Game, set and match for gym chain David Lloyd
For Wimbledon fans of a certain generation, David Lloyd and his younger brother John will always be at the heart of British tennis in the 1970s and 1980s.
America had John McEnroe, Sweden had Bjorn Borg, and we had our homegrown pin-ups: the blonde, tanned, and handsome Lloyd brothers.
John Lloyd, who was married to former women’s champion Chris Evert, was one half of the gold sports couple of the day. But David is now the more famous of the siblings, thanks to the company he founded in 1982 that has put his name above the posh leisure clubs across the country.
From one club in Heston, West London, the David Lloyd Leisure chain now has 130 outlets in nine countries. Lloyd, now 75, is no longer involved, having sold his business to leisure group Whitbread in 1995, but tennis “remains a central pillar of the business,” said CEO Russell Barnes.
The first club, he says, was “a copy of an American country club. It was rooted in tennis, with a modest indoor pool, outdoor pool and gym. It’s much broader than that now, but we would never build a new club without putting tennis and racquet sports in it.’
Fight fit: Boss Russell Barnes says membership is 25 percent higher than before the pandemic
Younger members and people outside the UK may not understand the full resonance of the David Lloyd tennis connection. “We would never consider changing the name,” says Barnes, and the family bond remains. ‘Tony, David Lloyd’s brother, still coaches at our Raynes Park club near Wimbledon, and Scott, David’s son, is on our board.’
68-year-old John was an early financier and had put in £20,000, which turned out to be about £790,000. Unsurprisingly, he has said he wishes he had invested a lot more.
The current craze in racquet sports is padel, says Barnes, a mix between tennis and squash. “It’s huge in Spain and Italy, and we want to roll it out in the UK.” It’s popular with older tennis players, says Barnes, because “it’s competitive but very social.”
Since David Lloyd sold the company to Whitbread, it has passed through several hands. Real estate group London & Regional bought it from Whitbread in 2007 for £925 million, with financing from HBOS, when the market was peaking just before the financial crisis.
L&R sold it to private equity group TDR Capital in 2013 for a significantly reduced price of around £750 million.
TDR, which owns the Stonegate pub chain and co-owns Asda, has been ‘fantastic’, according to Barnes, and has ‘consistently supported management for a decade’.
The company has hired investment bank Morgan Stanley to review its options, including a possible sale, with a price of £2bn and above speculated. The process is at a very early stage.
‘It’s private equity, so of course they want to crystallize their investment at some point. They have always fully supported us. They supported our vision,” says Barnes. He joined the company as chief operating officer in 2015, after 26 years with entertainment group Merlin. In 2021 he stepped down as CEO.
The chain lost 14 percent of its members during the pandemic, which he considers a good result under the circumstances.
“It was still a seismic loss of revenue,” he admits.
The company lost £51 million pre-tax in 2021, the latest figures available. That was less than half of the £108m red ink last year when Covid was at its peak, but it still hurt.
There has been, he says, an “extraordinary” uptick, with membership down to 730,000 – a 25 percent increase on pre-Covid numbers. The rise was led by the UK, which is surprising given the cost of living and mortgage crisis and the fact that membership packages, ranging from £100 to £200 a month, aren’t cheap.
“Our members are generally affluent and middle class,” says Barnes. “We are monitoring the data. Coming off a two year fixed rate mortgage is pretty brutal. That’s exactly the conversation we’re having: at what point does [the cost of living crisis] bite?’
Wealthy members may not be struggling financially just yet, but he admits that some of the 10,000 people who work for him are. Barnes distributed free meals in February and March and every member of staff received a gift of £100 in cash at Christmas. The last two pay cuts were six percent — not enough to keep pace with rising prices, but better than many pay cuts.
“The free meals cost us just under £1 million. We’ll look at it again when the winter period approaches.’
Barnes’ ambition now is to expand the number of clubs, ‘particularly on the mainland’. We have a pipeline that will go out in the next five years.”
He also wants to make the clubs more luxurious, with “spa retreats, steam rooms, saunas and outdoor spa baths, all in a very high-end environment.” We invest many tens of millions. Last year it was about 100 million pounds.’
The clubs are no longer concentrated in upper-middle-class enclaves in the southeast, but are spread across the country.
The fruits of the investment drive can be seen in the Teesside club, which has recently undergone a £3.6 million refurbishment. It has an indoor and outdoor pool, gym, tennis courts, a range of classes, spa and garden.
When I visit there are no intimidating physiques on display, just a convivial atmosphere with members of all ages, shapes and sizes.
According to Barnes, visits to British clubs in June were 15 percent higher than last year. “When it’s warm, more people come. Are they worried about their beach body? There’s definitely a bit of that. There’s something about the sun that makes people really want to socialize.’
Heyday: tennis star David Lloyd
The clubs are, he says, a haven from the stresses of modern life.
‘People don’t necessarily join to get fit anymore. It is much more rounded, about the balance between physical and mental health.
“Life gets very complicated. Young people are tethered to a screen and receive instant feedback from their entire peers, and the pressure that comes with it is enormous. I have two teenage daughters, so I see it every day.’
Does he think the nation has a health and obesity crisis?
‘Honestly? I lived in America for a few years and we think we have problems. I actually think it’s terrible, and I say that as a middle-aged man.
‘We need more preventive care and encourage people to watch what they eat and exercise.
“We will have to cope with an ever-expanding NHS. Either we’re going to pay more or we’ll eventually have to start thinking differently about what the NHS should do. It is coming under increasing pressure, unless there is radically different thinking, unless we are dealing with preventive care.’
His own fitness regimen, he admits with a laugh, comes in fits and starts. He cycles near his home in the New Forest and rode his Brompton bike to our interview from Waterloo station. He walks on weekends and – of course – goes to a David Lloyd gym once a week.
“I don’t think the British way of life necessarily helps us. A bottle of water can be more expensive than a bottle of soda. The healthy choices in a restaurant are not always easy to identify.
“All our trainers will tell you that you can’t run faster than what you put in your mouth.”
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