Coronavirus: 'The money isn’t coming in quickly enough' to pay wages

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Martin LongImage source, DW Fitness First
Image caption,
Martin Long says his firm's income has fallen to zero, overnight.

DW Fitness First has 120 gyms across the country, all closed due to the coronavirus lockdown.

Because of the closures, the company has stopped charging membership fees, which means it has no money coming in.

The boss of the gym chain, Martin Long, says the firm’s income normally totals around £15m a month, however that has fallen to zero, overnight.

And that means he won’t have the money to fund the firm’s £3m monthly wage bill when it's due at the end of April.

Nearly all of the company’s 3,000 staff have been furloughed but Mr Long is worried that the government’s coronavirus job retention scheme, which covers 80% of a worker’s salary each month up to a maximum of £2,500, won’t be set up in time to step in.

In total, gyms and leisure centres employ about 189,000 people across the UK.

Leisure trade body UKActive has warned that more than half of them could be out of work in 11 weeks’ time.

However, a spokesman for the Treasury said the scheme would be in place by the end of the month.

Members returning?

“Then the question is: ‘do you have access to bank loans?’,” Mr Long says. But he thinks getting cash through the government’s coronavirus loan scheme is “being made too hard”.

“The money isn’t coming in quickly enough,” he says.

“Ultimately, you’ve got to run a business with no income and no visibility of when the income is coming, because you don't know when you're going to reopen.”

“And likely even when you do reopen, you will have less members than when you started the period.”

Image source, Getty Images

Leisure trade body UKActive said that difficulties getting loans and a wait to access the government’s coronavirus job retention scheme could mean that more than a third of gyms and leisure centres collapse.

They were told to close their doors on 20 March as part of tougher measures to halt the spread of the coronavirus across the UK.

However, with gyms not expecting to receive any money under the jobs scheme until at least the end of April, many say they will struggle to pay staff.

'Painful' recovery

UKActive said some of the companies that run the country’s gyms and leisure centres may only survive for another five weeks as rent bills continue to mount.

“We are just weeks away from the closure of up to 2,800 fitness and leisure facilities, which play a crucial role in supporting our health, wellbeing and communities” said Huw Edwards, the boss of UKActive.

That would threaten 100,000 jobs in a sector worth £7.7bn a year to the UK economy, the group said.

“If our leisure facilities are lost, it will be incredibly difficult to rebuild them and any recovery will be extremely slow and painful,” Mr Edwards said.

Image source, Anytime Fitness
Image caption,
Neil Randall says franchisees of his gym chain probably don't have the cash to settle big pay bills for long

Neil Randall runs Anytime Fitness, a network of 166 franchised gyms across the UK.

“These franchisees don't have deep pockets,” said Mr Randall.

“Their cash reserves naturally are a lot smaller, and therefore, they don't have the same time that some other brands might have to survive.”

He said those businesses were now “fighting” to get loans and relief from the government. But he said the franchise owners were keen to borrow money to get them through the lockdown period.

“These guys have put a lot of time, effort and money into their businesses and they want to see them succeed,” he said.

“They're all optimistic about what will be available when we get reopened again, because I think people's propensity to want to become fit, healthier and well, is going to be even more enhanced.”

“But they need to be able to open the doors and have cash to exist at that point.”