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Banks are being very positive when lending to the budget sector, according to the low-cost operator Fitness4less


dave wright fia • independent operator representative


“B


anks have fallen out of ‘love’ with traditional health clubs and lost


interest in funding them. Independent health clubs have been particularly hard hit by the cutbacks in lending resulting from the banking crisis: their revenues are generally not that big, and the banks have focused their limited lending on businesses with higher turnovers.


As an illustration of the banks’ thinking, in December 2008


NatWest ran a TV advert about NatWest MoneySense, in which they were advising a customer to “cancel their gym membership and run outside”. The industry complained and it was removed, but this just goes to show the banks’ belief that health club membership is a luxury rather than a necessity. As they don’t believe in the benefits, they are not keen to fund it. The only exception is the low-cost clubs, as they do seem to be keen to encourage lending based on that model. Banks don’t understand equipment, so don’t value its


residual value. Equipment should be used as collateral: without equipment, there is no business. However, despite the banks’ view, the health club industry has been through three recessions, yet memberships are still increasing.


” november/december 2011 © cybertrek 2011


steve bradley fitness4less/topnotch • operations manager


traditional health and fitness sector – clubs that remain mid-market – particularly as there is still a question mark over the extent to which the budget clubs will impact on them. However, banks are being very positive in lending to the budget


“T


sector: the business model works well and banks are looking to get involved. If mid-market clubs are already considering moving towards the budget end, then the banks might give them a further push in this direction. The banks have become more stringent, but I don’t think


they have changed their policies towards the health and fitness sector. Even though health club membership is considered a discretionary spend, we are finding with our exit surveys that more and more people are considering it a necessity – they’re only leaving if they’re moving house or job, rather than for financial reasons. Our industry needs to be relaying these facts and shouting about our successes: the health and fitness sector is a safe investment, is here to stay, generates lots of cash and turns over several billion pounds a year.


” Read Health Club Management online healthclubmanagement.co.uk/digital 29


he banks are showing some trepidation around the


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