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Health Club Management

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features

Thought leaders: Equinox, Soul Cycle and Trump - what can be learned?

Equinox and SoulCycle became mired in controversy recently, when the CEO and majority shareholder of their parent company hosted a fundraiser for President Trump’s re-election. What's the way forward for these brands and what can we learn from this furore? Kath Hudson asks the thought leaders

By Kath Hudson | Published in Health Club Management 2019 issue 10
Stephen Ross, CEO and majority shareholder of Related Companies, which owns Equinox and SoulCycle, is a friend and supporter of Donald Trump / Photo by Andrew H. Walker/Getty Images
Stephen Ross, CEO and majority shareholder of Related Companies, which owns Equinox and SoulCycle, is a friend and supporter of Donald Trump / Photo by Andrew H. Walker/Getty Images

For some companies it wouldn't be too much of an issue if their owner decided to host a fundraiser for the most divisive president the US has ever had. For Equinox and SoulCycle it has become a huge issue.

Both operators have set themselves up as lifestyle brands that are empowering and supportive of liberal thinkers, women and the LGBTQ community, championing diversity and inclusivity. The founding ethos and core values of each brand has won them a celebrity clientele and a liberal, progressive membership: the type of people who take issue with Trump.

Equinox was acquired by Related Companies in 2006 and Related has billionaire tycoon, Stephen Ross, at the helm. A friend and supporter of Donald Trump, Ross hosted a $100,000-a-ticket fundraiser ($250,000 to join the round table discussion), at his home in The Hamptons in August.

Many members were outraged and took to social media saying they were leaving because they “don’t support racism and mass murder” and “don’t want to fund a Nazi regime”. Actor Conrad Ricamora tweeted: “Sorry @SoulCycle…you can’t peddle inspiration in your classes and have an owner funding hate and racism in the back room. Byeeeeee.”

Neither company has responded to requests for comments from the media, but they did issue a joint statement on social media distancing themselves from Ross, saying: “Neither Equinox nor SoulCycle has anything to do with the event later this week and do not support it. As is consistent with our policies, no company profits are used to fund politicians.

“We're committed to all our members and the communities we live in. We believe in tolerance and equality and will always stay true to those values. Mr Ross is a passive investor and is not involved in the management of either business.”

However, this didn't stop the outrage or stem the flow of defections. So what's the way forward? Can the operators win back members and mend their reputations? We ask the experts…..

Neil McLeod
The PHA Group: Head of Strategic Communications
Neil McLeod

Equinox and SoulCycle have consciously blurred the lines between simply being a business and being more ingrained in their members’ lives. Because of this ethos, the Trump fundraiser has gone against the beliefs of the most important people to their business – their customers.

The less-than-sharp handling of the crisis has made it worse. Firstly, they’ve made the age old mistake of not saying sorry. They haven’t held their hands up and taken responsibility, so it appears they’ve been blasé towards their members.

Releasing a statement on Instagram, and refusing to respond to journalists’ questions, is a strange way of dealing with a blazing issue, and this approach failed to address concerns. Attempting to distance themselves from someone who's clearly a key person in the business looks as though they're trying to gloss over the issue.

"They’ve made the age old mistake of not saying sorry. They haven’t held their hands up and taken responsibility, so it appears they’ve been blasé towards their members"

Doing this has added fuel to the flames and Equinox and SoulCycle are now in a situation where the attempted cover-up looks as bad as the crime.

It would be difficult to replace Ross as an investor, but he needs to step down as chair, and be replaced by a strong leader who will hold up their hands and say: “We got this wrong. We messed up, didn’t read the signs and didn’t listen.” While this happens they need to follow this up offline, contacting people personally. They won’t be able to win back everyone, but they would show they are listening.

Crises happen in business, but it's important to act quickly, with a clear leader, showing customers they're important and listened to.

We live in a world where customers demand transparency, openness and honesty and it is vitally important to respect that.

