They Paid 7.8 Times Earnings for a Gym With No Instructors. What Is Your School Worth?
Somebody wrote a check for £235 million this week to buy forty-seven gyms in Switzerland. Before he signed it, he knew the target’s revenue to the million, its margin to the point, its member count, its development pipeline, its rent roll and precisely what multiple of earnings he was paying. He knew all of it because the people selling had it written down.
Now go ask the owner of the martial arts school nearest you what his school earns. Not grosses — earns. Watch what happens to his face.
That gap is the real story of this week, and it has nothing to do with price.
- Key takeaways: PureGym paid 7.8 times earnings for NonStop Gym, a Swiss chain running a 47 per cent EBITDA margin on £53 million of revenue.
- A margin that size is only available to a business that has taken the instructors out of the product, which is why a martial arts school cannot and should not chase it.
- The five numbers most school owners cannot produce: average student value, collected versus billed, rent as a percentage of gross, monthly attrition, and earnings after a market salary for the owner’s own work.
- A multiple prices earnings that survive the owner leaving the floor — so a school built on one man has revenue, and a school built on a trained team has value.
- Average student value belongs at $250 to $300 a month; a $100 average is leakage inside the building, not a market condition.
What the money knew before it moved
On October 15, PureGym agreed to acquire NonStop Gym, a Swiss low-cost operator, for £235 million — about $311.4 million — with completion expected November 2. The disclosed arithmetic is worth reading slowly. For the twelve months to June 2026, NonStop produced £53 million of revenue and £25 million of adjusted EBITDA: a margin near 47 per cent. The purchase price represents 7.8 times run-rate adjusted EBITDA of £30 million, or roughly £5 million a location across 47 gyms and more than 100,000 members. PureGym funded it with £206 million from an October bond issuance plus £29 million of cash, which moves its own senior secured net leverage from 4.1 to 4.5 times — the top of its stated target range. CEO Alex Wood said the deal creates “a truly national operator” in Switzerland, where the combined network is expected to pass 100 clubs by year end. Source: Health Club Management, October 15, 2026.
Every one of those numbers is public. The buyer published his leverage. The seller published his margin. Neither of them was guessing.
And this was not an isolated transaction. On October 16, World Gym — Taiwan’s largest operator — signed a lease on its second Bangkok club, a 3,000-square-metre site at Singha Estate’s S-OASIS development opening in the first quarter of 2027, and called it the first phase of thirty Thai locations in five years. Its first Thai club reported more than 1,000 presale members inside two weeks. Source: PR Newswire via Thailand Business News, October 16, 2026. Two weeks earlier, Gulf operator GymNation announced its own thirty-gym Thai plan at 999 baht a month — about $29.75 — on the back of more than fifty locations across the UAE, Saudi Arabia and Bahrain and a US$100 million private credit facility from funds associated with HPS Investment Partners. Source: Health Club Management, October 1, 2026. New Zealand’s CityFitness committed NZ$100 million to about fifty clubs and published its site criteria — towns of 30,000 to 40,000 people with limited existing options. Source: B2B News New Zealand, October 7, 2026. And Smart Fit agreed to put up to R$32 million into Buddha Spa for up to 20 per cent of a 149-location, 96-per-cent-franchised Brazilian network, with a call option on a further ten percentage points. Source: Health Club Management, October 16, 2026.
Four continents, one behavioural pattern: these operators measure everything, write it down, publish it, and move capital against it. That is not a cultural quirk. It is the entire reason they can raise two hundred million pounds on a Tuesday and you cannot get a bank to look at a second location.
The quick list: five numbers you probably cannot produce
I have spent four decades across the desk from school owners, in seminars and on coaching calls, and I can tell you definitively what happens when you ask for these five. Most produce one. A good many produce none. And it gets annoying listening to failing school owners share their secrets of failure when the first secret is that nobody was keeping score.
- Average student value. Total monthly collected revenue divided by active students. Not the rate on the wall — the average that actually lands in the account. Schools that believe they charge $150 routinely collect $100 once you net out family rates, discounts, frozen accounts and the four students who are “going through something.” The number belongs at $250 to $300. A hundred-dollar average is not a market condition. It is leakage, it is inside your own building, and nobody outside your office has any idea it is happening.
