David Lloyd's Tennis Racket
Blackhurst, Chris, Management Today
Ten o'clock on a Friday morning, and the sprawling car park at the David Lloyd Club in Raynes Park, south-west London, is full to overflowing.
Wall-to-wall family estates, racy hatchbacks and four-wheel drives lend the scene an air of comfortable prosperity. Inside, the place is heaving -- all the tennis courts are in use, the gym is packed, the coffee-bar area is buzzing. Four mothers and their young children are using the swimming pool. In the other, outside pool, an elderly lady does her lengths.
The nursery is in full swing, other children are in the creche. The hairdresser, newsagent, finance broker -- yes, it has one, right beside the courts -- and in the car park, the car-washing service, are all doing good business. Only three areas are quiet: the function room that seats 200 people; the Lanes, a ten-pin-bowling centre, which is crowded in the evenings, and Laserquest, the laser shooting game that comes into its own after school and at weekends.
This is business, David Lloyd style. At first glance, it appears a sure-fire winner. Hundreds of people filling his club on a weekday morning is proof he has hit a rich vein. Lloyd, though, is playing a high-numbers game. Above all, what he needs are more people.
More people means new members, a joining fee and a payment straight to the bottom line. To keep pumping the profits the City has come to expect, and he has promised to deliver, he needs more centres. Finding big enough sites to take his clubs -- to keep the returns climbing in years to come -- is not easy. So far, he has succeeded. These, though, are still early days. One day, the wheels of David Lloyd Leisure plc could come off. 'If he can't get new sites and new members it may start to look very different,' says one corporate financier.
Last year, his profits grew 35%, to [pound]7.6 million on turnover of [pound]24.5 million. This year, Mark Finnie, leisure analyst at NatWest Securities, predicts another leap in profits, to [pound]9.5 million. From one centre -- opened at Heston, near Heathrow, in 1982 -- Lloyd now has 18 either up and running or under development.
Most of that growth has come in the past four years. Heston may have opened in 1982 but it was a full seven years before Lloyd built his second centre, at Raynes Park. Since then, the new complexes have come thick and fast. In March 1993, David Lloyd Leisure made its stock market debut, selling the shares at 150p. Today, they are 260p. The company is worth [pound]125 million and Lloyd holds 8.5%.
Sitting in the bar at Raynes Park with the man himself--looking just as lean and fit, with the tour pro's all-year tan, as he did in his prime -- he oozes confidence. To borrow a sporting cliche, he talks a good game: fast, chirpy, cocky even, masses of will to win. His ability to drive a hard bargain can be judged from his service contract: he is paid [pound]200,000 a year through his private company David Lloyd Associates and has a three-year notice period on his contract. If he is fired, he is entitled to [pound]750,000 and he can set up in competition, provided he serves his notice. His wife does not lose out either. Her services are also supplied by her husband's private David Lloyd Associates. In 1994, the company received [pound]287,000 for Lloyd's services as director, and other interior design and public relations work.
His appetite stems, he says, from starting as an amateur. When he began playing, tennis was not the easy-megabucks-just-for-turning-up sport it is today. At 17, he was staying at the YMCA and hitch-hiking to tournaments. Towards the end of his career, when he formed a successful Davis Cup partnership with his younger brother John, he was too late: the big money was for the next generation.
In America, playing team tennis, he saw the potential of indoor tennis centres. This country had its courts on public parks, usually poorly maintained, and its snooty clubs with waiting lists, but little in between. …