Town Sports International Holdings

Town Sports International Holdings (or TSI Holdings) is an operator of fitness centers in the Eastern United States, California and in Switzerland. Its brands include New York Sports Clubs, Boston Sports Clubs, Philadelphia Sports Clubs, Washington Sports Clubs, Lucille Roberts, TMPL Gym and Total Woman Gym and Spa.

Town Sports International Holdings Inc
New York Sports Clubs
Boston Sports Clubs
Philadelphia Sports Clubs
Washington Sports Clubs
Lucille Roberts
TMPL Gym
Total Woman Gym and Spa
TypePublic
OTC Pink: CLUBQ
IndustryHealth club
Founded1973 (1973)
HeadquartersJupiter, Florida
Number of locations
185 (September 15, 2020)
Websitetownsportsinternational.com
Footnotes / references
[1]
A New York Sports Club location in the Upper East Side, New York City

Founded in 1973 and based in New York City, the firm went public on June 6 of 2006 on NASDAQ. As of 2007 TSI Holdings operated over 155 clubs with approximately 483,000 members. Patrick Walsh was appointed CEO on September 30, 2016.[2]

New York City is home to the majority of the clubs under the banner of NYSC or New York Sports Clubs. There are over 120 NYSC clubs in New York, New Jersey and Connecticut. Boston is home to the second largest majority of clubs under the banner of BSC or Boston Sports Clubs with over 25 locations in Metro Boston and Rhode Island. PSC, Philadelphia Sports clubs has over 8 locations in Philadelphia and New Jersey, WSC, Washington Sports Clubs, has over 17 locations in D.C., Maryland and Virginia.

Corporate Regional offices are located in Boston and Philadelphia. TSI, the parent company, has its corporate offices in New York City.

TSI has had multiple legal issues regarding its cancellation policies.

In 2016, the Attorney General of the District of Columbia investigated TSI for violations of the District's consumer protection laws. TSI and the Attorney General settled this dispute in November, 2016, with TSI agreeing "to clearly disclose its cancellation policies, cease misleading consumers about how they can cancel, and not bill consumers who canceled their memberships."[3] In January 2019, the Attorney General of DC filed a new lawsuit against TSI, alleging that the company had violated the terms of its 2016 settlement and again violated the District's consumer protection laws.[4]

In May 2019, a separate class action lawsuit was filed in New York against TSI, further alleging that the chain ignored members' cancellation requests and collects fees after closing members' accounts.[5]

Forbes magazine reported that the company had a history of mishandling customer memberships, and that as of April 2020 had at least 24 membership-related federal lawsuits filed against it in a five-year span; a number disproportionately higher than TSI's competitors. The company also had an F rating from the Better Business Bureau for failure to respond to 54 complaints and failure to resolve 22 more. A former employee told Forbes that while no gym company was "100% ethical" there was "maybe a little too much" unethical behavior at the company. Several employees stated that many of the company's current issues came to a head after the appointment of Walsh as CEO.[6]

COVID-19 Controversy

On March 16, 2020, all gyms were temporarily closed due to the COVID-19 crisis, and all non-executive staff subsequently terminated.[7] Town Sports International continued to charge member dues, resulting in widespread outrage.[8]

On March 26, Mary Namorato filed suit against Town Sports International, alleging that the company was “defrauding and stealing from gym members” by continuing to charge the chain's approximately 605,000 members. The complaint stated that the company had made “it virtually impossible for members to cancel their memberships and has even refused to honor many members’ cancellation requests”. Namorato's representative stated that competitors Equinox Group, Planet Fitness and Blink Fitness had automatically suspended membership charges due to the closures."[9]

On April 3, the Attorneys General of the states of New York, Pennsylvania and the District of Columbia sent a letter[10] to CEO Patrick Walsh demanding he immediately cease charging monthly membership fees. Five days later the company consented to freeze memberships across the board, however the return of the fees that had been charged was not addressed.[11] An article in Bloomberg revealed that Walsh was considering having the company file for bankruptcy.[12]

Three weeks later, under pressure from the Attorneys General, the company agreed to issue credits and refunds of fees that had been charged to members.[13]

On September 14, Town Sports International filled for Chapter 11 bankruptcy, which allows for the company to remain open and to reorganize. In the filing, the company reported liabilities in the range of $500 million and $1 billion with assets in the same range.[14] Most of the liabilities are in the form of back rent.[1]

On September 16, Bloomberg reported that Town Sports International and its creditors were pursuing a sale of the business.[15]

References
  1. Ellement, John R.; Estes, Andrea (2020-09-14). "Boston Sports Clubs' parent company files for bankruptcy amid uproar from gym members". The Boston Globe. Retrieved 2020-09-15.
  2. "Town Sports International Holdings, Inc. Announces Appointment of Chief Executive Officer and Departure of Chief Operating Officer". www.businesswire.com. Retrieved 2017-08-17.
  3. "Attorney General Obtains Settlement with Washington Sports Clubs Addressing Cancellation and Billing Practices". oag.dc.gov. Retrieved 2019-11-22.
  4. "AG Racine Sues Washington Sports Club for Misleading District Consumers About Membership Cancellation Policies, Billing Practices, and Fees". oag.dc.gov. Retrieved 2019-11-22.
  5. Gartland, Janon Fisher, Michael. "Former members flex muscle with class action lawsuit against New York Sports Club". nydailynews.com. Retrieved 2019-11-22.
  6. Stoller, Kristin. "Former Employees Say New York Sports Club Has Mishandled Customer Memberships For Years". Forbes. Retrieved 2020-04-29.
  7. "Boston Sports Clubs Laid Off All Its Employees Monday Night". Boston Magazine. 2020-03-19. Retrieved 2020-04-10.
  8. "NYSC Continues to Charge Membership Dues Despite Gyms Being Shut". www.ny1.com. Retrieved 2020-04-10.
  9. "Coronavirus US Live: Mary Namorato, a New Yorker separated from her daily gym work-out, has filed a lawsuit against New York Sports Clubs..." The Guardian/US. March 27, 2020.
  10. James, Shapiro, Levine, State Attorneys General (April 3, 2020). "Town Sports International Holdings, Inc.'s Unlawful Response to the COVID-19 Pandemic and National Emergency" (PDF). NY State Attorney General's Office.CS1 maint: multiple names: authors list (link)
  11. TSI. "Member Letter". NYSC. Retrieved 2020-04-15.
  12. "N.Y. Sports Clubs Owner Considers Bankruptcy While Gyms Stay Shut". www.bloomberg.com. Retrieved 2020-04-15.
  13. DeGregory, Priscilla (2020-04-24). "New York Sports Clubs to finally refund fees, credit fees, amid coronavirus closure". New York Post. Retrieved 2020-04-25.
  14. "SEC Filing | Town Sports International Holdings, Inc". www.townsportsinternational.com. Retrieved 2020-09-16.
  15. "Bankrupt New York Sports Clubs Owner Seeks Buyer Amid Loan Talks". www.bloomberg.com. Retrieved 2020-09-16.


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