UK private health clubs: evolution: Ray Algar's timeline provides an instantly-accessible guide to the emergence of the UK private health club market, illustrating the key changes that have shaped today's marketplace

Leisure Report, May, 2008 by Ray Algar

This is a visual story that describes how the UK private health club industry has flourished from a few standalone operations in the early eighties, into the 2.5bn[pounds sterling], 3,117-club, calorie-crushing phenomenon that we know today.

It illustrates entrepreneurship in action, with key individuals making feisty strategic moves that have shaped the industry that over 4.4 million UK consumers now experience.

Key Challenges

* Managing rising operating costs

* Differentiating from competition

* Managing negative media sentiment

* Managing member attrition

* Growing secondary revenue

* Increasing frequency of member visits

* Harnessing technology to enhance the member experience

1979-82 THE THREE EARLY PIONEERS

(A) David Lloyd,
    Former Davis Cup player opens his first club

(A) Holmes Place
    Launch first club

(A) Cannons
    Health clubs founded

1991  New club openings 70

(A) Fitness Industry
    Association formed

(B) UK
    Enters economic recession

1992 New club openings 59

(A) Fitness First
    Opens its first club in Bournemouth
    with an 'affordable fitness'
    proposition--29  [pounds sterling] monthly
    membership

1994 New club openings 69

(D) Esporta
    Launches with the purchase of
    the Royal County of Berkshire
    Health and Racquets Club

1995 New club openings 83

(D) Whitbread PLC
    Acquire 16 David Lloyd health
    clubs for 200m [pounds sterling]

(A) Health Club Management
    Magazine launches as a stand alone
    publication

1996 New club openings 63

(D) Stakis PLC
    Acquire LivingWell clubs

(A) David Lloyd,
    Former Davis Cup player forms Next Generation

(A) Fitness First
    With six clubs floats on AIM. Shares trade
    at 0.40p [pounds sterling]. 8m [pounds sterling] raised to fund
    expansion

(A) Bannatyne's Health Clubs
    Formed

(A) LA Fitness
    Formed

1997 New club openings 119

(A) Holmes Place
    Lists on LSE (marketcap: 240m [pounds sterling])

(A) Adidas
    Launches Adidas Performance Training
    forging links with clubs across the UK

(A) Paddy Ashdown
    Joins Fitness Industry Association
    as Honorary President

1999

(D) Ladbroke Group
    PLC
    Acquire Livingwell

(D) Living Well
    Acquire Viva! Health
    and Leisure Ltd (5 clubs)

(A) Virgin Active
    Launch

(A) Fitness First
    List on LSE

(A) LA Fitness
    List on LSE

(D) Cannons Group PLC
    Pay 84m [pounds sterling] to acquire the
    privately owned Pinnacle
    club group. This makes
    Cannons the UK and
    Europe's largest quoted
    'pure' fitness operator.

2000 New club openings 151

(A) Top notch Health club
    With six sites floats on AIM

(A) JJB Sports
    moves into health clubs with the creation
    of hybrid stores

(A) Esporta
    With 38 clubs lists on the LSE

2001 New club openings 172

(A) Holmes Place
    Has 230,000 members and 60 private
    health clubs across the UK and overseas

(A) Boots
    Opens a pilot health and well-being club

(A) Fred Turok
    CEO of LA Fitness named Entrepreneur
    of the Year at the Financial Times PLC Awards

(D) Cannons
    Taken private in a 360m [pounds sterling] deal
    Funded by Royal Bank of Scotland

(C) Lady in Leisure
    With 22 clubs enters administration

2002 New club openings 146

(A) The 25m [pounds sterling] Reebok Club
    Opens at Canary Wharf 125 [pounds sterling] monthly fee

(D) Bridgepoint Capital
    Acquire Virgin Active for 110m [pounds sterling]

(B) Office of Fair Trading
    Criticises industry for misleading contract terms

(D) Duke Street Capital
    Acquire Esporta plc in a public-to private
    transaction valued at 230 [pounds sterling] million

(D) Esporta
    Acquire Invicta Leisure Limited to create
    a 60 club chain with 260,000 members

