Gyms and leisure firms ‘running out of cash’ in lockdown 3.0, bosses warn MPs

Gym and leisure bosses have told MPs that “cash reserves are running out” and operators will go bust without further financial support following the latest lockdown.

The stark warning came as MPs on the Digital, Culture, Media and Sport Committee questioned leisure and health firms on the impact of the pandemic and Government restrictions.

The UK boss of PureGym, the country’s largest gym chain, said firms are suffering an “economic long Covid” with smaller companies in urgent need of further support.

“Ultimately, over a prolonged period of time, we will see operators go out of business, the public will have fewer places to exercise and look after their physical and mental well-being and those that will survive won’t be able to invest,” said Rebecca Passmore, the UK managing director of the gym operator.

“For gyms, we have had no income for 34 of past 54 weeks.

“Covid has had an absolutely devastating effect.”

PureGym, which runs more than 270 sites across the UK, said all of its sites are shut as a result of current restrictions with its gyms expected to remain shut for “60 to 90 days”.

Marg Mayne, chief executive of community leisure centre operator Mytime Active, also warned MPs that more funding is needed to keep companies in the sector afloat.

“The January lockdown has been harder for a number of reasons,” she said.

“Operationally we’ve been pretty smooth – we know how to put people on and off furlough – but cash reserves are running out.”

Ms Mayne said it has cost firms around £60,000 per site to “hibernate” it each month during the lockdown due to maintenance costs, despite securing no revenues.

“The pandemic has been nothing short of catastrophic,” she said.

“Our income has dropped from something substantial and regular, with lots of people paying us monthly subs, to nothing.

“It is the third time in nine months that has happened.”

Rich Emerson, chief executive of indoor climbing centre operator The Climbing Academy, said operators will be in a “precarious” position when they reopen after the current lockdown.

“I think it is fair to say that our finances this year have been hit very hard as there’s been very little revenue,” he said.

“Some of our members have continued to pay their membership, which has been fantastic, but other than that we’ve had little revenue.

“We’ve had the Government support but we’ve seen a fairly sufficient erosion of cash on the balance sheet.

“That impact on the balance sheets will put us in a precarious position when we reopen in the spring as cash resources have been reduced significantly”.

Mr Emerson called on Government to cut VAT for leisure firms to 5% – in line with a current reduction of the tax for food and soft drinks in hospitality venues.

Meanwhile, Ms Passmore said a cut to VAT was among three measures needed to help support the industry.

“For an area like ourselves which has not been able to take any revenues – which we believe the Government needs to provide proportionate support,” she said. “We are looking for three things.”

“We need support in sharing the burden on rents, a continuation of the rates holiday which should be proportionate to loss of revenues and thirdly – alignment on VAT with hospitality.”