Bally Total Fitness is an
AmericanThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
fitness clubA health club is a place which houses exercise equipment for the purpose of physical exercise.- Main Workout Area :...
chain with four hundred
gymThe word γυμνάσιον was used in Ancient Greece, meaning a locality for both physical and intellectual education of young men...
s in seventy cities, and claims four million customers. At its peak, prior to filing Chapter 11 bankruptcy in 2007, Bally operated nearly 440 facilities located in 29 states,
MexicoThe United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
,
CanadaCanada is a country occupying most of northern North America, extending from the Atlantic Ocean in the east to the Pacific Ocean in the west and northward into the Arctic Ocean...
,
KoreaKorea is a civilization and formerly unified nation currently divided into two states. Located on the Korean Peninsula, it borders China to the northwest, Russia to the northeast, and is separated from Japan to the east by the Korea Strait....
,
ChinaChina is a cultural region, an ancient civilization, and, depending on perspective, a national or multinational entity extending over a large area in East Asia....
and the
CaribbeanThe Caribbean is a region consisting of the Caribbean Sea, its islands , and the surrounding coasts...
under the Bally Total Fitness, Crunch Fitness, Gorilla Sports, Pinnacle Fitness, Bally Sports Clubs, and Sports Clubs of Canada brands.
Bally Total Fitness is an
AmericanThe United States of America is a federal constitutional republic comprising fifty states and a federal district...
fitness clubA health club is a place which houses exercise equipment for the purpose of physical exercise.- Main Workout Area :...
chain with four hundred
gymThe word γυμνάσιον was used in Ancient Greece, meaning a locality for both physical and intellectual education of young men...
s in seventy cities, and claims four million customers. At its peak, prior to filing Chapter 11 bankruptcy in 2007, Bally operated nearly 440 facilities located in 29 states,
MexicoThe United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
,
CanadaCanada is a country occupying most of northern North America, extending from the Atlantic Ocean in the east to the Pacific Ocean in the west and northward into the Arctic Ocean...
,
KoreaKorea is a civilization and formerly unified nation currently divided into two states. Located on the Korean Peninsula, it borders China to the northwest, Russia to the northeast, and is separated from Japan to the east by the Korea Strait....
,
ChinaChina is a cultural region, an ancient civilization, and, depending on perspective, a national or multinational entity extending over a large area in East Asia....
and the
CaribbeanThe Caribbean is a region consisting of the Caribbean Sea, its islands , and the surrounding coasts...
under the Bally Total Fitness, Crunch Fitness, Gorilla Sports, Pinnacle Fitness, Bally Sports Clubs, and Sports Clubs of Canada brands. In response to an increasingly competitive market invaded by niche clubs catering to specific market demographics, Bally has diversified into franchising, with over thirty Bally facilities now operating as franchises. The company's headquarters are located in Chicago, Illinois.
History
The company traces it roots to 1931 Lion Manufacturing which was later named Bally Manufacturing (named for its successful
pinballPinball is a type of arcade game, usually coin-operated, where a player attempts to score points by manipulating one or more metal balls on a playfield inside a glass-covered case called a pinball machine. The primary objective of the game is to score as many points as possible...
product called the Ballyhoo. Its success at building
slot machineA slot machine , fruit machine , or poker machine is a casino gambling machine with three or more reels which spin when a button is pushed...
s led the company to open casinos in Atlantic City and
Las VegasThe Las Vegas Strip is an approximately stretch of Las Vegas Boulevard South in Clark County, Nevada. A small portion of the Strip lies in Las Vegas, but most of it is in the unincorporated areas of Paradise and Winchester...
.
In 1983 it purchased Health and Tennis Corporation of America in 1983 and Lifecycle exercise bike manufacturer. In 1987 was the world's largest owner and operator of fitness centers. It further expanded with the purchase of the American Fitness Centers Nautilus Fitness Centers. Included in the acquired clubs were ones connected to
Vic TannyVictor "Vic" Tanny was a pioneer in the creation of the modern health club.In 1935 he opened his first club in his hometown of Rochester, New York. In 1939 he sold the club and opened a new one in Santa Monica, California...
and
Jack LaLanneJack LaLanne is an American fitness, exercise, nutritional expert, and motivational speaker who has been called "the godfather of fitness". He has published numerous books on fitness and hosted a fitness television show between 1951 and 1985.LaLanne gained recognition for his success as a...
. The various brands were consolidated under the Bally Total Fitness brand in 1995.
In 1996 it was spun from its casino owning parent. In May 1998 it was listed on the New York Stock Exchange trading under the
ticker symbolA stock symbol or ticker symbol is a short abbreviation used to uniquely identify publicly traded shares of a particular stock on a particular stock market. A stock symbol may consist of letters, numbers or a combination of both...
of BFT.