Felicity Wingrove
Zen Communications: Managing Director
Felicity Wingrove

The responses from Equinox and SoulCycle have fallen short of many of the golden rules of crisis management. It's positive that they responded quickly with a statement, but their refusal to engage with the main media was a big mistake. Never refuse to comment.

Another golden rule is to take responsibility for the situation and show that you are trying to rectify it. By claiming Stephen Ross is nothing more than a passive investor, they are far from taking responsibility. Added to this, the statement was not well written and doesn’t connect with their community - they even speak about members in the third person!

The problem for Equinox and SoulCycle is that they have sold their members on a lifestyle brand which offers a sanctuary, but the businesses are now tainted, because the money behind them does not share the same values. Ten years ago, this would have been less problematic, but now consumers rarely engage with a business which they don’t connect with and so brands are judged far more unforgivingly.

"If you’re getting into bed with an investor, they need to be able to stand up to scrutiny and align with how you're positioning yourself and your company"

Equinox and SoulCycle can’t simply bounce back from this, it’s going to be about rebuilding. And if I was them I'd be concerned about what Ross will do next. They need to separate from him as soon as they can, although, with mass resignations of memberships and revenues down, it's not a good time to be looking for alternative investment.

In the shorter term, they need to reconnect with their grassroots and do some proper engagement work with their community, showing they're taking responsibility and action. The social media response has shown that their community values diversity and inclusion, so the brands should look to do something that shows they also care about this: not just writing a cheque, but working towards shared outcomes.

In an age of faceless hedge funds and venture capital funding we've seen scant due diligence from brands before taking investment. This just shows that if you’re getting into bed with an investor, they need to be able to stand up to scrutiny and align with how you're positioning yourself and your company.

David Harris
Simon Sinek Inc: igniter
David Harris

I think there are far more pressing global issues which deserve media attention and with all that is going on in the world, it’s unfortunate that this has been a major headline. But Equinox is a big brand and big brands, with big investors, are targets of protest these days.

We have already seen this with brands like Nike and Chick Filet. This phenomenon permits people to vote with their wallets and this is the first time it has been highlighted in a big way in the fitness/wellness/lifestyle industries.

As former VP of Equinox and a gay black man who worked there for 25 years, I can say that Equinox has a very diverse employee base and the commitment to diversity within the walls of the company has always been there. I know there's great pride in this, and not just on LGBT issues.

"Whether or not members come back to Equinox and SoulCycle will not be a question of forgiveness but of discomfort and service disruption"

Whether or not members come back will not be a question of forgiveness but of discomfort and service disruption. The average gym box lacks sophistication, does not deliver on service well and are often not clean. Equinox has always been committed to that, and it is critical to the high-end consumer. People love their creature comforts and in general among that consumer, the revolution ends at personal discomfort, and maybe even a bit of their own contradictions. It’s also about the relationship these consumers have built with many loyal and talented employees. I think that – more than anything – is the crux of the conflict and, therefore, the decisions consumers confront. As a society perhaps we should be more self inquiring.

Harris says many people stop rebelling when they risk losing their creature comforts
Daniel Korschun
Drexel University: Associate Professor
Daniel Korschun

The revelation that Stephen Ross is a fervent supporter of President Trump is potentially very damaging to Equinox and SoulCycle.

One of the key findings in my research is that consumers are more tolerant of different viewpoints than we often think. Just as most people have friendships with people who have opposing views, so too can they keep relationships with brands with which they disagree.

Just as in a friendship, the key to success in business is to be open about political views. In other words, it’s not just the political statement, but the intentions behind it that are important.

Equinox and SoulCycle have not done this. Both brands are positioned lifestyle brands and members have bought into a set of values. So, when they found out about the Ross fundraiser, many felt duped. By claiming itself to be something they're not, SoulCycle and Equinox seem hypocritical.

When consumers feel betrayed, it can leave a permanent stain on a brand. If the value proposition is good enough, defecting customers may eventually return, but the original betrayal is always lurking in the background. The bottom line is that Equinox and SoulCycle will survive, but we probably won’t see the same fervour from members as in the past.

