When Will the Free Market Catch Up?
by Joe Pulcinella
Just flipping through the paper version of "Fitness Business Pro," a magazine devoted to the health club industry. There is absolutely no shortage of articles based around the government getting itself involved in your personal lives under the guise of keeping you fit for your own good...with the blessing of Big Fitness (major chain health clubs), by the way. One that caught my eye is about the new "medically-based" Cooper Aerobics Center being built in McKinney, TX.
When the center opens to the public in January 2006, it will feature a climbing wall, sand volleyball court, five group exercise studios, an Olympic-sized swimming pool and a cooking demonstration kitchen.
Geez, health clubs have come a long way from the original Gold's Gym where the governor of California used to train. I've owned a gym for 10 years now and I just can't seem to see how all these extras pay for themselves. Could there be a way to do it that I am not aware of?
Like the original facility, the new Cooper Aerobics Center will be medically based. When joining the facility, new members will have an opportunity to visit a doctor at the adjacent Cooper Clinic...
Oh, so that's it! Since it is being operated under the umbrella of a non-profit mega-hospital conglomerate, they enjoy tax priviledges unavailable to the rest of us. And they compete on an extremely lopsided playing field in an industry previously occupied by tax-paying entrepreneurs like me. Just like what the YMCAs have been doing now for years.
When a local YMCA decides to build a state-of-the-art fitness center in affluent communities instead of providing programs for underserved individuals and families, the organization is deserting the very elements of the entire community that it is legally bound to serve. When the federal government, in particular the Internal Revenue Service (IRS), does not impose unrelated business income tax (UBIT) on such YMCAs, it forces hardworking Americans to pay more than their fair share of taxes. These YMCAs are free to compete unfairly with for-profit fitness facilities, taking away customers and driving them into financial distress.
By the way, I wonder why Arnold hasn't chimed in on this steroid thing?