Who Benefits from Exercise?

Gather round for an everyday story of contemporary capitalism. Like the greatest Grimms’ stories, this one covers all the bases of the world it is examining. In this case, our story covers global equity companies, takeovers, possible IPOs , difficulties of getting information and elderly ladies with arthritis.

It begins with a swimming pool. Actually 43 of them. They belonged to LA Fitness , the gym and fitness centre chain.LA Fitness is an American fitness chain which opened up in the UK about 20 years ago. It provided fairly well appointed gyms, with saunas and small pools. Sometimes  cafes came, operated by self employed outsiders. Gradually, though LA Fitness was a hard nosed (in chasing up missed membership fees for instance) company, its clients seem to have developed a relationship with their local gyms, building both social lives and health objectives round them.

This year along came Pure Gym, a ‘ no frills’ chain, founded by one Peter Roberts in 2009, and bought LA Fitness. The sale was accompanied by the usual claptrap from both companies about ‘continuing to innovate with new facilities…. Confident that our facilities and members will benefit from Pure Gym’s investment…”

Pure Gym is actually majority owned by a US private equity company, CCMP Capital which, it says, “specialises in buyout and growth equity investments”. This means it scours the world looking for companies out of which it can make money. Re-structuring is something they are keen on. Its doubtful that they would care much about the arthritic ladies of North London or the young mothers of Brentwood in Essex. Or the furious LA Fitness members in Bedfordshire who refer to “another example of big business coming to town and taking away vital facilities that are important to a town”.

This gym story is a perfect exemplar of the way contemporary capitalism is truly now a vehicle for making money for the people at the very top of companies. First of all the public realm is either starved of money- we’re closing local swimming pools/libraries/sports fields-or rubbished as something that will be better offered by the private sector. Shiny shiny new pools and gyms! Luxurious surroundings!

That works for a bit, sort of. It costs more from the start but there’s no doubt that some private enterprise did improve some services. Its what happens next that is really destructive. Private equity demands its payback.Or it fashions a scheme whereby a company will gobble up another company to prepare for an IPO( Initial Public Offering) where the big money really is. Or it seeks pastures new where the costs are low from the beginning. This last fits the picture of the La Fitness/Pure Gym sale. ( Pure Gym deny an IPO plan).The local residents of Kentish  town, Brentwood, Bedfordshire will find that both gym companies have eaten their exercise and taken the profits elsewhere.

So gyms that people have paid for, like and which are part of the local social, economic and health landscape are turned into engines of profit for people far away. Like Grimms tales , it is now a universal story.

And in a piquant twist, the remover of swimming pools from LA Fitness gyms,Pure Gym founder Peter Roberts, is now to be heard calling for the Government to remove VAT on fitness club memberships , to boost membership and help the fight against obesity. Doctors supporting the various local fights to save the swimming pools will have a chuckle at that one.