Tuesday 02nd September 2014
Club Solutions Magazine

Midtown’s Maestro

March 10, 2014
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Schwartz3TCA Holding’s CEO and President Steven Schwartz has molded Midtown Athletic Clubs into a successful, amenity-filled brand.

It’s important in life to have a certain direction — to know where you want to go and how you’re going to get from point A to point B. For Steven Schwartz, his entire life has been about making decisions and following through with the systems for the best possible outcome.

A little more than 10 years ago, Schwartz, the president and CEO of TCA Holdings, had to make a decision for TCA’s brand of athletic clubs, Midtown Athletic Clubs. The decision shaped the clubs’ focus for the foreseeable future. The question: with low-price models coming out, should Midtown go high, low or stay in the middle?

Schwartz’s decision to go high has radically pointed Midtown into a grand direction focused on a full club experience with more amenities than a member could truly know what to do with. Members at one of Midtown’s full-service locations throughout the U.S. could essentially arrive at the club in the morning, workout with weights or play a group sport, shower and get ready for the day, eat breakfast at the gym and then head to work. At lunch, members could come back for some afternoon exercise and a healthy meal, then return in the evening to kick back and relax for an amazing dinner.

“We (Steven Schwartz and his dad, Alan Schwartz) just get a kick out of seeing people improve and play,” explained Steven Schwartz. “There’s just something about the whole active community that we create. The resorts that we create, the sense of belonging that we just kind of love.”

Since Schwartz’s dad opened the first Midtown club 44 years ago, the club has expanded to 28 locations. The locations are composed of 10 full-service athletic facilities and 18 wellness complexes that are managed by Midtown Health, another division of TCA Holdings.

“The pressure on hospitals today is a result of the Affordable Care Act and the dynamic changes in the health care market,” said Schwartz. “They really have to relook at their business model and focus all their energy on being the best they can be. Those hospitals that have built wellness centers, or fitness centers, primarily to get into the prevention area of the business, or from a marketing point of view; traditionally [their fitness centers] have not performed financially anywhere near their potential.”

According to Schwartz, it’s not the medical facility’s fault that they aren’t able to fully benefit from the preventative centers they’ve created. After all, they are more focused on striving to do what they do best — get people well. “Now that the focus is so intense in a changing market for them, we see a number of opportunities coming to manage those facilities for them. We are very good at it, we’ve been doing it for years, we’re very successful at making dramatic changes relatively quickly, financially, with no degradation in service, often with an improvement in service.”

Schwartz sees the management concept in Midtown Health as the biggest expansion opportunity for TCA Holdings. “I would be surprised if we don’t add three or four clubs in the next year in the Midtown Health managed club division,” he said. “We’re leaders in that business and I think what makes us really different in that business is the fact that we also operate commercial clubs. We don’t just manage wellness centers, and as a result of having to compete in the crucible of commercial competitive clubs, and succeed on a stand-alone financial basis, we’ve learned how to do that very well. The other management companies really don’t.”

However, Schwartz doesn’t foresee a time when the Midtown Health division would ever overtake the Midtown Athletic Club division in terms of revenue. “It won’t take over the Midtown Athletic Club business because the nature of the economics in the management club business is just like in the hotel business — the magnitude of dollars involved for the management company is not that great,” he said. “Whereas if you really own a successful club you can make a lot of money. It won’t overtake the athletic club business, but I think we can easily double the size of Midtown Health in the next couple of years by lending our expertise to hospitals that need it.

“It’s a win-win scenario. We’ve learned how to deliver all kinds of hospital-based wellness initiatives integrated with their position groups, prescriptions, training — the whole works. We’ve been able to do it and dramatically improve the bottom line of these clubs for the hospitals. They have become raving fans of ours, and it’s really, really fun to have raving fans as customers.”

Midtown_Gym3The raving fans don’t just exist within Midtown Health’s hospital clientele, but the extreme fans extend on throughout the Midtown Athletic Club brand. The brand, which was launched as a single tennis location in 1969 on the dreams of Schwartz’s dad, has blossomed into 10 clubs throughout the U.S. that average 120,000 square feet.

“The key to branding is knowing that the brand is a promise to a consumer,” explained Schwartz. “The question is: what is our brand promise? Our brand promise has always been to deliver a high-touch, high-service, high-quality, communal environment for people to play together.”

