Profit Centers and Cost Centers

As you read earlier this year in IDEA Health & Fitness Source, wages/ salaries for most fitness staff increased over the past 2 years. A similar comparison for revenues and expenses
indicates that for the fitness business as a whole, and group fitness in particular, revenues have gone down since the year 2000—but so have expenses. On the other hand, both revenues and expenses have increased for the personal training side of the business.

When kept in perspective, survey figures can help benchmark the industry. However, there are a number of things to consider when interpreting the numbers. One problem with collecting financial information is that businesses account for dollars differently, so figures may represent some apple-and-orange comparisons. Also, some managers who responded to the survey may know only a part of their facilities’ total financial picture. Finally, because IDEA’s membership comprises a wide array of business models, “averages” can be deceiving. Members include huge city parks and recreation departments, as well as 75-square-foot
training gyms. The range between a minimum and maximum number for a given response can be vast. For example, revenues varied from $200,000 to $16 million! (Whoever reported $16 million, please contact me so I can report on your best practices!) To get a truer picture of the membership as a whole, let’s focus instead on the most frequently reported number, or mode; and the midpoint number, or median (which 50% of respondents are over and 50% are under).

Keeping those issues in mind, what can we glean from the figures? One thing is clear: For most facilities, personal training is a profit center that pays for the expenses of the group fitness program—which is often wildly popular, but doesn’t show a profit because it is “free” to members (included in membership dues). To see the number of facilities that charge “a la carte” for their programs, refer to the October 2002 issue of IDEA Fitness Manager.