Tony de Leede This insatiable innovator has stepped down as the head of Fitness First Australia, but remains an active player. CBI: You recently relinquished your duties as the managing director and CEO of Fitness First Australia (FFA). Why step away now at what many would regard as the peak of your career? Tony de Leede: rve turned 55, and, at this point, I need to lead a healthier lifestyle. I spent eight all-consuming years in Australia building Fitness First, and nearly 20 with Australian Bodyworks in the U.S. The choice was to step away now or in five years. Our investors, BC Partners, have indicated that they may exit in 2-3 years, and they asked if I'd be willing to stay a year or two beyond that point. By then, I'd be 60. Instead, I decided to hand over my daily responsibilities to our new CEO, Peter Stirling Benson. However, I remain chairman of the Australian group and still sit on Fitness First's global board. CBI: Looking back, how do you measure your achievements at FFA? TO: When I arrived in Australia, my goal was to grow this company to 100 clubs by 2010, which is going to happen. I've already taken it from 11 to 85 locations-that's 800% growth in just eight years. CBI: if you would, tell us something about Benson, your successor. TD: Peter moved to Sydney from the U.K. in 1989 to serve as a business manager for British Airways. In the mid-1990s, when pay television was being launched here, he became the CEO of General Entertainment Channel TVI. He returned to the travel sector as general manager of Galileo, the biggest electronic distributor of news to the travel agency network. He then assumed the role of CEO at Ticketek, a ticketing agency, and saw i1 through a major transformation. Peter's vast experience in the Australian marketplace, as well as his passion for developing successful service businesses, will ensure FFA's continued growth. A native of Sydney, Australia, Tony de Leede left school at 15 to pursue a business career. At 16, he had a surfboard shop; at 18, a clothing-importing business; and, in 1981, when he was 27, he moved to Atlanta, Georgia, and founded Australian Body Works ABWI, which eventually became a 23-unit chain. He also created Cardio Theater Holdings, which provided clubs with entertainment-technology options. In 2000, de Leede sold ABW, returned to Australia, and helped Fitness First (FF) purchase an insolvent chain, which subsequently became Fitness First Australia (FFA). He served as FFA's managing director until recently, remains its chairman, and sits on FF's global board. He's currently developing two other businesses. CBI: Now that you're not reporting to the office every morning, how are you spending your lime? TD: My wife and I divide our time between our new house on Sydney Harbor, and Gwinganna, my spa and lifestyle retreat on the Gold Coast, near Brisbane. I'm fine-tuning that business, as well as the Active Nedia Group, Fitness First magazine, and Fitness First Lifestyle Network-all of which offer advertisers the opportunity to showcase their wares to club members via closed-circuit television and other media. CBI: You mentioned your desire to adopt a healthier lifestyle. What are you doing now in terms of exercise? TD: I do cycling and BODYPUMP classes, and I work out with a personal trainer, each, once or twice a week at one of our clubs. My wife and I also take frequent walks in some of the beautiful areas around Sydney. I still need to eat more healthily, so Gwinganna will be good for me in that respect. It's a 500 acre property where we grow most of our own food organically. CBI: You've been involved with the Olympics, in a variety of ways, since they were held in Atlanta in 1996. What role did FFA play at the recent Beijing Games? TD: We established the Fitness First Recovery Center, which was filled with state-of-the-art equipment, for the use of the Australian Olympic Team during the event. That was one component of our sponsorship of the Australian Olympic Committee, which extends to the 2010 Winter Games in Vancouver and the 2012 Summer Games in London. Australian athletes inspire our nation, and their efforts help to educate the public about the benefits of exercise, health, and wellness. CBI: In retrospect, what about your career have you found most satisfying? TD: Hiring, coaching, and rewarding enthusiastic and passionate people—no question about it! It's been my practice to reward people with stock, so the employees of Australian Bodyworks received good payouts when I sold that company. The same will hold true should I decide to sell Active Media. FFA employees enjoy similar incentives, and I've continued the practice at