Like any modern gym-goer, Humphrey Cobbold, chief executive of PureGym, keeps a close eye on the numbers.

When gyms closed at the start of the UK’s first lockdown in March 2020, many viewed them as virus-friendly places. But the boss of the UK’s largest gym chain decided to lead the way in developing industry protocols to safely open gyms.

Cobbold says business leaders need to speak out on issues they have expertise in. He started lobbying for support for the sector and appeared regularly in the media. “I think business tends to shrink a bit into the background,” he says. “There are concerns about the extent to which the government supports business. † † but in this case I felt we should stand up and be visible.”

He had taken his job off your hands. Cobbold presented the sector protocols to Deputy Chief Physician Sir Jonathan Van-Tam and other SAGE scientists during a visit to Park Royal PureGym in West London. When Van-Tam saw the slick gym, he suspected a smokescreen by seeing PureGym’s smartest site. But 57-year-old Cobbold told him: “This is £23 a month. † † This is what a modern gym looks like.”

Fearing a government blind spot over the UK gym sector, which Deloitte consultants estimate at around £5.5 billion in 2019, he wanted to build a evidence base on the sector’s Covid-19 contagiousness. “You can take the man out of McKinsey, but you can’t take McKinsey out of the man,” he jokes, after spending his early career at the management consulting firm.

PureGym, together with industry association ukactive, led the development of data on infectiousness at gyms. An initial study found a total of 78 cases of coronavirus in 22 million gym visits. Repeated lobbying, supported by this data and other studies, helped convince policymakers that gyms were relatively safe. They would open to pubs within the UK after the 2021 shutdown.

While Cobbold had one eye on reopening, he also had to navigate the “immediate crises” of the pandemic. This included discussing rent deferrals with the company’s 250 landlords and making the decision to cover the vacation pay of PureGym’s 2,000 personal trainers who missed out on government payments. By early 2020, the company had also bought Danish operator Fitness World for £350 million. The company lost nearly £200 million, compared to £39.6 million in 2019, a hit Cobbold described at the time as “frankly, appalling”.

And the heavy losses continued until last year. PureGym had net debt of more than £800m, compared to just £70.9m in profits, over the nine months to September 2021. In addition, an attempt to go public failed. Cobbold and chief financial officer Alex Wood “didn’t really have a day off between May and December,” he says, as they prepared for a list — something Cobbold had previously attempted at the company in 2016.

But PureGym had to “raise quite a bit of capital to pay off debt and raise enough money”. As public offerings slowed towards the end of 2021, investor confidence waned and PureGym pulled out. Cobbold says he was “frustrated rather than disappointed” that “the markets were not as responsive as we wanted”.

Despite the high debt burden, Cobbold’s confidence stems from the company’s record. In 2016, PureGym was worth around £550 million – it’s now valued at over £1.5 billion, he says. “It frustrates me that the public market investors were unable to see through some of the short-term swings in the market.”

As a director you have to be clear and direct. † † but it’s not just my way or the highway

Getting through the pandemic took confidence in the model, as well as an “act of confidence” that would bounce back the turnout, he says. Now PureGym expects to take advantage of gym goers looking to trade-in their memberships to control the cost of living.

And the offerings are decidedly no-frills: the Oval location in South London where we meet isn’t glamorous. But like the 300 UK locations, the space is airy and perfectly functional for the over 20s who spend their Wednesday mornings there for around £25 a month.

Cobbold is proud of PureGym’s “budget status” and accessibility. “I think this is the standard gym product that people are looking for. Of course there are people who are happy to pay £100 or £150 to go somewhere with a little more granite and a little more glass and a little more chrome,” says Cobbold, but it’s not PureGym’s model.

The company offers contract-free membership and there is a variable pricing model, with costs ranging from £46.99 per month for a standard membership in Clapham, South London, to £17.99 per month for the same package in Grimsby, North East England. It’s a sign, he says, of how to run a simple business in a “sophisticated way.”

Three questions for Humphrey Cobbold

Who is your leadership hero?

The late Andrew Grove, former CEO of Intel. He wasn’t a big, showy leader or anything, but he had some important principles. He said the problem with most companies that become successful is that they take pride in that success. That success leads to complacency, and complacency is almost always a prelude to failure. You have to have this ethos of healthy paranoia.

What was the first leadership lesson you learned?

The importance of authenticity. When you lead people look at you and you can only reasonably expect them to follow you if they believe the person you are presenting is real.

What would you do if you weren’t a director?

A scientist. I studied science in Cambridge, I wanted to be a nuclear physicist. I did a few science research internships, but it wasn’t as exciting as reading about Einstein made it all sound and I was seduced by an interest in business.

Undeterred by the failed IPO, Cobbold has sought funding elsewhere and is embarking on a small-scale expansion in the US. “We halted the IPO process at the end of one week and entered talks with private equity investors the following week.” KKR would eventually invest £300 million to fund PureGym’s international expansion plans. It’s a well-known path: in 2017, US private equity group Leonard Green & Partners bought a majority stake in PureGym from CCMP Capital Advisors.

Cobbold rejects any idea that, under private equity ownership, he has no control over the direction of PureGym. Decisions such as expanding into the US or launching a Peloton-style bike are made in consultation with PureGym’s private equity owners.

“As chief executive you have to be clear and direct,” he says, “but it’s not just my way or the highway.” His collaborative approach leads to “robust debates,” he says, but also fosters confidence in his leadership. “Leonard Green is 11,000 miles and eight time zones away,” he says. “They know they depend on us and my sense of the market.”

We speak the week after John Foley stepped down as chief executive of Peloton. Cobbold, a “nerdy” cyclist and former CEO of online sports retailer Wiggle, says he uses the Zwift cycling platform instead of Peloton. And while he admires the company, he says it was “probably got a little carried away with things.” PureGym’s investment in the US will be small, opening three locations will risk about $20 million, he says. “If we build even a modest size business in America, it could be 100 or 200 sites worth $300 million to $500 million.”

The cautious optimism not to “bet the company” on expansion recalls Van-Tam’s warnings to “pull the pants off” pandemic restrictions. With an eye on the data, Cobbold says, “If it works, great. If it doesn’t work, we’ve learned why it doesn’t work.”

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