In the beginning, Schwartz said that it was all about tennis, but as the industry began to shift, he saw that Midtown Athletic Club and TCA Holdings had to shift as well. “When we started to realize, many years ago, that the industry was going to split into high-price and low-price models, we chose the high-price route,” said Schwartz. “When we chose that we knew we had to go deep. To do that, we had to make sure we kept our brand promise of being a high-end experience.”

Schwartz said he had to spend a lot of time and money making sure all the Midtown Athletic Clubs had the best facilities and a lot of options for its members, which included outdoor tennis, indoor tennis, a resort-style outdoor pool, indoor pool, a full fitness center, restaurant, spa, nicely-appointed locker rooms, lounges and social areas. “If our clubs were missing these things, we built them,” he said. “We renovated clubs to bring them all up to high standards.”

The transition didn’t happen over night. According to Schwartz, the renovations and changes to have top-of-the-line facilities across the board, took years to develop. “The first thing we did was build out the infrastructure for the sports resort concept,” he explained. “The next thing, or simultaneously, we extended our service experience and our programming experience.”

Finally, in 2006, Midtown Athletic Club made the extreme move to rebrand each of the clubs under the Midtown Athletic Club umbrella. “We originally considered all kinds of names that no one had ever used before,” explained Schwartz. “We decided instead to go back to our roots and call it Midtown — call them all Midtown. And the reason that it resonated with us, in addition to the fact that it was our name for so many years, is that we are trying to develop this social community of people. If you think of it as a small town, a village center — where you see people outside the coffee shop that you see three or four times a week as you’re walking down the street, or as you’re going to the little grocery store. I visualize in the [hypothetical] small town that I live in, and Midtown, just has a warm feeling to embrace that village atmosphere.”

Midtown Athletic Club is still investing in the village atmosphere. It continually adds new amenities and programs for its members to keep them engaged in the club. Upcoming will be a $30 million renovation of Midtown’s pristine Chicago location in Bucktown. “We want people to see our clubs as a badge of honor,” said Schwartz. “We’re hoping to create one of the greatest clubs in the world in Chicago where we already have our existing flagship. We are adding probably close to 100,000 square feet of fitness center, swimming pool, an outdoor pool deck in the heart of the city, squash courts, mind-body studio, a European-style spa, expanding our restaurant, developing a turf sports center … a giant place!”

According to Schwartz, the Bucktown location is in the hottest area of Chicago. “It’s a fabulous demographic and we think it’s going to be one of the greatest clubs ever built,” explained Schwartz. “We’re not doing this by cannibalizing tennis courts, which is the way other multi-recreation clubs have grown. We’re just adding.”

Unlike some clubs that saw tennis and racquet sports diminish in the 1990s and 2000s, Midtown never saw a decline in its tennis population. “Tennis has only gone forward,” said Schwartz. “First of all, tennis as a global sport has been increasing over the years. It’s not growing a lot, but it’s not shrinking. With regard to Midtown, tennis is part of our DNA and we are committed to it and good at it. We’ve always created tennis players, always been a place where you can get better no matter who you are, and we have outlets for you to engage. It’s not just you finding your own game. We have killer programs, and we’re known in every one of our markets as the best place to play tennis. And when you’re really the best at something, you usually do pretty well.”

For Midtown Athletic Club, tennis has played a major role in its success. Not only has it attracted those individuals enamored by the sport, but according to Schwartz, it has continually kept people engaged in that village atmosphere. “Our goal is to enhance our members’ lives,” explained Schwartz. “We know that a social sport is the best thing you can do to stay healthy.”

Schwartz explained this through an early-morning workout scenario: Although a person my be excited to start an early morning fitness routine the night before, once that alarm clock goes off at 5:30 a.m. or 6 a.m., the excuses amount. However, if someone else is relying on you to be there, members are more likely to make the effort. “Tennis players are more committed as members,” said Schwartz. “They don’t quit, they get more engaged, they spend more money and frankly, they have a great time. Our whole focus is to take that killer programming and apply it to fitness, but we can be the same world-class fitness company that we are in tennis. I think we have the secret sauce to do it. And that’s my mission.”

With 75,000 members throughout the Midtown Athletic Club brand, Schwartz’s mission has come into fruition, and continues to grow daily. With the perpetual growth of Midtown Health and the renovation of Midtown Athletic Clubs, Schwartz and TCA Holdings believe that the future can be bright for members throughout the U.S.

By Tyler Montgomery

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