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Health Club Management

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Health Club Management

Health Club Management

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IHRSA update: Q&A with IHRSA chair Derek Gallup

Last June, executive VP of fitness for private-equity firm New Evolution Ventures (NeV) Derek Gallup became chair of IHRSA. Here, Gallup, who has worked in the industry for more than 20 years, provides an insight into NeV’s operations and shares his intentions for his time at IHRSA

Published in Health Club Management 2018 issue 1
Derek Gallup
Derek Gallup
Personal and group training is the key differentiator for the NeV brands. It’s where we create the deepest relationships and produce the best results for our members

You joined IHRSA six months ago. What has the experience been like?
It has truly been great, especially as I’ve been able to meet so many hard-working and inspirational industry leaders, who are also extremely innovative. For example, I recently had the privilege of giving a presentation on leadership during the 18th Annual IHRSA/Fitness Brasil Latin American Conference and Trade Show in São Paulo, and at the IHRSA European Congress in London. These events gave me the opportunity to interact with so many great people. The board has also formed a new international committee that’s made up of four members whose businesses are primarily located outside of the US. The goal is to better address the biggest issues and opportunities that the global industry faces today.

Tell us more about how the private-equity firm you work with operates
On the fitness side of things, NeV’s portfolio consist of the likes of UFC Gym, Crunch Fitness and A-Rod Energy Fitness. Mark Mastrov – NeV’s chair – has been an amazing presence in the team. He seems to operate years ahead of everyone else, quickly generating ideas that may precipitate a new brand. For example, the Ultimate Fighting Championship (UFC) concept was born when he and Jim Rowley, the CEO of NeV, had one meeting with the former owners of UFC: Dana White, Frank Fertitta and Lorenzo Fertitta.

Then there’s the influence of Mike Feeney, our executive vice president. He lays out every location and decides on the equipment that will go into each club. This creates the symbiosis of our various brands. We bring some brands together because they work synergistically or because we have successful operators who we know can manage several platforms.

Celebrity partners or franchisees are commonly affiliated with NeV’s brands. Why?
It’s true that nearly every NeV Brand has a celebrity involved with its corporate or franchised clubs. Crunch, for example, has partnered with football star Cristiano Ronaldo to create CR7Crunch, which has opened its first location in Madrid, Spain. Joakim Noah, of the New York Knicks, is working on plans to open five Crunch facilities in Chicago.

UFC Gym has joint venture partner sites with UFC stars B.J Penn, Frankie Edgar, Urijah Faber, Michael Bisping and Cub Swanson. A-Rod Energy Fitness involves a partnership with baseball legend Alex Rodriguez, who also partners with us on UFC Gyms in Miami.

Finally, there’s Hard Candy, which was created in partnership with Madonna. Involving celebrities, who are also known as personal fitness enthusiasts, is important in building these brands because they are well placed to help get the active and healthy lifestyle message out to the masses.

You’re the executive VP of fitness and retail at NeV. Tell us about that role
My role involves both fitness and retail because I’ve had professional experience in both fields. I started my career at Macy’s and then went to Liberty House – a specialty store chain in Hawaii. When I was at 24 Hour Fitness, I led the growth of its retail business to US$70 million a year. Today, NeV’s nutrition, accessories and apparel arms constitute 6 to 15 per cent of total revenue, per location, depending on the brand.

How much of a contribution do those three categories make?
Nutritional products make up the largest part of our retail business and that’s because our brands are focused on delivering successful training programmes that produce results for members. A nutrition component that includes menu-planning and nutritional supplementation is needed to produce such results. Our partner, dotFIT, led by Neal Spruce, has created a programme that delivers the right nutrition at the right time; we use it with all of our North American brands.

Accessories make up our second largest retail segment. This includes workout accessories, such as foam rollers and home exercise equipment, recommended by our trainers. At UFC Gym, we also offer mixed martial art accessories (MMA), in keeping with the brand’s USP. We also produce some branded apparel, but that’s not a huge part of our revenue. The retail business – nutrition, accessories, and apparel – is our third-largest revenue stream behind membership fees and personal training.

And what contribution do fitness offerings make to NeV’s overall revenue?
Personal and group training is the key differentiator for the NeV brands. It’s where we create the deepest relationships with our members and also produce the best results for them. Training is responsible for 25 to 35 per cent of total revenue, per location. In fact, training revenue is actually larger than membership fees in some locations.

With respect to fitness, we always strive to be at the tip of the spear especially in terms of who we choose to join our team, how we train them, and the technology we use to enhance the club and team member experience both in and out of the gym.

Finally, what do you hope to have accomplished by the end of your tenure with IHRSA?
There are two key things I would really like to achieve. Firstly I’d like to have had a hand in providing IHRSA members with the information and services that makes it possible for them to offer improved programming options to their members, and to significantly increase their membership bases in order to have a greater impact on their local communities.

I’d also like to see the IHRSA board recognised for having created a highly visible footprint, so it can grow, promote, and protect the industry – reversing the physical inactivity epidemic in the process. It may sound grandiose, but basically, I’d like to save the world through fitness!

IHRSA is the global trade association which represents 10,000 health and fitness facilities and suppliers. Learn how IHRSA can help your business at www.ihrsa.org

Footballer Christiano Ronaldo affiliated with NeV's brands / Marvin Ibo Güngör/DPA/PA
Footballer Christiano Ronaldo affiliated with NeV's brands / Marvin Ibo Güngör/DPA/PA
Basketball player Joakim Noah is affiliated with NeV's brands / Chicago Tribune/ABACA/PA Images
Basketball player Joakim Noah is affiliated with NeV's brands / Chicago Tribune/ABACA/PA Images
Gallup began his fitness career at Gold's Gym Hawaii, overseeing retail
Gallup began his fitness career at Gold's Gym Hawaii, overseeing retail
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