Fitness freaks brace for impact as popular CrossFit empire fights off a possible buyout.
Thursday, August 16, 2012
A nasty divorce and ownership battle are putting Santa Cruz-based CrossFit through a grueling workout.
Part fitness phenomenon, part way of life, CrossFit is a strength and conditioning program that Greg Glassman, a former gymnast, founded 17 years ago.
Now Glassman and estranged wife Lauren Glassman, who was instrumental in growing the company, are duking it out in Arizona divorce court. A social media war rages as a faction loyal to Greg Glassman tries to fend off a potential co-owner, a Silicon Valley private equity firm.
Glassman, something of a titan to the 4,400-some affiliates who own CrossFit gyms like CrossFit Monterey, has framed the battle as a fight to the death to protect the company’s philosophy and culture of fierce independence. Wearing a shirt that read “UNBUYABLE” at a recent affiliate meeting documented on YouTube, Glassman told the audience he rejects offers to buy the company. “It’s our covenant to protect this model,” he said. HQ, as the central office in Santa Cruz is known in CrossFit lingo, would never dictate what T-shirts gym owners had to wear or what time they should open or close, but it might be a different story if his ex and a private equity firm get their way, he warned.
Lauren Glassman has agreed to sell her ownership interest in CrossFit to Menlo Park-based Anthos Capital for a cool $20 million up front, subject to court approval. Offers Glassman has made have been nowhere in that ballpark, she’s said.
Bryan Kelly, an Anthos managing partner, sounds wounded at the vitriol his desire to buy half the company has stirred. “The whole situation has been surprising, to say the least,” he says.
Kelly, a committed CrossFitter, calls Greg Glassman a “visionary.” He says he’d want him to continue running the company; Anthos, he says, has no intentions to change the affiliate model.
But the message out of HQ is that Anthos would stomp on the company’s solemn covenant to protect the independence of its affiliates, rendering CrossFit a cookie-cutter franchise model where gym owners are forced to peddle supplements and other merchandise.
Russ Greene, a spokesman for CrossFit, points to Kelly telling top management the company was “leaving money on the table.”
By contrast, Greene says, “Greg is never going to sell out. He’s not going to sell CrossFit any more than he’s going to sell his children.”
The company must be enough of a goldmine that it’s worth waiting out the storm. The company expects to pull in $40 million in revenue this year, Glassman told the magazine The Deal Pipeline. And the company is swiftly growing – in the past 18 months, the number of affiliates has doubled, Greene says.
“We have no interest in forcing affiliates to sell things they’re not interested in selling,” Kelly says. “We want to see the company thrive.”