Boston Sports Club Eyes Bankruptcy, May Close Newton Club

NEWTON, MA — The owner of Boston Sports Club said Monday it may have to declare bankruptcy and close a number of locations permanently - including in Newton - after the business took a financial hit because of the coronavirus pandemic gym closures.

“[The] scope and duration of the interruption to our operations has substantially reduced our cash flow," Town Sports International said in the filing. The company has also faced lawsuits for continuing to charge clients even amid the closure, before it moved to freeze memberships.

The company laid off most of its 7,000 employees across more than 200 clubs in March and stopped paying rent, according to a regulatory filing that the Patrick Walsh the CEO of the company signed.

"In response to these challenges, the Company’s board of directors is actively considering all strategic alternatives, including but not limited to negotiating with existing lenders, engaging with potential financing sources to raise capital, or filing for bankruptcy. The Company has also taken prompt action to preserve liquidity during the interruption of its operations, including by terminating employees at clubs that have been forced to close and by ceasing lease payments on its locations," Walsh wrote.

The filing comes just days after a former employee at the Boston Sports Club on Wells Avenue in Newton said former staff at that club were notified that at least that spot would be closing permanently and at least two other clubs in Greater Boston would be following the same suit.

According to the employee, those who worked at the Wells Avenue location were encouraged to apply for positions at other locations.

The email to employees:

We hope you and your families are doing well and staying safe. As you know, TSI was instructed by government ordinances to close all our clubs as a result of the COVID-19 pandemic in mid-March. As a result, this unfortunately led us to the difficult and unprecedented decision to lay off 95% of our workforce. While this was extremely challenging, it allowed for eligible employees to apply for unemployment as quickly as possible and allow TSI to stay solvent. We are currently in the midst of reopening our clubs. Our Florida clubs successfully re-opened in mid-May and we look forward to opening other markets in the near future. Per government and state restrictions, it will take some time for us to rebuild. However, we have formulated a robust plan to open our doors when possible in a safe and healthy way for our employees and members. Additionally, during the shut-down, TSI has been actively engaged with Landlords regarding our long-term leases. Upon review, some clubs were realized as not being profitable and as a result of this analysis, we have made the difficult decision to not re-open some of our locations. While we pride ourselves in the vast number of clubs within the various brands in our portfolio, it often is a good financial decision and necessary for organizational longevity. Unfortunately, your home club was identified as one of the clubs that will not be re-opening. Please reach out to your manager if you have personal belongings in your respective club. Because you left in good standing, we are also inviting you to apply for opportunities in neighboring clubs that may become available as we continue to rebuild – you can reach out to your Business Director for more information.We thank you for being patient with us as we navigate these unprecedented times and appreciate your support as part of the TSI family. We look forward growing our TSI locations and creating more employment opportunities in the future.

Gyms were set to be permitted to reopen in Phase 3 of the Massachusetts reopening plan.

In Newton, the BSC on Wells Avenue's lease was not set to run out until 2023, according to a 2019 article noting the building was for sale. Patch has reached out to Town Sports/ BSC for comment.

Previously:

• Boston Sports Clubs Freezing Memberships After ...
• Boston Sports Clubs Sued For Collecting Fees During ...
• Complaints Mount Against Boston Sports Clubs During ...