- Collected versus billed. Two different numbers, and the gap between them is a report card on your front desk. Schools with no systematic handling of declines and lapses run that gap at a level that would get a finance director fired in any other business. NonStop Gym put a 47 per cent margin on paper in part because its billing does not depend on somebody remembering to chase a card on Thursday.
- Rent as a percentage of gross. Not the dollar figure — the percentage, recalculated this month. I will say plainly that above roughly 15 per cent you have a structural problem that no marketing campaign repairs, and I have watched owners sign five-year renewals without ever running the division.
- Monthly attrition. Students lost divided by students enrolled, every month, charted. The attendance card is the crystal ball and it always has been: only about one dropout in ten is genuinely external, which means roughly nine in ten were preventable and most were visible on that card weeks before they disappeared. An owner who cannot state his monthly attrition rate is managing a leaking bucket by watching the tap.
- Earnings, with your own pay separated out. This is the one almost nobody has. What does the school earn after a market-rate salary for the work you personally do? If you pay yourself whatever is left in the drawer, you do not know whether you own a business or a job. The buyer in Switzerland knew that number for someone else’s company. You do not know it for your own.
Five numbers. An afternoon of work, once, and then twenty minutes a month forever. I am not asking you to become an accountant. I am telling you that the people expanding into your catchment have these on a dashboard, and you are competing against them with a feeling.
What a multiple actually measures
Here is the part that should interest you most, and it is not the 7.8.
A multiple is what somebody pays for earnings that will still be there after the previous owner walks out of the building. That is the whole of it. A 24-hour box with almost nobody on the floor earns the same on Thursday whether or not its founder is alive, which is exactly why it trades at nearly eight times. Our industry sits at the opposite pole: in most martial arts schools, the earnings and the owner are the same object. Take the owner off the floor and the earnings leave with him.
Don’t get my statement wrong. I am not telling you to step back, and anyone who tells you a school runs itself on fifteen hours a week is selling something. The relationship is the product, prime time is four to eight in the evening, and that is where the owner belongs. What I am telling you is that there is an enormous difference between a school whose relationships run through one man and a school whose relationships run through a trained team that one man built. The first has revenue. The second has value. Same gross, same mat, completely different asset.
And you build the second one the way I have argued for forty years: grow your leadership from inside. Your assistant instructors come up through your own student body. You never import a star black belt from another school and put him on a pedestal; incoming black belts start over, and the culture holds because there are no exceptions. That is not sentimentality about lineage. It is the only method I have ever seen produce instructors whose presence transfers the owner’s standard instead of substituting a different one.
Which, incidentally, is where the Brazilians are heading with a tool. Buddha Spa’s co-founder Gustavo Albanesi described certifying therapists across 149 locations by having AI assess standardised treatment protocols on video and flag deviations. I have said for decades that rooms teaching children should be recorded and that the standard should survive inspection. Somebody has now turned that into quality control at scale. It is going to arrive in our industry, and the schools that adopt it deliberately will be a long way ahead of the ones who have it imposed on them by an insurer.
Why this is the month it matters
You could have read all of the above in any quarter of the last twenty years. Here is what makes October different: your revenue signal and your cost signal both moved, in opposite directions, in the same week.
On the revenue side, the numbers flatly disagree with each other. The LSEG/Ipsos Primary Consumer Sentiment Index fell 5.3 points in October to 45.2 — its lowest since October 2011, below the May 2020 pandemic trough of 45.4, and the second-largest monthly drop ever recorded. Source: LSEG Lipper Alpha Insight, October 16, 2026. Meanwhile Bank of America Institute’s October Consumer Checkpoint reported card spending per household up 6.2 per cent year over year in September, 5.1 per cent excluding gasoline — the third strongest rate in four years — with growth recovering among lower- and middle-income households, alongside rising buy-now-pay-later use in which nearly one in five BNPL households carries a repayment above $500. Source: Bank of America Institute, October 2026.
