Amid the pandemic’s impact on gyms, Town Sports International ($CLUB), which operates New York Sports Clubs, Boston Sports Clubs and hundreds of gyms across the U.S., has filed for Chapter 11 bankruptcy.
The 47-year-old company said the restructuring would help "properly respond to the COVID-19 pandemic, with the long-term goal to emerge as a thriving powerhouse in the fitness industry." Following a sharp drop in revenue during the pandemic, the filing is aimed at reducing Town Sports’ debt load and strengthening the company’s capital structure to support its ongoing operations.
By the end of March as states imposed gym shutdowns, Town Sports temporarily closed all of its nearly 200 locations. The company had to lay off much of its 7,000-person workforce and stopped paying rent on some locations.
Since January, the company's LinkedIn headcount has dropped by 7%.
In its June SEC filing, Town Sports warned that it could be forced to file for bankruptcy because it did not have the cash on hand to make payments on its debt load. The company listed liabilities of $500 million to $1 billion in its filing and said “the scope and duration of the interruption to our operations has substantially reduced our cash flow.”
Town Sports has not announced plans to permanently close any of its gyms, which has about 605,000 members. For now, the company plans to continue reopening locations “as well as certain amenities in a ‘phased’ approach” as Town Sports evaluates the best time and locations.
Even as some gyms reopen, the struggle to survive the pandemic continues. In New York, gyms and fitness centers only began reopening on Aug. 24 with indoor capacity limited to 33% and all guests required to wear masks. Many gym-goers have chosen to forgo heading back to the gym and stick to exercising at home.
Before news of New York Sports Clubs' closing, its Facebook 'Talking About' Count soared above its competitors.
The map below shows Town Sports gym locations, as represented by the dots, and percentages of people with COVID-19 symptoms, shown in shaded areas.
Town Sports isn’t the first gym chain to file for Chapter 11 with Gold’s Gym having filed for bankruptcy at the beginning of May and 24 Hour Fitness having filed in June. Both chains said they would close a number of locations.
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