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L.A. Fitness Prepares to Pump Up

April 01, 1998|DEBORA VRANA

Buoyed by a $100-million financial commitment, L.A. Fitness International, one of the nation's largest privately owned health club chains, will begin a major Southern California expansion, the company said.

Newport Beach-based L.A. Fitness, with 1,600 employees and 36 clubs in California, Arizona and Florida, plans to build 20 new clubs in Southern California within the next two years, said Paul Norris, a partner with L.A. Fitness.

Peter Seidler, managing partner of Seidler Haas Co., a Los Angeles-based firm that invests in growing mid-sized companies, is arranging the expansion financing for L.A. Fitness through its private equity group.

Seidler's father, Roland Seidler, founded Seidler Cos., a Los Angeles-based investment bank. Roland Seidler's wife is the sister of former Dodger owner Peter O'Malley.

Recently, Seidler Haas purchased an 80% stake worth about $6 million in Benchmark Industries Inc., a promotional products company based in Riverside. Seidler Haas serves as a financial advisor in obtaining capital for L.A. Fitness.

"We just love the company; the more we can be involved, the better for us," said Peter Seidler, who is on the board of directors of L.A. Fitness. His brother Robert Seidler is also on the company's board, but the two have one vote, Norris said.

"It's a great concept. We think this company has a similar opportunity as Starbucks. There's no reason it can't be national," Peter Seidler said.

The new L.A. Fitness sports clubs, which will cost $6 million each to build, will feature more amenities than the company's existing clubs, including full-court basketball, lap pools, racquetball, saunas and steam rooms.

The new clubs will be modeled after a modern, 40,000-square-foot-club L.A. Fitness recently built in Chino Hills. Besides the clubs it currently has, the company has three more now under construction.

In the next five years, L.A. Fitness expects to own and operate as many as 100 sports clubs, Norris said.

There are roughly 13,800 commercial health clubs operating in the country, representing a$9-billion industry, according to the International Health, Racquet & Sportsclub Assn., a trade group in Boston. The number of clubs has more than doubled since 1982, the group said.

Despite that growth, there is still a large, untapped market of people who do not belong to a gym, despite the fact that many Southern Californians view a gym membership as a necessity, Norris said.

"Going to a fitness club today is like going to the dry cleaners or going to the market," Norris said.

L.A. Fitness was founded in Covina in 1984 by a group of partners, including Norris, with one club. The company has grown in part by acquiring 21 clubs, mostly mom-and-pop operations that operated just one gym.

Known for a low profile within its own industry, L.A. Fitness is privately held and does not release its revenue figures or participate in surveys tracking health clubs or industry growth.

Staff writer Debora Vrana compiled this report. She can be reached at debora.vrana@latimes.com

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