Parents New trend in gym ownership? (The Business Side Of Gymnastics / Powers Gymnastics)

[PippenMom]

Has anyone had experience with Powers Gymnastics? I am curious to hear about it and if it was positive or negative.

It sounds like Jill Powers owns this company and is buying up quite a few gyms in Arizona, Texas, and North Carolina. She appears to be shutting down quite a few of the compulsory and optional programs after purchasing the gyms because those programs are not profitable. The gymnasts are then left having to find another gym, sometimes increasing their commute by an hour, or more.

Powers Gymnastics Secures $16.8 Million Series A Led By Relevance Ventures to Scale its Multi-Vertical Approach

/PRNewswire/ -- Powers Gymnastics ("Powers"), the youth sports, facilities, equipment and gymnastics program provider, announced today $16.8 million in Series...

www.prnewswire.com

EDIT: Image added by ChalkBucket

 

[ORgymmom]

I know basically nothing about it, dug around and it is interesting and scary if you care about competitive gymnastics or even kids’ recreational sports. Look at Steve Butcher’s LinkedIn profile to start. FIG? Ozone? And Varsity Spirit? The founders are ticking all the right boxes and a few people at the end of their gymnastics careers were probably offered nice salaries in return for having the right names and connections to attract even more investors. I can’t decide if Butcher’s experience at Varsity Spirit or FIG is more dangerous for the future of financially secure independent gyms. Varsity Spirit has spent its entire history building a ruthless monopoly in cheer and dance, and FIG is only marginally better than the IOC.

Read this for fun later:

Varsity Settles Single Cheerleading Gym Suit in Antitrust Triad

Varsity Brands, the Bain Capital-owned cheerleading company, has agreed to settle one of the three federal antitrust lawsuits that have been filed against it. On Tuesday, lawyers representing a gro…

www.sportico.com

Bringing in outside business expertise would benefit many gym’s operations. Having outside investors holds owners and coaches accountable and adds transparency and order. However, you can’t run a business by the rules of venture capitalism without someone winning, and I don’t think children are going to be the ones on the podium.

 

[gym_dad32608]

Meh, it sounds like another Flip Factory type franchisey concept. The only difference is having some type of gymnastics program involved. Many gyms I know even in my small area have tried to add on some type of ninja warrior/parkour course to get more revenue dollars in the door. From what I can read, and its hard sorting through the PR BS, they are just trying to make a kids activity center with a gymnastics theme. Its all about increasing the revenue stream by having more kids sign up for classes. I can see them shutting down optional programs since they are low enrollment + high hours = not profitable, but compulsory programs bring in $$.

Owning 16 or so gyms may sound like a lot and in a small community it certainly can impact competitive gymnastics availability, but that is a very very small number in the grand total of gyms out there. This money is from a venture capital firm, they are going to want their return within 2-3 years. Reading an article in sports business journal the firm is hoping that in a couple of years they will be able to sell it to a corporation like Planet Fitness. Color me skeptical that this will get much traction. The facility costs alone are a huge barrier. And the founders admitted the only reason they bought gyms was because of COVID and the number of gyms for the cheap. But going forward I think most of the distressed facilities are probably out or bought. The program might be something to package and sell though.

 

[Aussie_coach]

In many ways it sounds very positive. The more recreational gymnastics programs there are available, the better.

Gymnastics is one of the best things a child can do. It is the foundation of all sports, and kids who do gymnastics, when they are young, can take you almost any sport later and do well. The types of movements in gymnastics also benefit everyone so much cognitively.

Competitive gymnastics is an exciting icing of this sport, but it can be quite exclusive. As many facilities as possible that offer recreational gymnastics to as many people as possible (kids and adults, the Us needs a lot more adult gymnastics) will be beneficial to everyone.

It won’t destroy competitive gymnastics in the area, in fact it will enhance it. More recreational kids, means more kids doing gymnastics. They then tell their friends, and word of mouth increases it further. When a new gymnastics club opens, the result isn’t usually that it takes kids away from other clubs, the result is that more kids do gymnastics.

With lots of kids doing recreational gymnastics, the competitive gyms will have an Avenue for more recruitment too. There will be kids in those gyms who take up the Rec classes and decide from that, to take their gymnastics to the next level, and competitive clubs will benefit.

Of course they are money minded, businesses need to be money minded. But they are making money by getting lots and lots and lots of kids involved in gymnastics to build their strength, agility and confidence. This is Not a bad thing.

 

[gymgal]

I haven't heard of or seen any changes in our area. Are the gyms still under their original names or switched to Power Gymnastics?

