CrossFit ‘boxes’ are sprouting up across Arkansas. What’s behind the explosive growth of this fitness business?
Photography by Ashlee Nobel
There’s a saying among CrossFit devotees that goes a long way toward understanding the explosive growth of this unique brand of gyms: The first rule of CrossFit is that you talk about CrossFit.
Desk-bound office types talk about it. Athletes talk about it. Journalists talk about it. Entrepreneurs talk about it. They talk about grueling workouts that produce quick results, a sense of communal purpose found while drenched in sweat and a business model that blows off advertising and franchising norms. And, the buzz keeps members coming in the door.
“I think I maybe took out one radio ad [since 2008],” said Lee Kelly, owner of CrossFit NWA, one of the first CrossFit gyms in Arkansas. “It was all by word of mouth.”
The Insider’s Workout
CrossFit began in 1995 when founder Greg Glassman, a personal trainer with contrarian streak, set up his own shop inside another gym. Glassman specialized in creating oddball routines like competitive repetitions on a weight machine, climbing tall poles or tossing a medicine ball at a wall until your arms gave out. Glassman’s workouts were anything but boring, and the results came quickly.
He called them the Workout of the Day, or WOD, and started putting them online in 2000, a practice that continues today. Anyone can log on to crossfit.com and scroll through hundreds of WODs, though they probably won’t make sense if you aren’t immersed in CrossFit. The workouts even have names: Fran, Murph, Linda, Kalsu. Jargon adds to the mystique; either you’re inside CrossFit, or you aren’t.
Glassman formally established CrossFit in 2000, and the first affiliate was in Seattle. In 2004, he codified CrossFit’s affiliation standards, ushering in a period of unprecedented growth. There were 13 affiliates in 2005, 3,400 by 2012 and more than 13,000 worldwide today.
The CrossFit business model is unique in the fitness industry. While there is a main company, CrossFit Inc., “boxes” (gyms in CrossFit lingo) are not franchises; they’re affiliates. To use the CrossFit name, an affiliate must attend a Level 1 Certification seminar for $1,000, then pay an annual fee of $3,000. The Level 1 course instructs aspiring box owners in the ways and means of CrossFit, and the annual fee is for the use of the name.
And that’s it. The company provides no guidance on how or where affiliates operate, how much to charge or what equipment to buy. Early CrossFit boxes were known for looking like industrial warehouses, an image the equipment — truck tires, heavy chains, medicine balls and a few barbells — did little to dispel. That’s changed somewhat since CrossFit has exploded. Nowadays, successful boxes have specialized equipment, and a few even have luxuries like showers. Most haven’t lost the industrial chic look; however, that’s part of the CrossFit DNA.
Insurance is one area where the company has stepped in to help box owners by creating CrossFit RRG, an independent coverage provider that serves CrossFit affiliates. RRG is tacit acknowledgement that CrossFit’s unorthodox routines and explosive growth have made it a target for lawsuits. It promises to “take aggressive action in the defense of our reputation,” and “discourage lawsuits against CrossFit by creating a formidable defensive barrier,” according to its website. Coverage is $1,185 per month for boxes earning under $125,000 a year.
The low barrier to entry is a big reason why CrossFit boxes are sprouting up everywhere. In 2015, Forbes estimated the value of the entire CrossFit ecosystem, company and affiliates, at $4 billion.
There are three main revenue streams for the company: certification courses, affiliates’ annual fees and licensing fees from the CrossFit Games, an annual competition that pits top Crossfit athletes against one another in a test to find the “Fittest on Earth.” Certifications and annual fees are the largest revenue sources.
The dirty secret in the fitness club business is that gyms make money by signing up people who don’t show up. Phantom members subsidize low-cost memberships for everyone else, and keep the industry in the black.
It doesn’t work that way at CrossFit, said CrossFit NWA’s Kelly. Members come to classes led by coaches who teach, cajole and mentor at the same time. That personal touch comes at a price; in some cities, CrossFit members can easily spend the equivalent of a monthly car payment on dues.
It’s not that expensive in Arkansas, where there are currently 42 CrossFit boxes statewide. Kelly charges $125 a month for a single membership with unlimited visits, and has various discounts — but even at the risk of losing members he emphasizes that people have to be committed.
“I tell people that I don’t want their money if they aren’t going to show up,” he said.
A former Rogers police officer, Kelly got into the business out of his own personal commitment to being in shape.
“I didn’t do it as a business,” he said. “I did it because of my passion for fitness. We didn’t expect to have civilians signing up.”
He started in 2008 with 1,500 square feet. Five moves later, he’s got a 10,000-square-foot box in Bentonville and a 3,500-square-foot box in Springdale, about 600 members between them and 16 coaches, including two who are full-time.
While Kelly started his business on a shoestring budget of about $5,000, he says that probably isn’t possible anymore, primarily because boxes like his often dominate a market. Location is paramount, he said, and members have come to expect certain amenities, such as showers. These days it might take $100,000 in equipment alone to open a competitive box, he said.
“If someone wanted to open across the street, they could, but good equipment and clean facilities, that matters,” Kelly said. “In today’s world, looks matter.”
Kelly declined to talk specifics, but said his business is making money. “It’s not like I live in a 5,000-square-foot house, but it is profitable. My wife still has a full-time job.”
Brady DeClerk, who co-owns Omnis CrossFit in Little Rock with his sister Shea Halbert, is a relatively new box owner who is seeing similar results. Though he’s only been open about a year, he’s already outgrown his initial 1,600-square-foot space and recently moved into facility almost twice as large.
“We were looking at new space three months in,” he said.
DeClerk too said his business is profitable. “All of the sudden within two months, we had 40 members,” he says. “We were lucky. It made it a job immediately.”
Omnis now has 90 members, and DeClerk is looking for slow, controlled growth. He wants members there three to four times weekly, so a sudden influx would mean hiring more coaches and putting a strain on the business.
Maybe that’s an opportunity for a new box owner. If that’s the case, DeClerk would be happy to see the competition; just more people talking about CrossFit.
“I welcome boxes around the area,” he says. “There are still a ton of people who have no idea what CrossFit is.”