The chief
executive officer of The Sports and Leisure
Group talks to Ian Freeman about an innovative
land partnership model that lies at the heart of
the group’s expansion plans
As health and fitness CEOs
go, Barry Hunter may not have one of the highest
profiles, but what immediately strikes you about
this likeable, committed professional is his
steadfast, confident and decisive manner.
“I
came into this business to drive an
organisation,” the boss of The Sports and
Leisure Group (SLG) says firmly. “We don’t seek
publicity and I don’t talk about what we are
going to do, we just get on with doing it – big,
bold statements don’t help anybody.”
The
organisation Hunter is driving – by all
accounts, rather dexterously – still has much
growing to do, but in its short life it has
focused on a compelling land partnership
business model.
SLG – originally Roko Leisure
Ltd – is today jointly owned by the Civil
Service Sports Council (CSSC) and private equity
firm Penta Capital. Investment in SLG totals
approximately £40m to date. “Both our investors
are extremely supportive, as is our bank, Allied
Irish Bank,” Hunter says.
SLG has two strands
– the PlayFootball chain of small-sided football
facilities, and Roko, which currently operates
five large-capacity, upper-end fitness
clubs.
Four of the Roko facilities are on
CSSC sites: in Bournemouth, Gillingham,
Nottingham and Portsmouth. The fifth, which
opened in February 2008, is the company’s first
fitness club on a commercial site, located on
University of Westminster land in Chiswick,
London. Another CSSC site is under development
in York and is due to open in April.
Hunter
was brought into the company in January 2003 by
Penta Capital, shortly after they initially
invested in the business – they then upped their
stake to 50 per cent in 2005. He had previously
held brand management roles with British Airways
and HJ Heinz and spent nine years with Adidas,
achieving managing directorship of Benelux, UK
and Ireland, followed by a spell as CEO of
FitLinxx, the computerised fitness system which
now sits at the core of Roko’s customer offer.
INNOVATIVE MODEL
The CSSC has
over 40 sites, offering sports and social
facilities to its 140,000 members; SLG was
formed by the CSSC to modernise and preserve its
sporting provision and make its sites more
attractive to its members.
“The CSSC is asset
rich,” says Hunter, “but certain sites were
becoming a challenge as members’ use of the
sports facilities was declining, with buildings
also becoming dilapidated and expensive to
maintain.”
The solution for the CSSC was to
attract private sector investment, enabling
selected sites to be upgraded with new playing
fields, state-of-the-art fitness facilities and
high standards of customer service.
The
refurbished facilities are then opened out to
public membership – CSSC members represent
between 5 and 7 per cent of all members at Roko
sites – forming what Hunter refers to as “a
win-win partnership”.
He adds: “We were
originally a business linked to the CSSC – and
actually still are, as they are our landlord on
many of our sites. However, our roll-out
objective is to extend the same business model
to work with other landowners as
well.”
Here’s the deal: a landowner provides
long-lease acreage to SLG at a low rent, and SLG
bestows 100 per cent of the capital development
costs to build the facility. The company then
offers the landowner use of the new facilities
at discounted rates.
Spare land owned by
schools and hospitals are just two of the
development opportunities Hunter identifies.
With the hospital model, staff can use the
facilities off-peak at discounted rates, as can
patients on GP referral or undergoing
rehabilitation.
Schools, in the meantime,
have been a particular land partnership model
for the PlayFootball business, which is seen by
Hunter to be very much at the forefront of the
small-sided football market. Sharing a business
philosophy with Roko, four of its sites are on
CSSC land, with another fi ve already open on
school and college sites and a further five
school sites scheduled by year-end. Football
operations in Portsmouth, Bournemouth and York
share sites with Roko clubs, and Hunter feels
the UK can support at least 200 new-generation
soccer facilities such as those offered by
PlayFootball. “The biggest currency we can offer
to schools is the opportunity to use a brand new
£2m football facility for curriculum sports
during the day,” he says.
VALUE FOR
MONEY
Roko clubs are, says Hunter, “in
the same mould as an Esporta or a David Lloyd,
but without indoor tennis. We offer a premium
product and service, but we are able to do that
at an affordable rate because of our unique
business model. We get a long lease or a
freehold, and a low rent, and pass on the
advantage to members by way of lower fees.” Fees
for a single adult start from £49 for peak-time
membership. Contracts are for three months, or
twelve months at a slightly lower rate.
