Expensive celebrity deals are costing a major Aussie fitness franchise big time, causing the embattled workout giant to torpedo its plans for global expansion and shed its workforce.
F45 Training rose to prominence through talents like actor Mark Wahlberg, who once branded the gym empire as the “best workout on the planet”, alongside major athletes like soccer star David Beckham, golfer Greg Norman and NBA legend Magic Johnson.
But the franchise’s payouts to many of the high-profile endorsers has left it in a far worse position than when it debuted on the New York Stock Exchange a year ago.
The Sydney Morning Heraldreports Beckham and Johnson were both paid more than $7 million by F45 for their endorsements.
Wahlberg, who once held 26 per cent of the company, gradually sold off his shares earlier this year, worth hundreds of thousands of dollars.
The award-winning US actor still holds more than 1million shares in the company.
The major payouts come amid “ongoing macroeconomic uncertainty” for F45, which once held plans to open thousands more gyms all over the world.
The fitness giant announced in July they were “realigning” their corporate operations around an outlook that prioritised “profitability and cash flow”.
110 global employees were laid off as a result.
In the same update, the company said their selling, general and administration (SG&A) expenses would be around $15-20 million per quarter – about 40-50 per cent less than the same expenses during the first quarter of 2022.
“While we expect growth to continue, market dynamics are having a greater than expected impact on the ability of franchisees to obtain capital to develop new F45 locations,” F45 chief financial officer Chris Payne said.
“Despite the headwinds, F45‘s business fundamentals remain strong.”
F45 planned to roll out 1500 new franchises this year but the company will now aim for between 350 and 450, while forecasted revenue has dropped by millions of dollars.
Originally published as F45’s major celebrity payouts amid staff cuts, expansion plans being dashed