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Gymtopia. A place where clubs do social good

Picture of a smiling Philip Newborough, co-founder of impact investor, Bridges Fund Management

Published in: Health Club Management, January 2019

By Kate Cracknell

Why every business (which includes the fitness industry) needs to start thinking about social impact.

Philip Newborough, the co-founder of impact investor, Bridges Fund Management, tells Kate Cracknell capitalism risks losing its mandate, and why every business (which includes the fitness industry) needs to start thinking about social impact.

When you refer to Bridges as an impact investor, what do you mean?

Bridges Fund Management is an investment company that uses commercial expertise to deliver both financial returns and social and environmental benefits. We believe that market forces and entrepreneurship can be harnessed to do well by doing good.

Over the course of the 20th century, the prevailing model of capitalism became all about maximising risk-adjusted returns. There was an unrelenting focus on shareholder value and profit maximisation, with scant regard to the other consequences that business or capitalism had. This has only accelerated with the emergence of private equity.

Our view at Bridges is that, in the 21st century, all businesses and investors should base their decisions not just on financial returns, but also on impact.

They need to take into account the effect they have on their broader stakeholders: employees, the supply chain, the environment and so on. If you don’t do this, then you’re not serving society terribly well – and that’ll ultimately undermine the value of the business.

The capitalist model may create wealth in the short term, but if it doesn’t start to address the broader issue of serving society, it risks losing its mandate – its licence to operate.

If inequality continues to grow, that might force more difficult change.

What was your personal motivation for setting up Bridges?

During my career I’d seen grants being used to try and solve social issues such as the wealth divide, to little or no effect. Income inequality was just getting worse.

Our thesis at Bridges is that governments alone can’t solve these problems by taxing and spending and that philanthropy can only go so far; if you want to address these issues, you really need to tap in to the huge pool of private and investment capital that’s out there.

That’s why, over the last 16 or 17 years, we’ve tried to find different ways of using our capital to make a difference – matching capital to innovative, entrepreneurial solutions.

How do you decide which businesses to invest in?

Obviously we look at the financials. Scale is another key aspect: our initial investment is typically £10–15m, so we’re looking for established, high-growth businesses. There needs to be a ‘specialness’ around the business too: it needs to be disruptive, differentiated and led by a team that believes very strongly in both the impact and the financial plan.

However, the first thing we look at is the impact the business can have, and here we focus on four areas: health and wellbeing; education and skills; sustainable living; and under-served populations.

Within the fitness sector, from an impact point of view, low-cost gyms have always been an obvious investment for us. Going to a high-quality gym was really a luxury until the emergence of low-cost gyms: they’ve made high-quality fitness much more accessible. Even people on lower incomes can be members.

Are all your investments in the UK?

Our investments are predominately UK-based – The Gym Group as a prime example in the fitness sector – but we do invest outside the UK too. We own Viva, which is the largest low-cost gym business in Spain, as well as Portuguese market leader Fitness Hut. We also own Planet Fitness, one of the largest fitness franchises in the US.

The challenges we’re facing in the UK in terms of income equality, climate change, ageing populations and so on – are pretty much the same across Europe and the US. We find our approach resonates across the developed world.

Some have seen fitness as a risky investment, what’s your view?

Actually, we love it: it really chimes with our investment style. The fitness market is very local, with proximity people’s main consideration. That makes these businesses very scalable: you know the population, you understand the demographics of the people you’re trying to serve, you know how many of them there are, and you can, therefore, predict realistic penetration rates. You can go step by step, reflecting on and improving the model as you roll out one site at a time.

You also invest mainly via capex, so you can speed up, slow down and then pause before moving forward if needed.

So, we very much like the dynamics from an investment point of view. The site-by-site roll-out means you get good data – and the more sites you open, the better your data gets.

Aside from the actual investment itself, what does Bridges bring to the table?
We bring a lot in terms of the execution and the operation. Our day job is helping businesses work through the growing pains that are associated with all successful companies: helping them scale, developing the tech systems that sit around the business, involving the management team, driving employee engagement and so on.