All
fi ve family-friendly clubs have three studios
hosting 55 group exercise classes a week, a Life
Fitness-equipped gym of 930-1,300sq m
(10,000-14,000 sq ft), a health and beauty
salon, treatment rooms, a spa and a minimum of
two pools.
“We can attract customers from two
sides of the market – people who currently pay
more and people who currently pay less,” says
Hunter. “The ones who pay less can trade up,
because for a little more in price you’re
getting a lot more product. And those currently
paying more are paying more than they need to –
the same product and standard costs less with
us.
“What we’re doing is challenging the
value proposition in the market. We’re not
cheap, just better value, with our land
partnership model as the enabler.” The company
also has a lean management structure with Hunter
and two senior operators at the helm, while
marketing, finance, IT, property development and
maintenance personnel are shared between Roko
clubs and the football business. Each fitness
club has 35-40 staff, including its own finance
manager.
KEEPING A
HOLD
Membership per Roko club is running
at around 4,000 – well on Hunter’s target. He is
a champion of customer care and almost religious
about retention. “You have to buy into a
philosophy of retention,” he says. “We actually
want members to use the club, not to join and
then not come. It’s cheaper to keep a member
than recruit a new one and, in a competitive
market, it’s vital to keep hold of the members
you have, to keep your business robust.”
If a
member isn’t coming in, Hunter’s team uses the
FitLinxx system as a source of information as to
why. “All our staff are trained in it, and our
members are familiar with it and managed through
it. If more operators were to adopt it, I’m
convinced they would see benefits,” he
says.
“FitLinxx will tell us what members
have done and not done while they are in the
club and we can spot signals that indicate they
might soon become demotivated, such as
underachieving on targets. Our conversation with
the member can then be much more informed.” Roko
club staff, each of whom is allocated a ‘flock’
of members, are performance-measured and bonused
on their retention success.
“I think the
sector has an opportunity to improve in the area
of customer service, and those that invest in
proper retention tools and staffi ng will benefi
t from it,” Hunter says. “I’ll gladly show
anyone, competitor or not, around our centres
and let them see how we do it. There are some
good and some not-so-good examples of customer
service delivery in the sector, and the
operators that succeed will be ones that deliver
against expectations.”
GOOD
PROSPECTS
As to the state of industry,
Hunter believes consumer demand for fitness is
very strong. “It’s on a lot of people’s
agendas,” he says. “With penetration levels the
way they are, there are significant growth
opportunities. We should also be identifying
ways to use clubs during quiet times, such as
helping to deliver government-sponsored
healthcare initiatives.”
Hunter is a
supporter of industry-wide initiatives and,
although admitting to not engaging much at a
personal level with the Fitness Industry
Association (FIA), he is a contented member.
“Andrée [Deane, FIA CEO] is extremely good at
building a relationship with government which
will drive awareness of the sector and ensure
we’re kept on the agenda. And the industry now
has everything in place to support government
health initiatives,” he says. He is also firmly
in favour of the FIA club assessment scheme:
“Trade associations should drive standards and I
have no issue with being a part of it. Anything
that improves quality within the sector is
good.”
On a personal level, Hunter says: “I’m
a profi t-driven manager. It may sound clichéd,
but success for me is about driving the value of
my shareholders’ investment. I’m a loyal
individual, dedicated to the people I work with.
I’ve been very lucky, too, as I’ve always chosen
sectors to work in that I really enjoy – I’ve
never woken up and not wanted to go to
work.”
Hunter happily confesses that there is
no one individual in the industry he
particularly admires. Unsurprisingly for a man
whose love of sport has led him to coach a
Sussex County League football team, his true
heroes are sporting champions who maintained
their status over a long period, such as Steve
Davis. He also cites Alan Shearer as someone who
“made it, stayed there and then knew when to
stop”.
For the future, Hunter’s objective is
to continue to build a pipeline of sites that
will give SLG longevity. “It’s my job to make
sure our centres sustain levels of profitability
without compromising quality and to make sure my
staff are motivated,” he says. He looks, where
possible, to promote from inside and
cross-pollinate within the group. “Team members
who have learned their customer service
disciplines in the clubs can be moved over to
the football operation, a sector which hasn’t
typically employed people with those skills,” he
says.
“I’m looking”, Hunter continues, “to
have 10 Roko clubs and 30 PlayFootball centres
by the end of 2010. In fact, I already know
where most will be – but I’m not telling
yet!” | |
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 Barry Hunter: A belief in actions,
not just words |
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