(C) Hunters Leisure PLC
    With four clubs enters administration

2003 New club openings 88

(C) The 25m [pounds sterling] Reebok Club
    Enters administration

(A) Reebok Club
    Under new management

(D) Bridgepoint and Permira funds
    Acquire Holmes Place PLC for enterprise
    value of 210m [pounds sterling]

(D) Cinven
    Private equity acquire Fitness First
    PLC for an enterprise value of 404m [pounds sterling]
    taking the company private

(C) Topnotch
    Health clubs with 9 clubs enters administration

(A) Former Topnotch CEO
    Acquires 8 Topnotch clubs for a bid
    in the region of 3-4m [pounds sterling]

2004  New club openings 113

(A) Next Generation
    Open a 165,000 sq ft club in Hertfordshire
    making it Europe's largest

2005 New club openings 92

(A) PruHealth
    Strikes deal with Cannons and Holmes Place
    to provide discounted gym membership to
    customers taking its private medical insurance

(D) BC Partners
    Acquire Fitness First for an enterprise value of 835m [pounds
    sterling]

(A)(C) LA Fitness
    Is now the only listed health club operator on the LSE

(D) MidOcean Partners
    Acquire LA Fitness with 67 clubs for 140m [pounds sterling]

2006 New club openings 101

(D) Next Generation
    Acquire the two Amida clubs (undisclosed value)

(D) Virgin Active
    Acquire 47 UK Holmes Place clubs with 190,000 members.
    Purchase price estimated at 175m [pounds sterling].

(D) Simon Halabi
    Acquires the 54 Esporta clubs for an estimated
    460m [pounds sterling]

(D) London & Regional Properties
    Acquire the 15 Next Generation clubs for 198m [pounds sterling]

(D) Bannatyne's Health Clubs
    Acquire the 24 standalone Livingwell clubs for 90m [pounds sterling]

(D) Fitness First
    Acquire 10 Fitness Exchange clubs for 13m [pounds sterling]

(A) Private equity
    Now controls circa 25% of private clubs

(A) Deloitte Consulting
    Launch Health Club Benchmark, compiling data on
    1.4m members and 500 health clubs

(A) FitSpace
    Launches the UK's first low-cost health club. Monthly
    membership from 11.66 [pounds sterling]

(D) LA Fitness
    Acquire Crown Sports PLC and 21 Dragons clubs for
    58m [pounds sterling]

2007

(A) Greens Health & Fitness
    With 15 sites, announces 6-club expansion plan

(A) BUPA
    Forms joint venture with David Lloyd Leisure to develop
    medicalised clubs branded as 'Core Exercise Clinics'

(D) London and Regional Properties
    Acquire the 69-club David Lloyd brand from Whitbread for
    925m [pounds sterling]

(A) Virgin Active
    Virgin Active named best brand in the Sunday Times
    Profit Track 100 Awards

(C) Esporta's
    Holding company enters administration

(D) Nuffield Hospitals
    Acquire 52 Cannons clubs for 170m [pounds sterling]

(A) FitSpace
    Grows to seven clubs

(A) Virgin Active
    Ponders a 1 [pounds sterling] billion flotation

Key events

(A) Positive event
(B) Negative event
(C) Company Failure
(D) Acquisition

[ILLUSTRATION OMITTED]

1970s   INCEPTION
1980s   MODERATE GROWTH
1990s   CHAINS BEGIN A CHANGE OF OWNERSHIP FRENETIC GROWTH
2000s    SHAKEOUT CONSOLIDATION OF MAJOR BRANDS

UK adults who have gym membership

[ILLUSTRATION OMITTED]

2005 4.24m
2006 4.24m
2007 4.40m

Representing 9.3% of UK adults

[ILLUSTRATION OMITTED]

Growth drivers

1980's Industry reposition's from body building to fitness.
       Group exercise classes attract women into clubs.

1990's Cardiovascular equipment broadens market
       appeal Clubs offer monthly membership via
       standing order and direct debit
       Media promotes active living
       Clubs become affordable driven by rising
       affluence and interclub competition

2000-7 Health of the nation becomes a governmental
       priority. Living, looking and staying well prevails.