"By claiming to be something they’re not, SoulCycle and Equinox seem hypocritical. When consumers feel betrayed, it can leave a permanent stain on a brand"

The companies now have two very tricky problems to address. The first is the loss of trust. The second is the notion – whether true or not – that a portion of their gym dues will find its way to the Trump campaign. Neither can be completely resolved without Ross getting bought out. As his exit is unlikely, it will make the next six months very rocky indeed.

The damage will become more apparent in the coming months, with the real test being around the new year, when many gym memberships come up for renewal. Further damage could also come if personal trainers decide to defect as well, as these contractors have dozens of devotees and could create a substantial ripple effect.

The operators need to sweeten the deals they give their best trainers and instructors to prevent this eventuality. They also need to directly address the source of the problem, which is the perception that dues are going to the Trump campaign.

Attempts to give money to more liberal causes may backfire because they may be seen as further evidence that the company is trying to deceive.

Soul Cycle has positioned itself as a brand that holds liberal values
Dave Courteen
Mosaic Spa and Health Clubs: Managing Director
Dave Courteen

On the face of it, Stephen Ross’ political beliefs and what he does shouldn’t have an impact on Equinox or SoulCycle. But, the problem is that both companies have created a personality around the brands and what they stand for, and Ross’ actions are at odds with that. This is a very emotive subject. It’s the equivalent of a club in the UK being very pro-Europe and then finding out that a key player in the company is campaigning for Brexit and friends with Nigel Farage.

Sometimes with social media attacks the best course of action is to stay quiet. The immediacy of the medium means that if you stay quiet it is all forgotten about within 48 hours and everyone has moved on to the next issue.

Maybe this explains the initial low key response from Equinox. However, a couple of months later the issue is still being talked about, so they need to take more decisive action.

"A far stronger statement is needed and Equinox and SoulCycle need to very publicly live out the brand values they have previously tried to portray"

By describing Ross as a passive investor, Equinox and SoulCycle have tried to distance themselves from someone who's clearly a key player and this hasn’t washed with members.

A far stronger statement is required and they need to very publicly live out the brand values they have previously tried to portray. Maybe they need to instigate a public campaign working with groups and charities which align with those values and are counter to Trump, to demonstrate what they really stand for.

Both brands must demonstrate their values to members
Equinox needs to make a stronger statement
http://www.leisureopportunities.com/images/imagesX/825329_774084.jpg
Equinox and Soul Cycle lost members when it became known that the CEO of their parent company hosted a fundraiser for Donald Trump. Is there anything we can we learn from this?
Kath Hudson, Journalist, Leisure Media Neil McLeod, The PHA Group: head of strategic communications Felicity Wingrove, Zen Communications: managing director David Harris, Simon Sinek Inc: igniter Daniel Korschun, Drexel University: associate professor Dave Courteen, Mosaic Spa and Health Clubs: managing director,Neil McLeod, Felicity Wingrove, David Harris, Daniel Korschun, Dave Courteen, Soul Cycle, Equinox, Donald Trump
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features

Thought leaders: Equinox, Soul Cycle and Trump - what can be learned?

Equinox and SoulCycle became mired in controversy recently, when the CEO and majority shareholder of their parent company hosted a fundraiser for President Trump’s re-election. What's the way forward for these brands and what can we learn from this furore? Kath Hudson asks the thought leaders

By Kath Hudson | Published in Health Club Management 2019 issue 10
Stephen Ross, CEO and majority shareholder of Related Companies, which owns Equinox and SoulCycle, is a friend and supporter of Donald Trump / Photo by Andrew H. Walker/Getty Images
Stephen Ross, CEO and majority shareholder of Related Companies, which owns Equinox and SoulCycle, is a friend and supporter of Donald Trump / Photo by Andrew H. Walker/Getty Images

For some companies it wouldn't be too much of an issue if their owner decided to host a fundraiser for the most divisive president the US has ever had. For Equinox and SoulCycle it has become a huge issue.

