Jul 23, 2012 at 05:24 PM
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Fitness Brand Aims For 100% Growth In Events Biz

With roots throughout the Midwest and a brick and mortar fitness club business generating over $1 billion in annual revenue, some outside of the endurance community might be surprised to learn that Minnesota-based Life Time Fitness is becoming a power player in the events business. Within the last couple of years, the company has gone from sponsoring to owning and operating hundreds of cycling, running and triathlon events throughout the country, a strategy made popular by energy drink giant, Red Bull and while many brands look at events as a cost center to drive revenue to other parts of the business, Lifetime Fitness Founder, Chairman and CEO Bahram Akradi believes that sponsored events can be a standalone contributor to Life Time's bottom line.

The key, Akradi believes, is using events and technology to help create a brand that provides marketers with a whole host of touchpoints with health conscious consumers -- whether they're inside or outside the club.

Last week, Akradi explained the company's strategy when it comes to events:

"The Athletic Event business in combination with the media, which is the sponsorship that comes together, is a profitable business. It's not where we want it to be right now but collectively, it does make money. So I want to make sure we're not losing money on these businesses -- a big portion of the Athletic Event business is [the] funds, money coming from sponsorship not just registration. That money right now shows up largely on our media business. So altogether, that's a positive contribution. How do we break it down? It's hard to really break it down because the real synergy in here is the fact that we have millions of participants and members with highly coveted demographics that advertisers like to be in front of. And if you just sell them the health club customer, that's just one venue. But when you start adding the healthy way of life venue, which is the events, the activities that goes on in the club, out the club, it becomes a really, really attractive place for them to expose their brands to. So [it's an] opportunity for us to continue to grow, substantially faster and that's a percentage on those -- obviously because they're small right now, but substantially faster than the club business. They will be profitable and the profitability should dramatically increase from various additions as we are spending some tremendous amount of money as we build the Greenfield and acquire on building the team and as well as branding of these things. On top of that, the synergy of that and our other 2 businesses, the clubs themselves, the memberships of the club and myHealthCheck, which is a corporate business, because a lot of times, like we did last night in our Torchlight, where we had more than 6,000 people participating, one of our sponsors had more than 300 of their employees, almost 400 of their employees participate as a team building event in the triathlon. So this all -- in that 5K run, all of these things are kind of working together. As we've talked about, they're synergetic and they're connected. So they should all grow."

Akradi went on to say that he expects the Athletic Event business to substantially grow and that 100% growth in the Lifetime division may be achievable within the next few years.


source: SeekingAlpha