Politicians have heard the calls from Mcfit boss Rainer Schaller and Co.: Since Monday fitness studios in Hesse and since Tuesday in individual regions in Schleswig-Holstein have been allowed to open their doors again – in compliance with a strict hygiene concept. Training is only allowed with a mask and showers are closed.
From March 22nd, the fitness facility operators are now hoping for further easing in the other federal states. From this date onwards, indoor non-contact sport should be possible again at the earliest – as long as the incidence figures allow it.
So far, the industry is hoping for outdoor sports: The largest German studio chain Mcfit has launched a protest and again built so-called outdoor gyms in the parking lots of selected locations nationwide and simply pushed the equipment outside. A maximum of five people from two households are allowed to train here in the fresh air and with a mask at the same time. It was only in mid-February that Mcfit set up outdoor gyms in front of the studios at ten locations in Germany, as well as some in Italy and the USA. A few days later, however, the local regulatory authorities ordered all locations to be closed. Last week, Mcfit filed lawsuits against the closings of the outdoor gyms in Berlin and nine other cities. In Bavaria, the company is surprisingly allowed to offer sport in the fresh air again.
The Mcfit boss warns of bankruptcy wave
In the run-up to the Corona summit on March 3, Rainer Schaller, the founder and managing director of the RSG-Group, the parent company of Mcfit, advertised the openings in an open letter to the Chancellor and the Prime Ministers.
The entire fitness industry had to struggle with a drastic decline in the number of members and total sales last and this year, according to the statement that Mcfit published on the company’s Instagram channel last Tuesday afternoon. Schaller operates more than 1,000 fitness studios under the umbrella of the RSG Group, including 200 facilities in Germany, and is considered the market leader worldwide, thanks in part to the takeover of the well-known US fitness chain Golds Gym.
For Schaller it is clear: “too big to fail” no longer applies – it affects both small and large studios. Is he implying liquid difficulties in his own company? At the request of NewsABC.net, the company has not yet been able to provide any specific information on the effects of the lockdown on membership numbers and sales, as the RSG Group is currently still in the evaluation phase. Schaller’s only statement: “For us, the economic damage caused to us by the lockdowns is very great.”
The important new contracts are missing
This arises from the natural loss of members and the lack of new contracts that could not be concluded during the entire period of closings. In the months of January and February, which are so important for the industry, studios usually close the most new contracts due to the typical New Year’s resolutions.
As a rule, three percent new memberships have to be concluded per month in order to maintain the status quo, said the chairman of the German Industry Association for Fitness and Health (DIFG), Ralph Scholz, NewsABC.net, in an earlier interview. Every month in lockdown, the industry costs around eight percent of its total sales of just under 5.5 billion euros annually.
Schaller’s company will not be able to make up for these failures in the foreseeable future, he says himself. The company, like many other studios, continued to withdraw most of its membership fees during the closings. Many consumers complain about a lack of goodwill from gym operators or unauthorized extensions of contracts. In one case that NewsABC.net learned about, a studio gave its member about only three days to pause membership during lockdown or the amount would continue to be withdrawn.
At Mcfit, members can have their contract paused for the period of lockdown-related closings without giving reasons. If you do not use this option, the months of the closures will be credited and added to the regular contract free of charge and without any contractual obligations. “In terms of accounting, this does not generate any sales for us, it is an advance payment for a future service,” says Schaller.
No entitlement to bridging aid when the membership fees are collected
Because many fitness studio operators have continued to collect membership fees, they are usually not entitled to bridging aid from the state, said DIFG chairman Scholz to NewsABC.net. Because unlike closed hairdressing or retail businesses, these studios have continued to make money.
The studios were able to pay their current bills, but not build up any reserves, says Scholz. The studios cannot book the revenues from the membership fees from the lockdown as such, but have to state them in the books as a provision, after all they first have to provide a service to the customer. At the latest in the months in which the studio then has to perform, it would become over-indebted, according to Scholz. “We are therefore mostly not talking about a liquidity problem in the industry, but about the problem of accounting overindebtedness,” said Scholz to NewsABC.net.
So far, Mcfit has received 50,000 euros from the corona aid, the company said at the request of NewsABC.net. Bridging Aid III has applied for the chain, but cannot say at the current time whether it will receive it and in what amount.
Some studio owners stopped collecting membership fees in the second lockdown in order to get the November and December aid amounting to 75 percent of the annual turnover from the previous year. A smaller fitness studio operator from Frankfurt reported to the “Frankfurter Rundschau” that he had no liquidity as a result, but that the state aid had not yet been paid out until January. He was unable to pay his ongoing high rental costs, and some landlords were already threatening to terminate the contract without notice, according to the report.
In an earlier interview with NewsABC.net, Schaller had already warned in November of the bankruptcy of many studio providers, which are disappearing from the market due to liquidity bottlenecks. “The entire fitness industry has its back to the wall,” he says in the open letter.