Posted by: Christine Calvin | August 22, 2009

Think outside the ring

If today’s economy makes you want to hit something, it might not be a bad thing — at least not for Mike Cimorelli. The El Dorado Hills entrepreneur took a jab at opening the first Prime Time Boxing franchise amid 2008’s toughest financial months and says business has gone nowhere but up.

Cimorelli, who owns Cimorelli Construction Co. in Rancho Cordova, among other businesses, had danced around a ring for years at Prime Time Boxing, a no-frills fitness and training gym that opened on Del Paso Boulevard in 1998. Sacramento natives Angelo Nunez and his wife, Cary Williams-Nunez, launched the company after years of competitive fighting.

“It’s not a free-for-all where people can choose from 10 different classes. It’s boxing only,” Williams-Nunez says. The concept is four-week boxing camps similar to a boot camp and derived from professional boxing workouts, so “you get to learn self-defense and feel like a badass while you’re getting into great shape.”

Tim Brooks, owner of 16-month-old Round 12 Boxing and Fitness in North Highlands, says his clientele includes “lawyers, stockbrokers, bank managers and Taco Bell employees,” and that more women and children are coming through his doors. He also has classes for the developmentally disabled.

It’s the same at Prime Time, where Williams-Nunez says the draw for C-level executives and others in the business world comes from the gym’s systematic approach. “[Type A] personalities like this sort of competitive workout. These are people who thrive on challenges,” she says. “They can just come in, and they don’t have to think about what they’re going to do. It’s very scheduled and very systematic, but ever changing.”

As membership has grown, so has Prime Time Boxing Inc.’s bottom line. The company had $100,000 in sales the first year and has grown by 5 to 10 percent every year since.

“We’ve grown organically on a shoestring,” says Williams-Nunez, who secured the gym’s SBA startup loan from Bank of America for $40,000. “I’ll never forget [the lender] because he called it a feel-good loan based off of nothing but the presentation we gave. We didn’t have collateral; we didn’t have cash in the bank; we didn’t have family investing.”

The feel-good loan was enough to get the Nunez’ started. The couple did the tenant improvements themselves, including electrical, cement and plumbing, for an estimated savings of $25,000. It didn’t take long for guerilla marketing and word to spread before the gym was packed.

The Nunezes have six full-time trainers and a membership of nearly 150 clients. Then, in 2006, they opened a new gym as a franchise model on Industrial Avenue in Roseville. Cimorelli Construction built the facility, and two years later the Nunezes approached the proprietor about launching a third location as a franchise.

“Construction and real estate development has been really difficult the past couple years, so I looked at it as a chance to diversify into a retail business,” says Cimorelli, who spent roughly $125,000 to get his gym running, including the $20,000 franchising fee.

The franchise, located in a Folsom retail space designed by San Francisco-based Vitae Architecture Inc., opened in September and has close to 90 members. It shares trainers with the other gyms.

“Disposable income is tough, and folks are hunkering down. But even with that, we’re growing every month,” says Cimorelli, whose franchise broke even in the first month. He won’t disclose operating expenses because they’ve changed monthly, but he says costs are low and rent is competitive.

“We’re on a good trend, and I expect that trend to continue. The phone is ringing off the hook.”

Even in the middle of an economic meltdown, membership numbers at the Sacramento and Roseville gyms have remained strong too, having dropped just 5 percent in 2008, according to Williams-Nunez.

Membership numbers are trending similarly at a number of the Capital Region’s other boxing and martial arts gyms, such as the LA Boxing franchise in Sacramento, which opened with 200 members in 2007 and has held steady at about 600 memberships, according to General Manager Branden Bruce.

Nationwide, health club memberships have increased for more than 20 years and have withstood other economic slumps, according to the International Health Racquet & Sportsclub Association, which reports that in 1987, 17.3 million people belonged to health clubs. By 1997 membership numbers reached 28.3 million, and in 2007 41.5 million people held gym memberships.

Likewise, Round 12’s Brooks has continued adding to his current 70-member roster. “It’s almost like the economy is having a double trigger effect. Here it is, the worst of times, and I’m almost two times what I was when the economy was good,” he says. “Maybe it’s because people feel vulnerable right now.”

With a solid foundation, Prime Time Boxing Franchise Inc. is now looking at the rest of California and beyond.

“We got a lot of (franchise) kinks ironed out,” Cimorelli says. “As far as the expenditures, I would say that we planned it pretty close. I think it will be a straight line from here, unless they decide to change the business model.”

So far, the Nunezes are looking to franchise in Florida and Los Angeles, even entertaining notions from actor Danny Bonaduce, who trained at the Roseville gym this past winter and has been raving on his Philadelphia radio show since.

“You put it out for sale, but not too aggressively because you want good leads,” Williams-Nunez says. “We’ve had more quality leads in the past three months than in the past year. We’re getting a lot better calls.”

Some of those calls are coming from interested parties as far away as Puerto Rico and Spain. The Nunezes are talking to two international entrepreneurs and are putting together agreements with the companies.

So while other sectors of the market are trying to escape the downward spiral, it looks like business in 2009 and beyond will be up for Prime Time.

“It’s so different than trying to build a building and get paid later. I really had to figure it out, and now that I get it and understand the business model, I am even more interested,” Cimorelli says. “As soon as a I get this gym in order, I would love to open up another one.”



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