 

[ORgymmom]

As someone in an area with a lot of gym closures and JO/DP program eliminations, it’s hard for me to be optimistic about it being a good opportunity for the remaining competitive programs. Existing gyms only have so much capacity to expand, and are usually limited by space constraints.

What we saw happen in our area was that a few athletes won the game of musical chairs and found new gyms when their programs closed, either because they were the very best in their level, had connections to a new gym, or had an early heads-up about a closure that gave them a head start on tryouts. Many- I would say most- athletes ended up without a spot on a team because gyms could only absorb so many new people. Most girls from the gyms that closed or eliminated their competitive programs never went back to gymnastics.

 

[NutterButter]

As far as Powers...sounds like The Little Gym on steroids, which for sure could be attractive at some point to a company like Life Time. It sucks that these acquisitions are killing off teams but we already know that team is not a revenue driver. Kind of but not really really related...there's a gym owner in the Twin Cities that now owns 5 local gyms and a couple out of state. Many of these acquisitions have been in the last couple of years. He also has a side consulting company for gym owners offering services related to mergers & acquisitions. Combining all his gyms, they had about 10-12% of all competitors at both state meets (a little less for the compulsory meet and a little more for the optional meet; Xcel levels are split between the two state meets). It will be interesting to see if consolidation is a trend. I can see where that would be very problematic for USAG!

 

[mom2newgymnast]

I haven't heard of or seen any changes in our area. Are the gyms still under their original names or switched to Power Gymnastics?

First in flight in the Charlotte area was one of the first to be bought. There were a lot of very upset people and it’s been discussed a lot in Facebook groups. They completely cut DP and Elite training and went all Xcel. Parents and coaches felt misled. It was pretty shocking how it all went down from what I’ve heard.

 

[ORgymmom]

First in flight in the Charlotte area was one of the first to be bought. There were a lot of very upset people and it’s been discussed a lot in Facebook groups. They completely cut DP and Elite training and went all Xcel. Parents and coaches felt misled. It was pretty shocking how it all went down from what I’ve heard.

That must have been a scramble for parents of team girls. They’ve had elite qualifiers and at least one recent Nastia qualifier.

 

[gymgal]

First in flight in the Charlotte area was one of the first to be bought. There were a lot of very upset people and it’s been discussed a lot in Facebook groups. They completely cut DP and Elite training and went all Xcel. Parents and coaches felt misled. It was pretty shocking how it all went down from what I’ve heard.

Oh wow! That's nuts! I wonder if the previous owners knew this would happen with the sale

 

[PippenMom]

I haven't heard of or seen any changes in our area. Are the gyms still under their original names or switched to Power Gymnastics?

The gyms retain their original names which is why it is hard to pull an entire list together of gyms that they own. I know they own EVO in Florida and the parents were not thrilled with the changes they made that had negative impacts to the girls program. It sounds similar to the other post about First in Flight.

Based on the article, they’ve purchased 16 gyms since 2019 across multiple states. They have $20M in capital to continue acquiring gyms and the article mentions a goal of 50 gyms. They will focus on Arizona and Texas. But, that doesn’t seem to be slowing down their gym acquisition in other states like North Carolina.

 

[gym_dad32608]

Its a VC-funded endeavor. They are hoping that they can buy up enough distressed gyms or gyms that are interested in selling to give it some critical mass, package the ninja set-up and structured program and sell it to a life-style type corporation for 100mill+ in a couple of years. While they are somewhat in the gymnastics realm, I would not consider them competitors or a threat to the standard competitive gymnastics gym. They really are going for different segments. Is there some possibility of cannibalization of clients that would normally go to the standard USAG gym? In a couple of years they will either be another O2B Kids or an afterthought.

 

[PippenMom]

Its a VC-funded endeavor. They are hoping that they can buy up enough distressed gyms or gyms that are interested in selling to give it some critical mass, package the ninja set-up and structured program and sell it to a life-style type corporation for 100mill+ in a couple of years. While they are somewhat in the gymnastics realm, I would not consider them competitors or a threat to the standard competitive gymnastics gym. They really are going for different segments. Is there some possibility of cannibalization of clients that would normally go to the standard USAG gym? In a couple of years they will either be another O2B Kids or an afterthought.

I hope you are right because that is definitely the way the article is framed. However, the reality sounds a bit different. Many of the gyms they are buying have talented optional and elite level gymnasts that are told they need to find a new gym because Powers is shutting down the competitive programs. Attaching a post from last month from a Texas parent whose gym was purchased by Powers. At a minimum, the efforts of Powers will most likely drive some consolidation of competitive programs.

