Club Insider

Congress Must Act to Save Hundreds of Thousands of Jobs

Posted: July 20, 2020 in IHRSA

IHRSA AdvocateIHRSA Advocate

WASHINGTON, D.C. – the International Health, Racquet & Sportsclub Association (IHRSA) released a new study showing the impact of COVID-19 case spikes on the health and fitness industry.

IHRSA has also shared these stunning new numbers with Congress in a letter to both chambers. The letter not only lays out the job loss estimates but also urges Congress to pass legislation immediately. Read the letter here.

“The numbers are clear and they are devastating to the men and women in the fitness industry. We need Congressional action immediately to save hundreds of thousands of jobs,” said Joe Moore, President/CEO of IHRSA.

The recent spike in COVID-19 cases across the country has resulted in states and local governments ordering thousands of health and fitness clubs to close again. These new closures add another devastating blow to the already struggling industry, its employees, and customers. Without immediate federal assistance, IHRSA estimates that 8,000 businesses could shutter permanently affecting tens of thousands of workers across the industry.

The following states have ordered health and fitness clubs closed again:

  • Arizona: 632 clubs, 29,000 employees;
  • California: 4,172 clubs, 192,000 employees.

The following states are expected to close health and fitness clubs (time frame):

  • Texas: 2,577 clubs, 118,500 employees;
  • Florida: 2,250 clubs, 103,000 employees;
  • Pennsylvania: 1,296 clubs, 59,000 employees.

These closures are in addition to the following states where health and fitness were never re-opened:

  • Michigan: 1,000 clubs, 46,000 employees;
  • New York: 1,955 clubs, 90,000 employees;
  • New Jersey: 1,154 clubs, 53,000 employees;
  • North Carolina: 985 clubs, 45,000 employees;
  • Washington: 743 clubs, 34,000 employees.

Totals: 16,764 clubs, 770,042 employees

The health and fitness clubs affected by these recent closure orders represent almost 50% of total number of health and fitness clubs in the country.

Federal Assistance Is Required to Save the Industry

At the start of the COVID-19 outbreak, state, and local governments moved quickly to shut down health and fitness businesses. This had a devastating impact on the industry, which is comprised overwhelmingly of small individual operators. Unlike many other businesses affected by the COVID-19 pandemic, health and fitness clubs could not pivot to new revenue streams. In addition to the loss of membership incomes, many clubs lost all ancillary revenue, i.e. concessions and private events. According to IHRSA surveys and data:

  • $7 billion in lost revenue through July 1, 2020;
  • 25% of clubs could close by the end of 2020;
  • National fitness chains have filed for bankruptcy with expected closures of many facilities;
  • Massive layoffs, many permanent closures, and substantial bankruptcies expected through end of 2020.

Based on IHRSA’s data from Europe and reopened states, most health and fitness clubs will see only 25% to 50% of customers return when allowed to do so. The industry will face unique long-term consequences from the COVID-19 pandemic. Without immediate economic assistance, the industry will be far smaller, employ far fewer people, and serve far fewer customers. Many communities may lose their only access to health and wellness facilities.

To address the unique and pressing needs of the health and fitness industry, IHRSA would like to offer the following policy proposals.

Recommendation—Provide Direct Financial Assistance to Industry Through Additional Loan Forgiveness

  • IHRSA supports S. 3814, the RESTART Loan Program

Recommendation—Modify the Paycheck Protection Program to Allow Mid-Sized Health and Fitness Chains to Participate

  • Issue a blanket waiver for health and fitness clubs from the Small Business Administration (SBA) affiliation rule to access the PPP while resources are still available; or
  • Provide Administration flexibility to issue waiver from the rule, based on clear criteria

Recommendation—Provide Tax Incentives to Spur Consumer Spending on Health and Fitness

  • IHRSA Supports Including S. 680/H.R. 1679, the Personal Health Improvement Act (PHIT) bill, which allows HSA and FSA dollars to be used to pay for fitness and healthy living.

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