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CBI Spends 10 Minutes on the Line with
Frank Napolitano
THE RECENTLY INSTALLED PRESIDENT AND CEO OF GLOBALFIT
Reproduced here is a featured article in this month's issue of Club Business International,
the premier industry publication.
Call-In Press Conference
CBI Spends 10 Minutes on the Line with Frank Napolitano,
the recently installed president and CEO of GlobalFit
Frank Napolitano, Jr., 51, may not have spent his entire life in the club industry, but, since he got 'hooked' on it in the mid-80s, he's explored virtually every corner of it—as a club developer, owner, and operator; consultant; chain executive; and, most recently, as the president and CEO of GlobalFit, a unique membership-benefit network.
Napolitano earned degrees from the Wharton School of the University of Pennsylvania and the Georgetown University Law Center. He practiced accounting briefly, spent three years as a litigator, and then, providentially, in 1984, joined a small real estate development firm. 'One of our projects had a very large club at its core,' he remembers. 'I quickly learned that we couldn't maximize the value of the property unless we could make the club profitable. That experience sold me, forever, on the industry.'
Over the years, Napolitano made deeper inroads into the business, developing a small chain of clubs and a full-service consultancy. By 1994, he'd sold all of his facilities, except one, and, five years later, he sold that one to Town Sports International (Nasdaq: CLUB), and joined the company as its senior vice president of strategic planning and special projects. Napolitano also served as the president of IHRSA for the 1995-96 term, and is now in his second tour of duty as an IHRSA board member.
In June, after resigning from Town Sports International (TSI), Napolitano took over the reins at GlobalFit, which is headquartered in Philadelphia. A national network that links some 2,000 fitness centers in 49 markets with more than 1,300 sponsoring companies, insurers, and organizations, GlobalFit allows the later group to offer club memberships as a cost-free employee benefit. Today, more than 50 million Americans can take advantage of GlobalFit's menu of fitness facilities and other services. Napolitano spoke with CBI contributing Editor Jon Feld.
CBI: Many people still aren't familiar with the GlobalFit business model. Can you describe it?
Frank Napolitano: In short, GlobalFit is a provider of employee and group fitness benefits. We represent a large body of clubs, which allows us to help national organizations meet the health and fitness needs of their employees or members. We're able to offer companies a comprehensive voluntary benefit, including convenient access to our club network. Our close relationships with human-resources and medical professionals in large firms gives us unprecedented access to their employees—we work with them to educate employees about the benefits of a healthy lifestyle and encourage them to begin a program of regular exercise. As a result, we're able to reach a group of individuals who, otherwise, might not consider joining a health club.
CBI: What's the payoff for participating clubs?
FN: There are a number. Principle among them is the fact that we help clubs obtain new members from sources that they'd normally have a hard time accessing—that is, large national corporations and organizations. The educational programs that we provide also make it possible for us to do a better-than-average job of delivering first-time exercisers. Our goal is to sell memberships at, or slightly below, a club's average corporate rate, which means that we're a strategic partner—rather than a competitor—in their corporate sales effort.
CBI: Apparently, you left TSI on very good terms. The chain's 135-plus facilities now figure prominently among the GlobalFit network of clubs. How did that relationship come about?
FN: TSI joined the GlobalFit network last March, but I didn't take over as CEO and president until June, so the relationship was a preexisting one. Bob Giardina, the CEO of TSI, and I evaluated the GlobalFit opportunity carefully, and concluded that it would provide us with access to corporations and large groups that, otherwise, we couldn't reach. It seemed a logical extension of our already-strong corporate sales effort.
CBI: You've also developed relationships with other high-profile club companies, such as Bally Total Fitness and the Lady of America/Workout Express facilities. How did you accomplish that?
FN: GlobalFit has a provider-development department that's constantly working to initiate and cultivate relationships with chains. Multi-club operations are in high demand with our sponsors because of their brand recognition, sophisticated product offerings, and convenient locations. Bally has been a part of our network since 2003, and Lady of America/Workout Express came aboard at the beginning of this year.
CBI: What about Curves International, Inc.? Have you targeted it?
FN: We have a lot of Curves locations in our network, but we don't yet have an affiliation with the home office—the international franchising company.
CBI: What about the independent clubs and mini-chains? Do you plan to open your doors to them?
FN: The big names, admittedly, tend to get more attention, but we already have independent clubs and some smaller chains on board. The 2,000-plus clubs in our network are split pretty evenly, about 50/50, between large chains and the smaller players.
CBI: How do you develop corporate relationships? What do you offer your clients? And how do they measure the GlobalFit ROI?
FN: We have a team of sponsor-relationship managers who are focused on getting the word out to corporate employees about the GlobalFit benefit. We also work closely with human-resource managers and medical directors to help them get their employees fit. For example, we frequently attend annual open-enrollment sessions and quarterly health fairs at our clients' offices. Beyond that, we offer our members online diet programs, and attractive discounts on nutritional foods, home fitness programs, and exercise equipment. Plus, we offer online and phone access to health coaches, who help GlobalFit's constituency learn how to exercise, eat right, lose weight, and quit smoking.
As to ROI, unless a company offers a subsidy on fitness and wellness benefits—in most cases, the individual employee pays for their club membership—the investment involves little more than some time and the distribution of materials. Understanding that a fit employee population lowers healthcare costs, companies recognize that the return on their investment is dramatic.
CBI: How will growing concerns about exploding healthcare costs affect GlobalFit?
FN: That's a key driver of our growth. Every time healthcare costs increase, benefits managers turn to fitness and wellness programs to help get expenses under control. Make no mistake about it: They understand that fitness matters. They know that employees who maintain a healthy body weight, muscle tone, and cardiovascular fitness have a much lower incidence of diabetes, cancer, and heart disease. Fit employees also take fewer sick days and are more productive on the job.
CBI: Can you compare the GlobalFit offering to those of other similar operations?
FN: GlobalFit provides a full-service benefit, while the other players, it seems to us, function more like a referral service. We enroll members and handle all of the service administration, including billing, for our network of clubs. We actually bear most of the acquisition and administration costs on their behalf. For our corporate sponsors, GlobalFit tracks and reports on the number of inquiries and enrollments, a service that, as far as we know, no one else offers.
Frankly, we don't think anyone else does what we do.
CBI: What sort of a future do you see for such brokered arrangements?
FN: GlobalFit is a facilitator of fitness. As the industry grows, the need for such facilitators will grow as well.
CBI: Looking forward—where do you think that GlobalFit will be in 5-10 years?
FN: Our mission is to change the way that people think about, and access, healthy-living programs, products, and services to help create a healthier world. We know that, in order to do this, we have to expand our offerings; that, in turn, will help us create a national consumer brand. We also appreciate the importance of having the right strategic partners. We've recently been selected as a 50th Anniversary Partner by the President's Council on Physical Fitness and Sports, and we'll announce several other important new relationships over the next few months. These agreements give us extra credibility and empower our own branding process.
While, like anyone else, I can't see 5-10 years into the future, I do think it's going to be a period of stunning growth for both our industry and us.
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