 

[ORgymmom]

Its a VC-funded endeavor. They are hoping that they can buy up enough distressed gyms or gyms that are interested in selling to give it some critical mass, package the ninja set-up and structured program and sell it to a life-style type corporation for 100mill+ in a couple of years. While they are somewhat in the gymnastics realm, I would not consider them competitors or a threat to the standard competitive gymnastics gym. They really are going for different segments. Is there some possibility of cannibalization of clients that would normally go to the standard USAG gym? In a couple of years they will either be another O2B Kids or an afterthought.

They won’t be a threat to other gyms, just a threat to the existence of competitive programs housed at gyms that sell to the company. The biggest impact will be on gymnasts already on teams or in the pre-team pipeline. It will be more difficult for gymnasts seeking competitive programs to find opportunity in areas where the purchases are taking place, and those already on teams will have to work hard to keep their spots.

 

[gym_dad32608]

No doubt, if you are a competitive gymnast in a gym that gets purchased by them, you better start packing. Their business model does not allow for competitive gymnastics because it is not a profit center. But this is in the micro. I do not see this as a macro trend. In a couple years the venture capital funding will run out. If it has not been sold to another corporation by then they will be closing shop.

Didnt all those FiF gymnasts end up going to Sonshine?

 

[mom2newgymnast]

No doubt, if you are a competitive gymnast in a gym that gets purchased by them, you better start packing. Their business model does not allow for competitive gymnastics because it is not a profit center. But this is in the micro. I do not see this as a macro trend. In a couple years the venture capital funding will run out. If it has not been sold to another corporation by then they will be closing shop.

Didnt all those FiF gymnasts end up going to Sonshine?

No, none of them are at Sonshine. A lot went to Bull City, including many of those training elite. But Bull City is 2-3 hours from FIF. Some of the original Bull City level 10s did move to Sonshine. I think a lot of the FIF gymnasts also ended up at other Charlotte area gyms such as Everest, Perfect Balance and Southeastern. It was still a pretty big shock for them, because they did not have a struggling program, they were doing great competitively prior to the sale. I have no idea about the financial side. I guess I understand it from a business perspective, but it really sucks from a individual perspective from those that were affected.

 

[gymgal]

Sonshine is 3hrs away from FIF, so that is doubtful. Even bull city is 2+hrs away. And that's just from FIF. If the families are coming from further west (there are no well known high level gyms west of FIF), it would be even longer. For elites, Everest and Bull City (which has only recently gone into elite) would be the only reasonable options. College recruiting gymnasts would have more options in the Charlotte area and KPAC as well, further north. But again, these are all highly competitive programs that may not have space on their established teams. I really feel for the families involved.

 

[GymnastMomX2]

They bought our gym, and another local gym almost a year ago. They kept the gym names, and also formed a new LLC as the owners. So it would be hard to track which gyms they own now.

Everything I’ve heard and read about them has been… not good. My daughter is training 9, and we had 10+ level 10s this year. Doesn’t seem to be their business model to keep DP programs around… however so far we’ve seen no big changes to our program. Hoping it stays that way, but I’ve had a lot of anxiety around it lately. We love our coaches, so I don’t want to look elsewhere unless I have to, but also don’t want to end up without a gym. The other gyms in the area with upper level optional programs do not have the capacity to absorb all our athletes.

 

[mom2newgymnast]

Sonshine is 3hrs away from FIF, so that is doubtful. Even bull city is 2+hrs away. And that's just from FIF. If the families are coming from further west (there are no well known high level gyms west of FIF), it would be even longer. For elites, Everest and Bull City (which has only recently gone into elite) would be the only reasonable options. College recruiting gymnasts would have more options in the Charlotte area and KPAC as well, further north. But again, these are all highly competitive programs that may not have space on their established teams. I really feel for the families involved.

The elite coaches and some of those training hopes/elite from FIF moved to Bull City. That’s HOW Bull city recently started doing elite training. Because the coaches and gymnasts moved there (plus new ones from Bull City of course) But like you said, they aren’t exactly close.

 

[Aussie_coach]

It sounds like many of these gyms, that are bought, would have gone out of business if not bought up so these team gymnasts would have lost their teams anyway.

But this is the way our western world works. If businesses struggle, they go under. Employees who worked in those businesses all their lives may lose their livelihood, and have to start again.

A new owner may purchase the business, and they going to have to make changes in order to ensure their purchase is profitable. In the perfect world the business owner could put everyone’s individual needs as the priority, but they can’t.

But gymnastics in the US is very business and profit centred and this is the side effect.

In Australia less than half of gymnastics clubs are for profit businesses (mine is one of the few that is a for profit business).

Most are not for profit organisations, they have the benefit of being able to apply for grants and community funding, and the gym is run by a committee who can vote for changes. Could this be done in the US?