Peddling Maker of Lifecycle : Health: Life Fitness saw its sales soar in the fitness-crazed ‘80s, but Bally, its cash-strapped owner, wants to concentrate on casino and gaming operations.
Life Fitness Inc., the manufacturer of the Lifecycle exercise bike that was one of the symbols of the 1980s’ health-fitness craze, has been put up for sale by its owner, Chicago-based Bally Manufacturing Corp.
Bally said Monday that it has hired an investment firm to sell Irvine-based Life Fitness as part of a larger effort to bolster the finances of the casino, health club and manufacturing company. Bally has been struggling to come up with the cash to meet a delayed interest payment on its Nevada casino unit.
Life Fitness, which Bally acquired for $3 million in 1984, saw its sales soar along with the boom in health-club membership during the 1980s. The Irvine firm had sales of $70 million last year.
Analysts said the Life Fitness unit is viewed as a small but profitable part of Bally. The sale of the company, they said, will allow cash-strapped Bally to concentrate on its casino gaming operations. Bally, which had revenue of $2.1 billion last year, currently has a heavy debt load of about $1.9 billion.
“I think the primary thrust of Bally has been more towards the gaming segment over the past several years,” said Michael Mulvaney, an analyst for Moody’s Investor Service in New York.
Bally did not disclose an asking price for Life Fitness, and several analysts declined to estimate a possible sales price.
Bally has placed Life Fitness exercise machines in more than 300 health clubs that it owns across the nation, including the Holiday Health Spa chain, analysts said.
Founded in the late 1970s by Augie Nieto, Life Fitness started business to develop a computerized exercise bike based on an idea from a Canadian cardiologist who wanted to help rehabilitate his patients. The company designed a high-tech machine with a built-in computer and video screen that simulated riding a bicycle on hills of varying steepness. Besides breaking the monotony of a workout, the machine allowed riders to practice “interval” training used by professional athletes.
More than 150,000 Lifecycles, which currently sell for $2,295, have been sold to health clubs. The company also makes a less-expensive home version of the high-tech exercise bike. The machine is also used by all teams of the National Football League.
Life Fitness also manufactures a computerized rowing machine, a weight-lifting machine and a stair-climbing machine. The company plans to introduce a computerized treadmill machine next year, said Michael Hoffman, a company spokesman.
The company employs 100 people at its Irvine headquarters and more than 100 other workers at its manufacturing plant in a former Bally pinball machine factory in Chicago.
Besides putting Life Fitness up for sale, Bally said it has retained investment firms to restructure and refinance the debt of Bally’s Grand Inc., its Nevada hotel-casino unit. Last month, Bally missed a $18.4-million interest payment on the casino unit.
Bally said it has decided to terminate its previously announced purchase of the Clarmont Club casino in London from the Rank Organization. The company also said it has decided to take its health spa division, Bally’s Health and Tennis Corp., off the market.
The Chicago firm also announced that Roger N. Keesee had resigned as president and chief operating officer. Richard Gillman, a director of Bally and chief executive officer of Bally’s Casino Group, was named to replace him in those positions.
Bally said Monday that it “fully intends to have the company’s Nevada casino operations continue as a viable entity.” Bally also operates two hotel-casinos in Atlantic City, N.J.