Both operators have set themselves up as lifestyle brands that are empowering and supportive of liberal thinkers, women and the LGBTQ community, championing diversity and inclusivity. The founding ethos and core values of each brand has won them a celebrity clientele and a liberal, progressive membership: the type of people who take issue with Trump.

Equinox was acquired by Related Companies in 2006 and Related has billionaire tycoon, Stephen Ross, at the helm. A friend and supporter of Donald Trump, Ross hosted a $100,000-a-ticket fundraiser ($250,000 to join the round table discussion), at his home in The Hamptons in August.

Many members were outraged and took to social media saying they were leaving because they “don’t support racism and mass murder” and “don’t want to fund a Nazi regime”. Actor Conrad Ricamora tweeted: “Sorry @SoulCycle…you can’t peddle inspiration in your classes and have an owner funding hate and racism in the back room. Byeeeeee.”

Neither company has responded to requests for comments from the media, but they did issue a joint statement on social media distancing themselves from Ross, saying: “Neither Equinox nor SoulCycle has anything to do with the event later this week and do not support it. As is consistent with our policies, no company profits are used to fund politicians.

“We're committed to all our members and the communities we live in. We believe in tolerance and equality and will always stay true to those values. Mr Ross is a passive investor and is not involved in the management of either business.”

However, this didn't stop the outrage or stem the flow of defections. So what's the way forward? Can the operators win back members and mend their reputations? We ask the experts…..

Neil McLeod
The PHA Group: Head of Strategic Communications
Neil McLeod

Equinox and SoulCycle have consciously blurred the lines between simply being a business and being more ingrained in their members’ lives. Because of this ethos, the Trump fundraiser has gone against the beliefs of the most important people to their business – their customers.

The less-than-sharp handling of the crisis has made it worse. Firstly, they’ve made the age old mistake of not saying sorry. They haven’t held their hands up and taken responsibility, so it appears they’ve been blasé towards their members.

Releasing a statement on Instagram, and refusing to respond to journalists’ questions, is a strange way of dealing with a blazing issue, and this approach failed to address concerns. Attempting to distance themselves from someone who's clearly a key person in the business looks as though they're trying to gloss over the issue.

"They’ve made the age old mistake of not saying sorry. They haven’t held their hands up and taken responsibility, so it appears they’ve been blasé towards their members"

Doing this has added fuel to the flames and Equinox and SoulCycle are now in a situation where the attempted cover-up looks as bad as the crime.

It would be difficult to replace Ross as an investor, but he needs to step down as chair, and be replaced by a strong leader who will hold up their hands and say: “We got this wrong. We messed up, didn’t read the signs and didn’t listen.” While this happens they need to follow this up offline, contacting people personally. They won’t be able to win back everyone, but they would show they are listening.

Crises happen in business, but it's important to act quickly, with a clear leader, showing customers they're important and listened to.

We live in a world where customers demand transparency, openness and honesty and it is vitally important to respect that.

Felicity Wingrove
Zen Communications: Managing Director
Felicity Wingrove

The responses from Equinox and SoulCycle have fallen short of many of the golden rules of crisis management. It's positive that they responded quickly with a statement, but their refusal to engage with the main media was a big mistake. Never refuse to comment.

Another golden rule is to take responsibility for the situation and show that you are trying to rectify it. By claiming Stephen Ross is nothing more than a passive investor, they are far from taking responsibility. Added to this, the statement was not well written and doesn’t connect with their community - they even speak about members in the third person!

The problem for Equinox and SoulCycle is that they have sold their members on a lifestyle brand which offers a sanctuary, but the businesses are now tainted, because the money behind them does not share the same values. Ten years ago, this would have been less problematic, but now consumers rarely engage with a business which they don’t connect with and so brands are judged far more unforgivingly.

"If you’re getting into bed with an investor, they need to be able to stand up to scrutiny and align with how you're positioning yourself and your company"

Equinox and SoulCycle can’t simply bounce back from this, it’s going to be about rebuilding. And if I was them I'd be concerned about what Ross will do next. They need to separate from him as soon as they can, although, with mass resignations of memberships and revenues down, it's not a good time to be looking for alternative investment.