Employee engagement tends to be very strong in the companies we invest in: one of the great things about an impact-driven approach is that it tends to create a stronger sense of purpose. In the end, most people want to feel that what they’re doing in their day job has meaning and value – so when you have a business with such a clear sense of purpose as The Gym Group, for example, you create a huge amount of employee engagement and dynamism. Your employees get behind what you’re trying to achieve, not just in financial terms, but also in terms of your impact on members and the population as a whole.

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Published in: Les Mills – Fit Business, July 2018

By Jak Phillips

Fitness and Corporate Social Responsibility – Running on empathy

Jak Phillips Global B2B Content Manager at Les Mills interviews Ray Algar, founder of Gymtopia, about the fitness industry’s approach and track-record on corporate social responsibility.

By its very nature the fitness industry supports a healthier planet, but in an age of heightened social awareness, growing inequality and intense scrutiny of business ethics, is this still enough? We spoke to fitness and philanthropy expert Ray Algar, who says that in order to truly thrive in a post-recession, the fitness industry must move beyond memberships and P&L, and strive for a greater social purpose.

As a big advocate of corporate social responsibility, how do you define it?

Corporate Social Responsibility (CSR) is when social and environmental issues are strategically woven deep into the mission of a business and interactions with all their stakeholders. The business is economically viable but simultaneously aware of its wider social responsibilities. So we can picture three spinning plates – economic, social and environmental and a ‘responsible’ business is simultaneously managing all three.

By stakeholder, do you mean investors?

A ‘stakeholder’ is any person or organisation who impact or are impacted by the business. So, the narrow definition would be investors, customers and employees. However, a wider definition encompasses the wider community, journalists, suppliers, friends of employees and even competitors. John Muir the Pioneering preservationist once said: ‘When you tug at a single thing in nature, you find it connected to the rest of the world.’ I think this is a lovely metaphor for contemporary business. The most successful businesses recognise that stakeholders are inter-connected and that actions can quickly ripple from one group to another.

Can we describe charity-giving as summing up the essence of CSR?

There is probably a misunderstanding that charity-giving and CSR are one and the same thing. However, a simple donation to charity demonstrates how a business chooses to spend a part of its profits and not how they are first generated. TOMS, by contrast, is a very interesting business which has embedded CSR deep into its mission. Blake Mycoskie founded TOMS following a visit to Argentina where he witnessed that the lack of shoes was preventing children from attending school. With no experience in the shoe industry he created a for-profit business based on a one-for-one model – for every pair of shoes purchased, one pair is donated. Working with humanitarian organisations, TOMS has now donated more than 60 million pairs of shoes. These shoes are often sustainably produced in the country of need which helps to also create employment. TOMS has kick-started a global ‘one-for-one’ movement across many industries and has itself now also moved into eyewear – one bought pair of glasses funds one sight-saving surgery.

Read the remainder of this article by clicking the link below.

Published in: Health Club Management, May 2018

By Tom Walker

Gymtopia founder and DataHub forge partnership to help fitness operators unlock the social value they generate

As part of the DataHub’s continued drive to enrich the sector’s understanding of the data it holds, a new strategic partnership has been agreed with Ray Algar, Gymtopia founder and Managing Director of UK-based Oxygen Consulting. The partnership is designed to help both private and public sector leisure operators more clearly define and champion the social value generated through their venues and programmes.

Founded in 2013, the DataHub is a virtual repository for sports and leisure data, holding information from more than 157 operators and their visitors at over 1,600 sites. By sharing up-to-date intelligence, those investing within the sector can benchmark and make more informed decisions. DataHub’s award-winning Social Value Calculator (SVC), created in partnership with Sheffield Hallam University, currently utilises more than 400 million visits worth of data to deliver benchmarks and key insights about the social value created by the sector.

