Central Jersey Allstars and Calvert All Stars Cheer & Dance discuss owning vs. leasing their gyms.
By Morgan McMurrin
CBN Feb/Mar 2011
You’ve always wanted to start a cheer gym, but when it comes down to deciding whether or not you should lease your facility or own it, things start to get tricky. Because of this, Central Jersey Allstars in Kenilworth, NJ, and Calvert All Stars Cheer & Dance in Owings, MD, decided to share their viewpoints on the subject matter in hopes of helping make the decision less grueling for up-and-coming gyms that are stuck between both possibilities.
Owning Your Gym
Dear Potential Gym Owners,
For several years, Central Jersey Allstars was very happy at our local gymnastics academy where we made monthly payments to share a space with gymnasts. However, we began to outgrow the facility, and therefore we were no longer able to meet our athletes’ needs by leasing. I realized that I had no choice but to turn my lifetime dream of owning a gym into a reality. The notion of owning a facility resulted in many sleepless nights, but in my heart I knew that taking this risk would be the best decision for my athletes and parents. We needed a place to call our own, so CJA decided to enter an exciting new era of all-star cheerleading together.
Although I’ve only had the title of owner for less than a year, it’s already apparent that the benefits of owning a facility outweigh the benefits of leasing. I love the fact that, with each mortgage payment, there’s the opportunity for equity buildup that doesn’t exist with lease payments. I never felt completely comfortable with funding someone else’s retirement every time I signed a rent check. In addition, stable occupancy costs are a lot less stressful than worrying about unforeseen increases in lease rates when a contract expires. I now get to decide how long we want to stay at this location and. with equity, there’s the possibility of financial gain if we ever decide to sell in an expanding market.
Next, there’s something empowering about having control over the physical appearance of my facility. Our staff has done a magnificent job of conveying CJA’s style and aesthetic with streamlined, sleek artwork and murals. Each athlete feels more comfortable performing her best because she feels at home when she walks through the doors.
Selecting tenants to occupy free space is another benefit of owning that’s been enjoyable, as well as profitable. For instance, Pop Warner, high school teams and college teams utilize our competition floors, and a local fitness trainer rents our studio to teach zumba classes two nights a week. In addition to finding tenants, we’re now able to conduct various clinics, specialty classes and camps because we have the advantage of time and space. We no longer have to worry about dividing our time with other paying customers from another program. Each athlete receives the personal attention they need and has the opportunity to practice on new, state-of-the art equipment instead of worn spring floors and mats.
From a public relations standpoint, owning a gym definitely increases awareness of and interest in your gym. There’s a lot to be said about the legitimacy, strength and stability of a program that owns its own space. In these tough economic times, paying customers want to invest in programs that are in it for the long haul. They need assurance that their child won’t be left without a home when a landlord decides to shut down the facility, relocate or raise the monthly rent. It’s an unfortunate reality, and I’ve seen it happen to some of my colleagues in the industry.
Most importantly, owning a gym is more beneficial than leasing space because of the overwhelming sense of pride that comes with having your own home. Pride’s everything. It can move mountains. My staff, athletes and parents want to see this business prosper just as much as I do, and we all know it won’t happen overnight. With renewed pride and passion, everyone is working just a little bit harder than usual to ensure the success of CJA now, and for future generations of cheerleaders who will one day call CJA their home.
—Patty Ann Romero
Central Jersey Athletic Center, Owner
Leasing Your Gym
Dear Potential Gym Leasers,
Calvert All Stars Cheer & Dance was formed in 1998 and spent its first 18 months practicing in the hallway of a local elementary school. Since then we’ve grown a lot and today we currently lease our practice facility and have been doing so for the last 10 years.
Before deciding between leasing and buying, we did our homework.Asking ourselves questions such as: How long do we plan on being in the building? Are there tax benefits of owning versus leasing? What’s the availability of an existing building or property that is suitable for our needs? And What are the overall goals of the organization? These are just a few of the critical questions all business owners should ask themselves as part of their business plan when deciding to lease or purchase any building or equipment.
Obviously, no one creates a business plan intending for it to fail; however, knowing that the average “life expectancy” of an all-star gym (at the time) was five years and hoping for continued growth, leasing was the most cost effective answer to our first question. It also provided CAS with the option of expanding to fit the needs of a growing organization. Additionally, there were no maintenance costs associated with the lease, as all maintenance issues (i.e., lights, plumbing, heating/cooling, mowing, snow removal, etc.) were included in the lease and handled by the property manager. When it came to the tax benefits of leasing verses owning, the differences were negligible as it applied to our particular situation. (Each organization’s situation with regards to taxes will be different.)
For the first six years, we leased a building, which measured 1,500 square feet. However, due to the layout of the building our athletes practiced on what amounted to an 18′ by 42′ floor; that was, at least, better than the school hallway. By 2005, our membership had outgrown the first building. The business park was also expanding and was willing to work with CAS to build a 3,000-square-foot facility to our specifications essentially double the size and allowing for the addition of a full spring floor, tumble tracks and other training equipment.
The list of pros and cons of leasing versus owning are different for each organization. Though we lease our facility, we’ve begun to reexamine our options as the organization continues to grow and the demand for additional youth-centered programming is a very viable option, which will require a larger facility. However, given the current economic climate, we’re somewhat hesitant but remain optimistic that they’ll require an even larger facility in the very near future. So it may be time to take the next step into actual facility ownership, provided it fits into our needs and budget.
—Tracie Jones
CAS Cheer & Dance, program director
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