The growth in the number of 24-hour gymnasiums in Adelaide is shaking up the fitness industry with less financially secure operators hitting the wall, an Adelaide insolvency expert has warned.
Mr Nick Cooper, the Adelaide Partner with national solvency and forensic accountancy firm Worrells, said that in recent months he had been appointed liquidator of two well-known gymnasiums that had been forced to close in the face of increasing competition.
Club Metro Pty Ltd at Mawson Lakes and Noarlunga Health Club Pty Ltd, which had traded as Genesis Noarlunga, had both suffered from the impact of national 24-hour gymnasium chains that had opened facilities nearby.
Mr Cooper said Club Metro had unsecured debts of around $210,000, while Noarlunga Health Club owed about $380,000. In both cases, the Australian Tax Office and the landlords were major creditors.
“Gymnasiums require a lot of funds to set up with a typical gym having equipment costing around $700,000,” he said.
“Usually this equipment is leased, so the lease repayments, together with the cost of accommodation, electricity and wages mean gymnasium operators are under constant pressure to retain and grow memberships to ensure they can meet their payment obligations.
“While there does not seem to be any drop in the number of people attending gyms, there has been a significant increase in the number of 24-hour outlets opening across the State and these are attracting customers away from traditional businesses.”
Mr Cooper said that consumers looking to join gymnasiums needed to do their homework to minimise their exposure if the facility suddenly closed.
“One way would be to minimise upfront membership payments and look to pay monthly or weekly rather than pay six months or a year in advance,” he said.
Mr Cooper said members of the Club Metro or Noarlunga Health Club who are owed money can contact Worrells Solvency & Forensic Accountants to be added to the list of unsecured creditors. However it was unlikely there would be any substantial dividend once the liquidation of the companies was completed.
Worrells Solvency & Forensic Accountants
08 8214 0501