In the shorter term, they need to reconnect with their grassroots and do some proper engagement work with their community, showing they're taking responsibility and action. The social media response has shown that their community values diversity and inclusion, so the brands should look to do something that shows they also care about this: not just writing a cheque, but working towards shared outcomes.

In an age of faceless hedge funds and venture capital funding we've seen scant due diligence from brands before taking investment. This just shows that if you’re getting into bed with an investor, they need to be able to stand up to scrutiny and align with how you're positioning yourself and your company.

David Harris
Simon Sinek Inc: igniter
David Harris

I think there are far more pressing global issues which deserve media attention and with all that is going on in the world, it’s unfortunate that this has been a major headline. But Equinox is a big brand and big brands, with big investors, are targets of protest these days.

We have already seen this with brands like Nike and Chick Filet. This phenomenon permits people to vote with their wallets and this is the first time it has been highlighted in a big way in the fitness/wellness/lifestyle industries.

As former VP of Equinox and a gay black man who worked there for 25 years, I can say that Equinox has a very diverse employee base and the commitment to diversity within the walls of the company has always been there. I know there's great pride in this, and not just on LGBT issues.

"Whether or not members come back to Equinox and SoulCycle will not be a question of forgiveness but of discomfort and service disruption"

Whether or not members come back will not be a question of forgiveness but of discomfort and service disruption. The average gym box lacks sophistication, does not deliver on service well and are often not clean. Equinox has always been committed to that, and it is critical to the high-end consumer. People love their creature comforts and in general among that consumer, the revolution ends at personal discomfort, and maybe even a bit of their own contradictions. It’s also about the relationship these consumers have built with many loyal and talented employees. I think that – more than anything – is the crux of the conflict and, therefore, the decisions consumers confront. As a society perhaps we should be more self inquiring.

Harris says many people stop rebelling when they risk losing their creature comforts
Daniel Korschun
Drexel University: Associate Professor
Daniel Korschun

The revelation that Stephen Ross is a fervent supporter of President Trump is potentially very damaging to Equinox and SoulCycle.

One of the key findings in my research is that consumers are more tolerant of different viewpoints than we often think. Just as most people have friendships with people who have opposing views, so too can they keep relationships with brands with which they disagree.

Just as in a friendship, the key to success in business is to be open about political views. In other words, it’s not just the political statement, but the intentions behind it that are important.

Equinox and SoulCycle have not done this. Both brands are positioned lifestyle brands and members have bought into a set of values. So, when they found out about the Ross fundraiser, many felt duped. By claiming itself to be something they're not, SoulCycle and Equinox seem hypocritical.

When consumers feel betrayed, it can leave a permanent stain on a brand. If the value proposition is good enough, defecting customers may eventually return, but the original betrayal is always lurking in the background. The bottom line is that Equinox and SoulCycle will survive, but we probably won’t see the same fervour from members as in the past.

"By claiming to be something they’re not, SoulCycle and Equinox seem hypocritical. When consumers feel betrayed, it can leave a permanent stain on a brand"

The companies now have two very tricky problems to address. The first is the loss of trust. The second is the notion – whether true or not – that a portion of their gym dues will find its way to the Trump campaign. Neither can be completely resolved without Ross getting bought out. As his exit is unlikely, it will make the next six months very rocky indeed.

The damage will become more apparent in the coming months, with the real test being around the new year, when many gym memberships come up for renewal. Further damage could also come if personal trainers decide to defect as well, as these contractors have dozens of devotees and could create a substantial ripple effect.

The operators need to sweeten the deals they give their best trainers and instructors to prevent this eventuality. They also need to directly address the source of the problem, which is the perception that dues are going to the Trump campaign.

Attempts to give money to more liberal causes may backfire because they may be seen as further evidence that the company is trying to deceive.

