to 26 weeks of Advanced Individual Training would help get him into the shape needed to serve, he said. But the OPAT encourages recruits to get into shape before basic training in order to be successful in their training.

              The military used to believe that it could take an out of shape kid and whip them into shape at boot camp. But they’ve been finding that when they expose these kids to exercise, they just get injured. So it makes sense that the Army would start to focus on preparing kids for boot camp. This is a scary development though. Our national security will always depend on having people who are fit enough to fight. Another development that I hadn’t considered was how obesity patterns are affecting the recruitment process:

The fitness of recruits is even more concerning in the South, which has traditionally been where the Army is most likely to find its force.

A recent study led by The Citadel in South Carolina in collaboration with the U.S. Army Public Health Center and the American Heart Association found that recruits from 10 Southern states -- Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, Tennessee and Texas -- are "significantly less fit, and consequently are more likely to encounter training related injuries than recruits from other U.S. states."

Those 10 states have accounted for more than 37 percent of the Army's new recruits in recent years, according to data from U.S. Army Recruiting Command.

The Citadel study found that recruits from those states are 22 percent to 28 percent more likely to be injured, with each recruit lost to injury estimated to cost the Defense Department approximately $31,000.

              It’s much easier to get someone in shape if they’ve ever been active before. It is very difficult to start from scratch with someone. There are parts of this country that have a culture of inactivity and unhealthy eating. It is tough to unlearn all of that. I’m glad to see the DOD come up with some solutions but I am scared that it won’t be enough.

TidBits:

-NBA star Draymond Green is becoming a Blink Fitness franchisee

-Golfers are finally starting to see the value in strength & conditioning

-Smartwatch sales are up and fitness tracker sales are down

-Fitness trackers are missing a key measurement of exertion

-The Killmonger work-out