Bally forges into New Year after CEO musical chairs

Nary 11 days after former Bally Total Fitness CEO Lee Hillman quit (oops, retired...), the company is forging ahead into the New Year.

Nary 11 days after former Bally Total Fitness CEO Lee Hillman quit (oops, retired...), the company is forging ahead into the New Year with a national TV ad campaign designed to solidify its position as a brand that offers "total fitness solutions."

The first quarter of the year is the biggest season for many clubs as New Year's resolution-makers try to make good, and Bally isn't the only club -- only perhaps one of the biggest -- to try to take advantage of it via the boob tube.

The ad campaign for Bally (NYSE: BFT) will unveil this week and is titled "The Beautiful Pain," which the company says "leverages humor, humanity and physical results, capturing the passionate feelings only offered by the Bally experience." Debuting will be two 30-second spots, titled "Stories" and "Crosswalk," which were developed by Foote, Cone & Belding, Chicago.

SNEWS View: Bally likely hopes that this campaign, its potential to attract more members or even customers for Bally products, and the inevitable January rush will shift attention from Bally's rather sudden management changes, dropping stock prices as a result, and possible sale, while also pumping up revenues and profits. With Hillman suddenly "retiring" per a Dec. 11 announcement and Paul Toback stepping in as CEO, stock prices took a dive, falling nearly 20 percent in 24 hours. They still haven't totally recovered as of Dec. 23, hovering close to 7.00 from a close the day before the announcement of 8.51.

Hillman, 47, had been brought aboard in late 1996 to "turnaround" the ailing and aged chain. And that he did, master-minding a metamorphosis based on aggressive retail, product, programs, e-commerce, and branding strategies, as well as upgraded memberships, renovated clubs and strategic alliances with major corporations. In 1996, operating revenues were $639.2 million, which jumped 15 percent in the following two years to 1998's $742.5 million. Not as if Toback, 39, is a stranger to Bally, having been involved as chief operating officer in many of the company's recent initiatives. Hillman didn't offer personal quotes or insights when he left, leaving the company stating that universal and eyebrow-raising comment that he left "to pursue new challenges and interests" and to spend more time with his family. Now who really believes that one? One problem after the initial boost at Bally was its recent downturn in stock prices, dropping from a 52-week high on April 16 of 24.10. And in its third quarter this year, Bally's profit fell 73 percent to $7.2 million. Toback has been quoted as saying that any changes will be "more evolutionary than revolutionary," whatever that means. It sounds to us as if he has been pushed ahead as another turnaround mastermind who may also find himself "retiring" -- perhaps when the rumored sale actually happens.


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