Ray Algar, Gymtopia founder said: “The fitness sector is driven by an altruistic purpose; public, private and third sector organisations all exist to serve and support the health and wellbeing of their customers. However, the metrics used to quantify business success, especially in the private sector, are predominantly financial – profit is very often a key measure. I have long argued that the wider social impact health clubs create also needs to be consistently measured. I believe the DataHub’s new Social Value Calculator can help clubs to demonstrate in new and compelling ways the transformative social bearing they have.”

Such recognition can only be achieved if the sector is measuring clubs in a comprehensive, systematic way. “Having a consistent method for operators to measure and compare the social impact of their business will provide a greater understanding of the important role this sector plays in improving the nation’s health and wellbeing,” says Algar. “Over the past five years I have witnessed the DataHub build considerable support from public sector operators: I will be encouraging private operators to engage, and unlock new ways to measure and communicate their social impact.”

Algar will be working with operators to interpret and translate their social value findings and form important evidence for their corporate social responsibility strategy, helping to foster buy-in from potential investors, exploring revenue opportunities with new partners and enhancing reputation.

The SVC fits well with the themes captured in Oxygen Consulting’s Fitness Sector Social Good Report, which explores the idea that a business with a purpose beyond maximising its own self-interests will become a more valued and sustainable organisation, and will enable some of its recommendations to be implemented. Algar will also be exploring ways that his Gymtopia platform – a free-to-access website that gathers stories to show different ways the health and fitness industry is giving back to its local communities – can link with the DataHub to further drive engagement with operators.

About The DataHub
The collaborative DataHub project was launched in 2013 as a secure, automated way for all facilities across the health and fitness sector to bring their data together on a daily basis, align it with data standards and then access and share consistent business intelligence and best practice. All DataHub Club members (facility operators, NGBs and delivery partners) now have accurate reporting information, relative benchmarks and actionable operational solutions, based on a central and growing shared repository of 400+ million facility visits.

The DataHub allows partner suppliers (marketing, health and safety, customer insight, social return etc.) to leverage the centralised intelligence within their own specialist modules and services, creating a one-stop-shop that delivers simple, coordinated and enhanced customer, programme and facility outcomes. Never before have so many sector organisations been united under one umbrella with such a fundamental mandate, and with the technology to deliver this much-needed step change in how the industry uses data.

Published in: Health Club Management, October 2016

By Ray Algar, Chief Engagement Officer, Gymtopia

Calorie-powered membership – Holmes Place Portugal

Holmes Place Portugal has forged a partnership with the Portuguese Cardiology Foundation to raise the issue of inactivity among the national population. Ray Algar reports.

Month of the heart’ is how Portugal uses May to encourage its citizens to embed just a little more activity into their everyday lives. Like many Europeans, the Portuguese are failing to move enough – a European Commission study from 2014 reported that more than six in 10 adults never exercise or take part in sport, ranking the Portuguese 27 from 29 countries. By comparison, Sweden topped the table with fewer than one in 10 never active. Holmes Place – which operates 19 clubs and studios in Portugal – recognised an opportunity to join the national inactivity debate by partnering with the Portuguese Cardiology Foundation. The charitable foundation exists to reduce the incidence of cardiovascular disease, which accounts for three in 10 of all deaths in Portugal. The Foundation believes small lifestyle changes can nudge people towards a healthier future by reducing their risk of heart disease and stroke.

Movement against inactivity

During May 2016, the two organisations created the campaign ‘Movement against a sedentary lifestyle’. The core idea was to develop a mechanism for those already active to help others who were not. For this one-month period, all Portuguese citizens – along with Holmes Place members – were able to ‘donate’ their activity calories to support the Foundation’s work. Calories burned were converted into complimentary club memberships, which were gifted to the Portuguese Cardiology Foundation. One million activity calories was worth one six month Holmes Place membership.

People were invited to log any physical activity that raised their heart rate, from walking the dog to taking part in a group class. Calories expended during a Holmes Place class were automatically captured using data for an average participant, while other activity away from clubs could be logged by posting a photo on Facebook, Instagram or Twitter using the hashtag ‘darcalorias’ (givecalories).

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