Bankruptcy
Bally filed for bankruptcy in August 2007, with outstanding debts of $761 million. Over the preceding ten years, its stock price had fallen from a high of approximately US$37.00 to less than $0.37 on the
Pink SheetsPink Quote, informally known as the Pink Sheets, is an electronic quotation system operated by Pink OTC Markets that displays quotes from broker-dealers for many over-the-counter securities. These securities tend to be inactively traded stocks, including penny stocks and those with a narrow...
, a plunge of over 99% of its value. It was delisted from the NYSE.
On October 1, 2007, Bally announced its emergence from bankruptcy court protection, 100% owned by a
hedge fundA hedge fund is an investment fund open to a limited range of investors that is permitted by regulators to undertake a wider range of investment and trading activities than other investment funds, and that, in general, pays a performance fee to its investment manager...
,
Harbinger CapitalHarbinger Capital Partners is a private hedge fund based in New York City, New York.-Background:Harbinger was founded by its Senior Managing Director Philip Falcone and Harbert Management Corporation, a Birmingham, Alabama-based investment company that provided much of the original funding. Falcone...
.
On December 3, 2008, Bally again filed for bankruptcy due to problems arising from a global credit crisis. The company indicated that it would explore options including reorganization or possibly even a sale, but that it hoped to emerge from bankruptcy as soon as possible.
Controversy
Bally Total Fitness has been the subject of controversy over their sales and membership cancellation practices, with some customers claiming they were misled into signing long term membership contracts that can last for three years, and subsequently found themselves dealing with
collection agenciesA collection agency is a business that pursues payments on debts owed by individuals or businesses. Most collection agencies operate as agents of creditors and collect debts for a fee or percentage of the total amount owed...
.
In April 1994, Bally paid $120,000 to settle
Federal Trade CommissionThe Federal Trade Commission is an independent agency of the United States government, established in 1914 by the Federal Trade Commission Act...
charges of illegal billing, cancellation, refund, and debt-collection practices. But consumers complain that little has changed over the years. From 1999 to 2004, over six hundred customers complained to the
New YorkNew York is a state in the Mid-Atlantic and Northeastern regions of the United States and is the nation's third most populous. The state is bordered by New Jersey and Pennsylvania to the south, and Connecticut, Massachusetts and Vermont to the east...
Attorney GeneralIn most common law jurisdictions, the attorney general, or attorney-general, is the main legal advisor to the government, and in some jurisdictions he or she may in addition have executive responsibility for law enforcement or responsibility for public prosecutions.-Usage:The term has traditionally...
's office, leading to an investigation and subsequent agreement by Bally Total Fitness to reform their sales tactics in February 2004.
According to
ConsumerAffairs.comConsumerAffairs.com is a consumer advocacy and complaints site that defines itself as an “independent consumer news center”.The site publishes original and reprinted stories on consumer-related topics....
, "We get so many complaints about Bally Total Fitness, it's a workout just to sort through them."
Paul Toback, a former
White HouseThe White House is the official residence and principal workplace of the President of the United States. Located at 1600 Pennsylvania Avenue NW in Washington, D.C., it was built between 1792 and 1800 of white-painted Aquia sandstone in the late Georgian style and has been the residence of every...
aide in the
Clinton administrationThe United States Presidency of Bill Clinton, also known as the Clinton Administration, was the executive branch of the federal government of the United States from January 20,1993 to January 20 ,2001.-First Term :...
who joined Bally as a corporate development officer in 1997, was named Chief Executive Officer (CEO) in late 2002, after predecessor Lee Hillman resigned.
Investigations
Bally has been the subject of at least one federal investigation, in addition to the aforementioned probe into consumer complaints against Bally, conducted by the
New York State Attorney GeneralThe New York State Attorney General is the chief legal officer of the State of New York. The office has been in existence in some form since 1626, under the Dutch colonial government of New York....
, regarding the firm's sales practices. In April 2004, Bally disclosed the U.S. Securities and Exchange Commission (SEC) was investigating its accounting practices. The company eventually restated its
financial statementsFinancial statements are formal records of the financial activities of a business, person, or other entity. In British English, including United Kingdom company law, financial statements are often referred to as accounts, although the term financial statements is also used, particularly by...
for 1997 through 2003.
The SEC has yet to complete its investigation, but an internal Bally probe blamed the company's "culture of aggressive accounting" on Mr. Hillman and former Chief Financial Officer
John DwyerJohn Dwyer may refer to:*John Dwyer *John Dwyer *John M. Dwyer, set decorator*Jack Dwyer, American football player*John Dwyer , baseball player in 1882 Cleveland Blues season...
; both men have repeatedly denied any wrongdoing.
On February 28, 2008, the SEC formally filed financial fraud charges against Bally Total Fitness. Among the charges, the SEC alleges that in 2001, Bally overstated its originally reported stockholder's equity by roughly $1.8 billion (over 340%), and understated its 2003 net loss by $90.8 million (or 845%).
External links