Posted: February 5, 2010

By Michael Schwartz

michael.schwartz@insidebiz.com

Opening a gym at 115 W. Tazewell St. in downtown Norfolk has had its share of drama.

But finally, after two years, a couple of false starts and three tenants, downtown Norfolk property owner and restaurateur Sture Sigfred thinks he has the tenant he needs for the long boarded-up, 101-year-old building to get in shape and stay that way.

The saga began in early 2008, when a sign bearing the name Fuel Fitness appeared on the boarded-up exterior of the old building. It was a gym concept conceived by a man named Jerry Curran. The build-out and interior restoration of the long-shuttered building began with plans to open the gym by October of that year.

Curran, the story goes, more or less disappeared, leaving Sigfred with an old building on its way, but not quite ready, to becoming the next player in an already crowded marketplace for fitness clubs.

Sigfred didn't give up on the idea of having a gym in his building. He found Brian Cavanaugh, who with the help of investors, founded and ran Premier Fitness in the Harbour View section of Suffolk. Sigfred liked what he saw in the high-end Premier concept and approached Cavanaugh and his majority investor, Ron Jackson, about bringing a similar gym to Tazewell Street.

Slowly but surely the building's transformation continued as Premier, with the help of Jackson's money, prepared for its grand opening in January.

Cavanaugh sold the message that his high-end concept, which had seemed to be working well in Harbour View, would work in Norfolk by attracting downtown residents and professionals.

But weeks before Premier Norfolk was set to open, Premier's Suffolk location was shut down and all of a sudden the Premier banners that adorned the Tazewell building were gone, replaced by yet another gym concept, Fitness First Health and Wellness.

Fitness First, as it turned out, is owned by Jackson, Cavanaugh's main backer.

It turns out business at Premier's Suffolk location wasn't going as well as it appeared and Jackson, a plugged-in local businessman who has made his money in the commercial window business, was basically bankrolling the gym's day-to-day operations.

After three months of that, Jackson was fed up with the Suffolk situation and realized he had a decision to make about also being Cavanaugh's source of cash for the new Norfolk location.

"I said that's enough," Jackson said. "I'll stop the bleeding."

Rather than fund both of Cavanaugh's gyms, Jackson said he cut ties with Cavanaugh, paid $180,000 to get out of the Suffolk lease, and went to Sigfred to see about cutting a deal to open the Norfolk gym himself. All of a sudden Jackson was a gym owner, albeit a reluctant one.

Purely from a business perspective, foregoing ties with Cavanaugh made some sense.

First and foremost, Jackson said, Cavanaugh "had not a penny in Suffolk or this location."

Cavanaugh created the concept and brought in the investors. But Jackson said under Cavanaugh's leadership the company burned through $700,000 in 29 months. That money came from Jackson and two other investors.

Jackson said he kept putting money in to try to save the faltering Suffolk location, hurt by multiple factors including the economy and a Gold's Gym opening just up the road. The lease alone at the Harbour View location was $20,000 a month for 14,000 square feet.

Working to Jackson's advantage was the fact that his wife, Julie Jackson, is a longtime certified fitness professional who was involved in running the Suffolk gym and capable of running the fitness end of the Norfolk gym. Julie was previously listed as group fitness and activities manager at the Premier Suffolk location.

"He's the business guy," Julie Jackson said. "I'm the gym person."

Jackson's son, a power lifter in the Special Olympics, will work at the gym, as will his daughter, along with about 12 employees.

Jackson, who was itching to get back to Washington, D.C., to the hub of his company, Architectural Windows Inc., wanted to stay around just long enough to see the gym open for business.

"I can't wait until it's over so I can get back to work," Jackson said while putting a chair together at the gym in Norfolk.

His business plan for the gym includes his hope to eventually sell it.

He said he needs at least 400 members to cover the costs of running it. Leading up to its grand opening last week, Fitness First had 80 members signed up with more potential members coming in for tours each day.

Jackson said he has developed a good relationship with Sigfred and now has a favorable introductory lease for the 9,000-square-foot building, about a third of what Premier was paying in Suffolk.

As he spoke, just days before its opening, the building was still getting the finishing touches. And Jackson was watching each step closely because he's using his own money to fund the project. That's not necessarily by choice, he said.

Financing at a decent rate for such a venture just isn't out there he said. For instance, he looked into leasing all the fitness equipment but the interest was around 19.5 percent. So he just bought it all straight up. Jackson has put in about $340,000 for all the equipment for the Norfolk location so far. He hopes he'll benefit later from not having any debt on it.

The business model includes charging $50 a month for memberships in a Norfolk fitness club market that includes the YMCA; The Gym Downtown on Granby Street and its new location in Waterside; Onelife Fitness, formerly Gold's Gym on Monticello Avenue; and Executive Health and Fitness at the World Trade Center.

Now the Jacksons will work to attract customers using direct mail and targeting fitness programs at specific times to cater to downtown professionals, including opening at 5:30 a.m. Monday through Thursday.

"The only obstacle we have right now is letting people know we're here," Julie Jackson said.

But don't forget about Cavanaugh, who had for a moment, two gyms under his control and is now left with questions. Premier's Suffolk location remains shuttered. At the urging of his attorney, Cavanaugh said he was not able to go into detail about what happened.

He e-mailed a brief statement that hints of potential legal implications.

"The landlord [Sigfred] asked me to open a fitness center in his building," Cavanaugh said in the e-mail. "I negotiated a lease and brought in an investor. After I signed the lease, the landlord and the investor made a deal with each other that didn't include me."

Of the drama, Sigfred said he didn't have any comments other than to say, "Everybody wants to be downtown, you understand."

He said he wishes everybody well who's been involved in getting a gym up-and-running in his building and said they are "all great folks." nib