Precor's acquisition of ClubCom could redefine "total product"

Barely taking a breath after acquiring strength brand Icarian 10 days ago, Precor parent Amer Sports has added another member to its burgeoning fitness family – entertainment technology company ClubCom. The acquisition, announced Jan. 23, was sealed for $22 million.
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Barely taking a breath after acquiring strength brand Icarian 10 days ago, Precor parent Amer Sports has added another member to its burgeoning fitness family – entertainment technology company ClubCom.

The acquisition, announced Jan. 23, was sealed for $22 million, and includes ClubCom's Cardio Theater division and all entertainment and content areas; ClubCom's advertising division is being spun off as a separate company owned by a group of ClubCom investors. 

Adding ClubCom's and Cardio Theater's entertainment and network systems to its own InSite wireless equipment monitoring system, Precor will look to leverage the technologies of all three to create a company that not only supplies a package of equipment types, but one that also provides services and tools to help a club be more efficient and, ultimately, more successful.

That, in turn, could help Precor shoulder its way into position to vie for becoming the top equipment supplier not only in the United States, but also in Europe, company management said.

"We feel if we redefine what 'total product' really is, we have a chance at No. 1," President Paul Byrne told SNEWS® a few hours after the acquisition was announced. "There is no finish line in this game.

"The equipment is not the business that clubs are really in," Byrne added. "The business they're in is about attracting and retaining customers,… and entertainment helps do that."

ClubCom was founded in 1999 by current president Tom Lapcevic, although it wasn't truly operational until January 2000. In August 2001, ClubCom and Cardio Theater merged, resulting in Cardio Theater becoming a wholly owned subsidiary of ClubCom. That transaction's value, which was estimated to be about $10 million, consolidated into one organization the E-Zone installation base that was purchased a few months earlier by both ClubCom and Cardio Theater. Currently, ClubCom's systems are in about 600 clubs, with another few hundred at clubs such as Lifetime Fitness and Gold's Gym nearly ready to be turned on, management said.

"Today, entertainment is the most visible and accepted technology, but both in terms of capability or market penetration, we've only scratched the surface," Lapcevic said in a statement. "Entertainment technology will maintain its primacy in the short term, but soon it will be joined, and perhaps surpassed, by additional technology-driven services that benefit the fitness facility and its members."

ClubCom will maintain its headquarters in Pittsburgh, Penn., and will operate as an independent subsidiary. It will collaborate with Precor on new technologies, such as Precor's InSite wireless information service. An interesting side note was a relationship revealed in SNEWS last October that was established between Precor UK and ClubCom that said the companies there were putting their heads together on touch-screen technology. At that time the parent companies had not invested in each other, management said then, although unannounced negotiations had been quietly underway for months.

This acquisition could initially mean a large boost in Precor's European presence since entertainment systems and technology already mean more to operators there, Byrne said; in the United States, clubs historically have been more steeped in operations and interested in having "best in class" equipment.

"The chains are now realizing it's more than just product," Byrne said.

Precor's InSite wireless monitoring technology, announced in SNEWS in February 2003, will allow clubs from one central location to monitor all its equipment, check usage, coordinate service needed, determine which pieces need replacing and, in the end, eliminate downtime and satisfy member needs – all without guesswork.

The IHRSA show in late March in Las Vegas, Nev., will be for Precor a grand coming-out party for its new family members.

"This will be the biggest show that we've ever done," Byrne said, hinting at a new approach to show-off the companies and services there that are all now part of Helsinki, Finland-based parent Amer Sports (www.amersports.com).

"It's not going to be Icarian in one corner, and oh there's Precor, and by the way, there's ClubCom," Byrne explained, but rather a meshing of the companies and the services to show off their potential together.

Amer "believes in the vision," Byrne added about the parent company's recent investments in fitness acquisitions. "They share it."

SNEWS View: Didn't we say back in October that "it is entirely likely that Amer Group may look into an acquisition of such technology so Precor can take two leaps forward all at once." Well, there you go. Amer has of course been upfront by saying that it is striving to be No. 1 globally in sporting goods, and fitness in the last few weeks has played a large role in those steps. Without acquisitions, Precor didn't have a breath of a chance to "catch" Life Fitness or even steal any of its thunder internationally. But with 2004 dawns a new era. In fact, the possibilities of linking clubs and equipment for better maintenance as well as user interaction and entertainment are endless. Think ahead even how this kind of wireless network could, eventually, be used on home equipment to allow users across the country to talk and to see each other on a virtual run "together." Think further even: Once established in clubs, technology such as InSite could be used in the home to let equipment owners receive updates about how much they've used the equipment (even keeping tabs on other users!) or about oft-ignored maintenance needs. Even if we stop spinning into the future of possibilities, the opportunities and technology possible just in the next year or two are pretty broad and will certainly allow Precor to move 10 steps forward.Â

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