How gyms are pumping up the UK economy

03 June 2015 Matt Owen

Around 13% of people in Britain have a gym membership. And as of yesterday, I’m one of them.

I hadn’t been to the gym in a while, due to a combination of recently moving house, and being bone-idle. As usual for a Monday though, it was packed to the rafters, with lines for machines, and free weights cordoned off by guys roughly the size of Fiat 500.

Britain may lag slightly behind Europe in number of gym memberships (the continent averages around 20%) , but those who do go, go a lot. Our newfound interest in getting swole and developing insane abs has driven an explosion in the sports industry in recent years, one that is benefitting the economy (and, as we’ll see, the pockets of large investment firms). From clothing retail to treadmill manufacturers, there is consistent growth.

I thought it would be interesting to delve into the market in more depth to see how much economic muscle it really has.

The usual caveats before we begin. Separating ‘gyms’ from ‘fitness centres (squash clubs for example) can be tricky as they all rely on similar industry codes.

Most gyms will appear under 2003 SIC code 92: Recreational, Cultural And Sporting Activities, or the sub-code 9262: Other Sporting Activities (Essentially odd sports like bowls and Javelin clubs)

Those with a 2007 code will appear under R: 93, and R931, again accounting for sporting activities.

I’ve also added a variety of keywords, including ‘Fitness’ and ‘Gymnasium’ here, in order to filter out any event organisers and party planners who might also crop up on this list. Recreational activities needn’t always be sporting in nature after all, or if they are, they might include betting on a horse every now and then.

Once we’ve done this we’re left with just over 25,000 businesses, a representative sample of gyms, fitness groups, karate clubs, and sailing groups and associated tennis players.

Total size of market

Here they are, neatly mapped:

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Note: More people live in the South East, so this map doesn’t mean they are more likely to go to the gym.

Generating a report on these companies reveals some fascinating statistics.

Employment

Largely speaking these companies do not file reports of their total head count, but at least one company has more than 10,000 staff on payroll. All together, the sector employs between 200-300,000 people.

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Of the businesses that do report these numbers, the vast majority (86.7%) employ less than 200 staff.

A further 9.2% have between 200 and 500 employees, while just 4.06% have more than 500.

It is interesting to note that of companies that filed under older SIC codes, only 1.16% managed more than 500 staff, possibly indicating more recent growth from companies like LA Fitness, catering to the mid-market.

This is particularly interesting when we consider the recent rise of PureGym, now the largest chain of gyms in Britain; with almost 450,000 members. PurGym has stated that it would like to expand to between 200 and 300 locations in the mid-term future, and it seems there is room to support this growth.

Speaking to The Telegraph recently, Puregym’s founder Peter Roberts noted that

“The UK was dominated by the mid-market and top-end chains and there was a real opportunity at the bottom end.”

Interestingly, Puregym typically employs just two full-time staff at each of its locations. An upturn in the number of locations may not immediately show a significant growth in local employment, but there is a trickle-down effect: PureGym makes up its numbers with self-employed personal trainers.

Incidentally, there are around around 6,000 gym locations total in the UK right now (remember that note earlier about other sporting facilities filing under similar codes), and while there has been huge growth in the chain-gym market, many of these are still independents.

Between them, PureGym, Virgin Active, David Lloyd Leisure, Fitness First and The Gym Group have about 800 locations, Indicating that there is still plenty of room for expansion.

Total market value

As with all cross-sector reporting, there’s a couple of billion in wiggle room here, depending on exactly how we filter things, but the market turns over at least £30bn, or about 0.03% of the UK’s total £12.2 Trillion turnover. It’s interesting to note that one business reported a turnover of just £1 last year…

Just 4 companies exceeding 1bn in turnover, which can largely be attributed to the premier league, and bookmakers which will fall under the same industry codes.

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Profit and assets

Total profit paints a very different picture, amounting to ‘just’ £259million.

76 companies made a loss, including a -£3.41billion outlier from GRA Acquisition LTD, who interestingly also reported the largest turnover.

Done Brothers reported the highest gains, posting gross profit of 215,078,000 GBP, an increase of more than 10% up on previous filings. It seems we still like a flutter when times are hard.

However this shortfall is balanced out once we begin to look into assets. Total assets rose to a massive £70.4 billion, while current assets nudge the £27 billion mark. All those treadmills don’t come cheap.

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Much of the mid-and-upper market is also supporting growth in private investment and related financial businesses.

  • Virgin Active sold an 80% stake to South African investment firm Brait this April for £682m, giving a company valuation of £1.3 billion.
  • David Lloyd Leaisure is benefitting from the financial clout of TDR investment, ploughing around £50million into developing the group.
  • Finally, Fitness First now calls Oaktree Capital when it needs some pocket money for its 360 global gyms. A far cry from its beginnings as a single squash club in Bournemouth back in the 1990s.

Overall it seems as though gyms remain a healthy market, although the middle is being squeezed significantly.

Gymbox (Described by Owen jones as targeting “fitness freaks with deep pockets”) have proven it is possible to make headway in the upscale city markets where convenience is a primary driver, but nationwide, low prices and no frills look set to win in the long term.