F45 roster pays celebrities millions amid staff cuts
Expensive celebrity deals are costing a major Australian fitness franchise, forcing the embattled workout giant to torpedo its global expansion plans and shed its workforce.
F45 Training has risen to prominence thanks to talents such as actor Mark Wahlberg, who once called the gym empire “the best workout on the planet”, alongside major athletes like the soccer star David Beckham, golfer Greg Norman and NBA legend Magic Johnson.
But the franchise’s payouts to numerous high profile endorsers have left it in a far worse position than when it debuted on the New York Stock Exchange a year ago.
The Sydney Morning Heraldreports Both Beckham and Johnson were paid over $7 million by F45 for their endorsements.
Wahlberg, who once owned 26% of the company, phased out his shares earlier this year, worth hundreds of thousands of dollars.
The award-winning American actor still owns over a million shares in the company.
The main payments come amid “continuing macroeconomic uncertainty” for F45, which once planned to open thousands more gyms around the world.
The fitness giant announced in July that it was “realigning” its corporate operations around a perspective that prioritized “profitability and cash flow.”
110 global employees were laid off as a result.
In the same update, the company said its selling, general and administrative (SG&A) expenses would be approximately $15-20 million per quarter, about 40-50% less than the same expenses during of the first quarter of 2022.
“While we expect growth to continue, market dynamics are having a greater than expected impact on franchisees’ ability to raise capital to develop new F45 locations,” said Chris Payne, chief financial officer of F45.
“Despite headwinds, F45’s business fundamentals remain strong.”
F45 planned to roll out 1,500 new franchises this year but the company will now aim for between 350 and 450 as projected revenues have fallen by millions of dollars.