The fitness industry is relatively young, but very competitive. According to the International Health, Racquet & Sportsclub Association, the health and fitness business is a $30 billion industry that’s seeing big changes on the horizon.
With a yearly growth of 4%, the trend in spending for adults between 18 and 65 is around $155 per month. Moreover, rising obesity rates signify the need for a revolutionary approach to how this industry caters to its clients.
This represents a grand opportunity for a wholesome, family-centered fitness facility. It can help people get healthier and happier by providing customized services to the whole family, not just individuals.
HEALTHY COMPETITION: LIFE TIME FITNESS
Ramsey, Minnesota will be Flagship Fitness’s first location. Minnesota is also where the main offices of Life Time Fitness are located. This company has over 18 locations in the state.
In 1991, Life Time Fitness opened its first location in the suburb of Brooklyn Park, Minnesota. With approximately 20,000 square feet of space, this location catered to 28,000 people, mostly within a modest income bracket. They accumulated over 3,000 subscriptions with an annual revenue of $1,100,000.
Two years later, Life Time Fitness started expanding to their second location in the suburb of Eagan, Minnesota and required more equity capital. So they started looking for investors to raise $3 million in equity (price per preferred shares is unknown).
They were successful in raising the capital and started construction of their second, larger, 64,000 square foot location. They served a population of 35,000 with a total of 6,000 subscriptions, which resulted in an annual revenue of over $6,120,000.
Life Time Fitness’s fourth location covered 57,000 square feet and was built in the city of Champlin, Minnesota. Champlin’s population of 28,000 yielded 5,500 subscriptions and an annual revenue of over $5,280,000.
Life Time Fitness also opened a 100,000 square foot location in the suburb of Chanhassen, Minnesota. The population of 30,000 was comprised of mostly higher-income households. Membership subscriptions exceeded 8,000 and the annual revenue boomed at $10,100,000.
In a few years, they managed to open 18 locations and all were immensely successful. In 2005, the company went public and their shares rose from $16 to $60 per share. All initial investors sold their shares.
After going public, Life Time Fitness managed to secure large amounts of financing. They built several other locations at a cost of $30 million per location across other states. They recently sold to private equity for $4 billion.
FLAGSHIP FITNESS AIMS TO GO FURTHER
Following in the footsteps of Life Time Fitness, but with a firm goal to surpass all revenue projections and expectations, Flagship Fitness is securing funding for property acquisition and facility construction.
On top of that, we have received tremendous support from the city of Ramsey, Minnesota. The city has provided Flagship Fitness with a $2.9 million subsidy in the form of 8 acres of land, elimination of construction permit fees and cash which will go towards the construction of the facility.
The revenue projection for Flagship Fitness is $50 million by 2027. But with high interest in entering “B” type markets that have a high potential of quickly becoming “A” type markets, this projection falls short of what the actual numbers may look like.
Our management has been intensely involved in the development of this family-centered facility, starting with site selection and covering all operational aspects. Our staff possesses extensive industry knowledge, practical expertise, and ingenious attitudes. This will help establish Flagship Fitness as a major player in the health and fitness industry.