People feel like it is 2011 and are spending like it is a decent year, some of it on instalments. That is a nervous consumer, not a broke one. And where the nerves surface is instructive: September Census figures had sporting goods, hobby, musical instrument and book stores down 0.5 per cent on the month after steady growth most of the year, with GlobalData’s Neil Saunders noting that tighter money hits the non-essential gear those stores sell. Source: Marketplace, October 16, 2026. The gear, not the instruction. A squeezed parent skips the second uniform. She does not pull an eight-year-old out of the one hour a week where a man she trusts tells her son he is doing well, three months before his next belt. What she cancels instantly and without regret is the membership nobody in the house uses.
On the cost side there is no ambiguity at all. Colliers put the U.S. national retail vacancy rate at 4.3 per cent for the third quarter, shopping centers at 5.4 per cent, average asking rents at $26.20 per square foot and up 0.7 per cent on the quarter, with net absorption of 10.5 million square feet — the highest since 2023 — and elevated construction and financing costs keeping new supply constrained. Source: Chain Store Age, October 15, 2026.
Tight space, rising rents, little new construction. Your landlord has leverage at renewal and he has read the same report. So you are walking into a negotiation where he knows his numbers cold and you have a rough idea of yours. If your rent percentage is ugly you have two honest moves — raise average student value, or reduce occupancy cost by sharing the box with a compatible tenant, which is a model more academies are now using deliberately rather than as a last resort. What you cannot do is negotiate a figure you have not calculated.
The trend that was going to kill us, volume nine
I have been told this industry was finished so many times I have lost the ability to be alarmed. The Karate Kid was going to flood us and then leave us with empty floors. Tae Bo was going to take the fitness crowd. The MMA boom was going to make traditional schools obsolete. Budget fitness was going to price us out of existence. Trampoline parks, climbing gyms, screens.
Here’s reality: not one of those trends ever closed a school. What closed schools, every single time, was an owner who could not see his own position clearly enough to respond well — so he chased the trend, or panicked at it, or cut his price against it. The schools that died in the MMA boom tore out a profitable children’s program to chase twenty-three-year-old men who train eleven months and leave. The schools that died against budget fitness started selling punch cards and $39 month-to-month memberships because that is what the box across the street charged. In both cases the fatal act was a decision made without numbers.
That is why I am not writing you a column about the thirty-dollar gym. The gym is not your problem. Your problem is that it can describe itself in six figures and you cannot. Fix the measurement and the competitive question answers itself — usually in your favour, because a school collecting $280 a student with 1.5 per cent monthly attrition is in no danger from an access-only box, and a school collecting $100 with six per cent attrition was in danger before anybody broke ground.
Do this before Friday
Not a summary. An assignment, and it takes about ninety minutes.
One sheet of paper. Write the five numbers on it: average student value, collected versus billed, rent as a percentage of gross, monthly attrition, and earnings after a market salary for your own work. Then write beside each one the date you calculated it, because an undated number is worthless within a quarter.
Then do one more thing, and this is the part that will sting. List by name every student currently paying below your published rate, and write beside each the reason you said yes. Not the reason they gave. The reason you said yes. That list is your real price sheet, and in most schools I see it sits a long way below the one on the wall.
Pin the sheet inside your office door and update it on the first of every month. That is the whole discipline. It is less work than one marketing campaign and it is the difference between owning an asset and renting a job from yourself.
P.S. Somebody is going to read this and conclude that I am telling him to prepare his school for sale. I am not. I am telling him that the measurements which make a school sellable are the identical measurements that make it run well — a trained instructor team, a known average student value, documented systems, attrition you watch weekly. Build it so that it could be sold at a sensible multiple, and then never sell it. That is what a Black Belt rank in business actually looks like.
Stephen Oliver, MBA, 10th Degree Black Belt, is the founder of Mile High Karate and Martial Arts Wealth Mastery, and the author of The Way of the Mile High Maverick and Six Simple Steps to Add 100 New Students, and co-author with Grand Master Jeff Smith of Extraordinary Teaching. Disclosure: Martial Arts Professional is published by Stephen Oliver, who also operates Martial Arts Wealth Mastery, a paid coaching program for martial arts school owners.
