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Owner of Omni Hotels to Buy Gold's Gym

The fitness chain that Schwarzenegger made famous is said to draw $160 million.

June 15, 2004|Agibail Goldman | Times Staff Writer

The owner of Omni Hotels is hoping to add some new muscle to Gold's Gym International Inc., the fitness chain made famous by a bodybuilder named Arnold Schwarzenegger.

TRT Holdings Inc., which owns about 40 Omni Hotels in North America, has agreed to buy the 2.5-million-member Gold's chain from Brockway Moran & Partners Inc., a Boca Raton, Fla., investment firm. The purchase, valued at $160 million by one person familiar with the deal, is expected to close in late July.

Gold's, which began as a single gym in Venice and was featured in the 1977 movie "Pumping Iron," now has about 650 company-owned and franchised Gold's Gyms worldwide, an apparel brand, a line of exercise equipment and food and drink supplements.

The plan now is to pump up the company further, TRT said.

"We viewed Gold's, because of the unique quality of its name coupled with the growth we see in the fitness industry generally, as a unique platform to make an investment in the sector," said Terrell Philen, TRT's chief financial officer. "We want to continue to deploy capital and continue to grow the brand and the number of stores."

He declined to provide specifics, such as how much money TRT plans to invest in Gold's growth, how many gyms it hopes to add and over what time period. He did say Gold's would keep both its name and management team, and he said he hoped to expand licensing agreements for things such as nutrition bars and sports drinks.

Gold's employs about 2,100 people at its Venice headquarters and its company-owned gyms. Including franchises, about 30,000 people work for Gold's clubs. Privately held Gold's does not disclose its annual revenue or say whether it is profitable.

Gold's was founded in 1965 by Joe Gold, a bodybuilder who helped put the muscle on Muscle Beach. When Gold sold the gym in 1979, it was to two other bodybuilders and an architect.

In the decades that followed, however, gyms moved well beyond the bodybuilder circuit and into mainstream America. Although obesity rates in the United States have been rising steadily over the last several years, so have the number of clubs aimed at fighting the battle of the bulge.

There are about 23,500 health clubs in the United States, according to the International Health, Racquet & Sportsclub Assn., an industry trade group. About 39.4 million Americans are members of health clubs -- up by about 7 million members since 1998 -- helping to propel the industry to 2003 revenue of $14.1 billion, according to the group's figures.

Still, it is a highly fragmented industry, and no company runs more gyms than Gold's, Philen said.

Bally Total Fitness Holding Corp., a Chicago-based, publicly owned chain with more than 420 clubs and 22,200 employees, lost $646 million last year on revenue of $953.5 million.

Closely held 24 Hour Fitness Worldwide Inc., which owns and operates more than 300 fitness centers and employs 16,000, posted 2003 sales of $1 billion. The company, based in San Ramon, Calif., does not disclose its profit status.

TRT Holdings, based in Irving, Texas, was formed in 1989 by Texas oil explorers Reese Rowling and his son, Robert. The company, which has oil and gas holdings, retail stores in Mexico and commercial and residential real estate properties, has $3 billion in assets, Philen said.

For Brockway, which bought Gold's in 1999 for what one person familiar with the deal said was $60 million, "the timing is just right for us to sell," said Peter C. Brockway, the firm's managing partner.

Brockway added 36 company-owned gyms and about 100 franchised ones.

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Bloomberg News was used in compiling this report.

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