Gwinganna. CBI: If you had to assess the impact of your 28-year career in fitness, what sort of a mark do you think you've made? TD: Because, personally, I don't like to exercise, I decided early on that we needed to have some "sizzle to sell the steak." With fitness, the sizzle—consisting of the "three Es," those being entertainment, education, and experience—helps clubs to grow. Cardio Theater, the company that I founded in 1989, was the first to provide fitness facilities with education and entertainment offerings. Before that, there weren't any TVs in health clubs. To provide members with an experience, we introduced Cosmic Cycling—cycling rooms painted black and illuminated with black lights—12 years ago at my Australian Body Works clubs in Atlanta; we now offer it at all of our FFA clubs. We also educate people through FFA's Lifestyle Network. CBI: Turning, for a moment, to FFA's parent company, Fitness First, how are its global expansion plans coming along? Will it be opening clubs inthe U.S.? TD: No, none in the U.S. Right now there are far more lucrative opportunities in emerging markets, such as where we've already opened two and have two more in the pipeline. This slowed our rate of growth somewhat because of current economic conditions. In the past, we've opened 4 clubs per year throughout the world. CBI: What's the outlook in Australia? Is the economic downturn having an effect on FFA? TD: Inflation is revving up; food and energy prices are rising; and more interest rates are high, at 8% or 9%. FFA has just had three months of sales, but our attrition is better than expected, and we're still ahead of budget. People are staying with us in part, because fitness is a wonderful stress-reliever. FFA continues to be the most profitable division of Fitness First. While we only have 15% of all its clubs, we generate 37% of its profits. We'll be opening another seven in Australia during the coming year. I take great pride in the very strong team that we've developed here. Still, like many other places, we're challenged by lifestyle-related issues. Australia, for instance, ranks closely behind the U.S. Fortunately, our beautiful country and temperate year-round climate, encourage physical activity. CBI: Music licensing has recently become a major issue in Australia. What's the problem? Where does the situation stand? TD: Because sales of their traditional product—music CDs—have been declining, music companies and artists are looking for additional sources of revenue. As a result, Phonographic Performance Con of Australia IPPCAL which repre these constituencies, has filed a complaint and music publishers, might push for a similar rate; in that case, a club could, conceivably, see a total increase in fees of around $120,000 per year. CBI: What's the Australian club industry doing? How's it addressing this issue? TD: On the national level, Fitness Australia is contesting the PPCA's increase with the Copyright Tribunal, arguing that the magnitude of the proposed increase simply can't be justified. Our position is that it shouldn't be more than the rate of inflation, as measured by the Consumer Price Index CPI. A Copyright Tribunal hearing date has been tentatively set for next year. On the international industry level, we created the Global II-Leadership Council (GILCI) at the 2008 International Conventior Trade Show. The group included representatives of IHRSA. Fitness Australia, Fitness New Zealan, Fitness Industry Canada, and Fitness Industry Association in U.K. Its goal is to effectively acquire the current music-licensing and other problems that might threaten the global club industry the future. The GILCI is now raising funds to wage the necessary b in Australia, and prevent it from affecting the industry worldwide. CBI: Is there a danger that the problem could spread to other countries? TD: Yes. Keep in mind that it's for copyright-collecting societies set tariff rates based on those in other countries, There's already a major potential problem brewing in Canada; if approved, a proposed tariff there would cost the Canadian fitness industry $94 million a year. CBI: Turning From the problem to the promising: what factors do you think will propel the industry forward in the future? TD: It's what I said before, sizzling innovations in equipment and programs that satisfy the three Es of education, experience, and entertainment. This is especially true as we enter emerging markets. As long as we're able to protect our industry, sizzle will drive growth and ensure our success the world. —Patricia Amend pamend@aol.com Club Business International Tony de Leede is a member of The Leading Edge Roundtable.