The encyclopedia · Finance & Accounting · Financial decision · 1973–2020
Town Sports ran nearly 200 gyms — the pandemic bankrupted it in six months
Town Sports International, owner of New York and Boston Sports Clubs, filed Chapter 11 on 14 September 2020 with up to $1B of debt, gyms shut by the pandemic.
Town Sports International · New York Sports Clubs · 2020-09
What happened
Town Sports International grew over nearly five decades into one of the biggest gym operators on the US East Coast: almost 200 clubs and some 605,000 members under the New York Sports Clubs, Boston Sports Clubs and Lucille Roberts brands.
The strain showed before the virus. By 2020 the company was warning that bankruptcy was imminent, negotiating refinancing as debt matured and liquidity dried up. Then the pandemic shut the clubs for months: cash flow collapsed, much of the 7,000-person workforce was laid off, and the company stopped paying rent to preserve cash.
On 14 September 2020 Town Sports filed for Chapter 11, listing $500 million to $1 billion of liabilities. It said no permanent closures were planned at the filing — but most clubs were still shut, and the chain that defined the New York gym went into restructuring in the worst year the industry had known.
Why it happened
- A leveraged balance sheet with maturing debt left no cushion even before revenue went to zero.
- The pandemic shut every club at once: memberships froze while the costs of nearly 200 empty gyms stayed.
- Gyms were among the last businesses allowed to reopen; each closed month deepened the hole.
The lesson
Town Sports carried up to $1B of debt into a pandemic that closed all ~200 of its gyms at once — leverage that survives an ordinary downturn cannot survive zero revenue.
Aftermath
The filing was built around a sale of the business; the clubs continued under new ownership after restructuring.
Sources
- CNBC, 14 September 2020 — Covid-19: New York Sports Club owner Town Sports files for bankruptcy (Chapter 11 filed Monday 14 September 2020; brands New York Sports Club and Boston Sports Club; nearly 200 locations; liabilities listed between $500M and $1B with significant debt due fall 2020; drying liquidity and imminent debt maturities; company had warned a filing was imminent while negotiating refinancing)
- CNN Business, 14 September 2020 — New York Sports Club owner files for bankruptcy (company ~47 years old; brands New York Sports Club, Boston Sports Club and Lucille Roberts; nearly 200 gyms and ~605,000 members on the East Coast; filed to 'substantially' reduce debt after pandemic-related revenue collapse; stopped paying rent to preserve cash; laid off much of its 7,000-person workforce; no permanent closures planned at filing though a majority of locations stayed temporarily closed)
spotted an error? The club wants to know.
More like this
24 Hour Fitness carried $1.3B of debt against under $1M of cash
Thai Union put $575M into Red Lobster, then wrote off $530M and walked away
TGI Fridays went from $2B in revenue to Chapter 11 in sixteen years
Somewhere, someone solved the problem this company failed at. 2nd Opinion →
Comments · 0
Sign in to join the comments.