Soul Cycle has positioned itself as a brand that holds liberal values
Dave Courteen
Mosaic Spa and Health Clubs: Managing Director
Dave Courteen

On the face of it, Stephen Ross’ political beliefs and what he does shouldn’t have an impact on Equinox or SoulCycle. But, the problem is that both companies have created a personality around the brands and what they stand for, and Ross’ actions are at odds with that. This is a very emotive subject. It’s the equivalent of a club in the UK being very pro-Europe and then finding out that a key player in the company is campaigning for Brexit and friends with Nigel Farage.

Sometimes with social media attacks the best course of action is to stay quiet. The immediacy of the medium means that if you stay quiet it is all forgotten about within 48 hours and everyone has moved on to the next issue.

Maybe this explains the initial low key response from Equinox. However, a couple of months later the issue is still being talked about, so they need to take more decisive action.

"A far stronger statement is needed and Equinox and SoulCycle need to very publicly live out the brand values they have previously tried to portray"

By describing Ross as a passive investor, Equinox and SoulCycle have tried to distance themselves from someone who's clearly a key player and this hasn’t washed with members.

A far stronger statement is required and they need to very publicly live out the brand values they have previously tried to portray. Maybe they need to instigate a public campaign working with groups and charities which align with those values and are counter to Trump, to demonstrate what they really stand for.

Both brands must demonstrate their values to members
Equinox needs to make a stronger statement
http://www.leisureopportunities.com/images/imagesX/825329_774084.jpg
Equinox and Soul Cycle lost members when it became known that the CEO of their parent company hosted a fundraiser for Donald Trump. Is there anything we can we learn from this?
Kath Hudson, Journalist, Leisure Media Neil McLeod, The PHA Group: head of strategic communications Felicity Wingrove, Zen Communications: managing director David Harris, Simon Sinek Inc: igniter Daniel Korschun, Drexel University: associate professor Dave Courteen, Mosaic Spa and Health Clubs: managing director,Neil McLeod, Felicity Wingrove, David Harris, Daniel Korschun, Dave Courteen, Soul Cycle, Equinox, Donald Trump
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Company profile: Incorpore Limited
Incorpore Ltd is a leading fitness and wellness company which has been successfully delivering solutions ...
Company profiles
Company profile: Technogym
Founded in 1983, Technogym is a world-leading international supplier of technology and design-driven products and ...
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Directory
Fitness software
Go Do.Fitness: Fitness software
Lockers/interior design
Crown Sports Lockers: Lockers/interior design
Whole body cryotherapy
Zimmer MedizinSysteme GmbH / icelab: Whole body cryotherapy
Exercise equipment
Matrix Fitness: Exercise equipment
Fitness equipment
Stages Cycling: Fitness equipment
Trade associations
International SPA Association - iSPA: Trade associations
Management software
Fisikal: Management software
Direct debit solutions
Harlands Group: Direct debit solutions
Spa software
SpaBooker: Spa software
Flooring
Total Vibration Solutions / TVS Sports Surfaces: Flooring
Property & Tenders
Greywell, Hampshire
Barnsgrove Health and Wellness Club
Property & Tenders
Derby City Council
Property & Tenders
Diary dates
06-07 Jul 2020
Eastwood Hall, Nottingham, United Kingdom
Diary dates
28-31 Aug 2020
Expo Centre & Riviera di Rimini, Italy
Diary dates
21-24 Sep 2020
Loews Coronado Bay Resort, Coronado, United States
Diary dates
01-02 Oct 2020
Whittlebury Hall, Whittlebury, United Kingdom
Diary dates
11-12 Oct 2020
ExCeL London, London, United Kingdom
Diary dates
17-23 Oct 2020
Pinggu, Beijing, China
Diary dates
27-30 Oct 2020
Messe Stuttgart, Germany
Diary dates
30-31 Oct 2020
NEC, Birmingham, United Kingdom
Diary dates
27-28 Nov 2020
Athena, Leicester, United Kingdom
Diary dates
23-26 Feb 2021
IFEMA, Madrid, Spain
Diary dates
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British Military Fitness
British Military Fitness