Lack of Financing Closes Luxury Health Club

The Spa at the Center, which billed itself as Orange County’s most exclusive health club, has abruptly closed its doors just four months after it opened because its financing fell through, officials said Friday.

The temporary closure will last until the health center can find a way to replace $1 million in equipment financing that had been promised, said spa President Jeffrey Jones.

“We are working with our partners and other investors to reopen the spa, but we don’t want to reopen until we’re on firm financial ground,” he said.

About 500 clients have plunked down the $1,250 initiation fee and monthly dues of $99 for the privilege of sweating away pounds in a Roman-style exercise palace of marble, granite and French limestone, with fountains and thick carpeting. There was no immediate word as to whether clients would receive refunds.

The center closed at 3 p.m. Thursday, idling 50 employees. A note was posted on its thick glass door informing clients of the decision. Jones said customers were also notified by letter.

Opened in March, the $6.5-million, 20,000-square-foot spa featured a limited membership goal of 1,200. The club is in a Town Center high-rise office and cultural complex, across from the Orange County Performing Arts Center in Costa Mesa.

“We’re dealing with hundreds (of members), and most health clubs (sign up) thousands,” Jones said. “This is more like a getaway and not part of some social scene.”

Cecil Spearman, last year’s president of IRSA--the national association of health clubs based in Boston--said that The Spa’s closure did not come as a surprise to him. Spearman, owner of the John Wayne Tennis Club in Newport Beach and the Laguna Niguel Racquet Club, said he declined an offer some months back to invest in the chichi club because he doubted its chances of success.

“The motivation behind building the club was based on the presumption that there were enough wealthy people in the area willing to pay a lot of money for elegant surroundings and uncrowded conditions,” Spearman said. “I didn’t agree. People will pay a premium for a quality club--$59 a month or something in that range--but there is a point of diminishing returns.”

The Spa got off to a rocky start. Its opening was delayed by two months because of construction complications. A promised Northern Italian cuisine restaurant, exclusively for spa members, was never built. And the spa was dogged early on by rumors that it was having financial and membership troubles.

Jones denied reports that The Spa faced “serious financial problems” as recently as in this month’s issue of the Orange County Metropolitan, a business magazine.

And he said the level of membership was strong enough to keep the center profitable despite the recession, which he said had only a mild effect. The problems centered entirely on the failure of a “local leasing company,” whom he declined to identify, to deliver the $1 million in financing.

He said well-heeled investors, including members of the Segerstrom family that built Town Center, contributed the seed money to build the complex. But he said that the leasing company was supposed to come through with the financing to provide for the longer-term needs of the center.

Jones said he has been seeking replacement financing since April, when he found out that the financier would not honor its agreement. He said he had no success in finding other funding sources.