Let me tell you a story about the small town I live in.
It’s a boring small town, but that’s just the way I like it. You kids can have your commuting and your road rage and your smog and whatnot. I’ll take my 3 minute commute, affordable real estate, countless opportunities (mostly because nobody wants to live in small towns) and low crime rates. Small towns may be lacking in the entertainment department, but that’s why Al Gore invented the internet. I still don’t understand why people flock to large centers.
My town recently opened a large community facility. It includes a large field house, along with an indoor track, a convention center and a large gym. I won’t get into the whole story, but the building of this center was kind of hotly contested. Admittedly, it was mostly older people against it, probably because old people are miserable and because it’s not like they’d risk breaking a hip by actually using the place. It is owned and operated by the municipal government, (henceforth referred to as “the town”) which is information that will become important.
I’ve been there a few times, and the gym is massive. It rivals nice facilities I’ve seen in centers much larger than the one I live in. There’s every imaginable piece of equipment, and it’s all brand spankin’ new. There are hottie personal trainers lingering around, just waiting to point out your flaws in exchange for some extra money. To become a member at this swanky facility will only set you back $30 per month if you buy a yearly membership, or about $35 if you lose motivation quickly and only buy a monthly membership.
My town used to have 3 places to pump the iron. The first was a dinky little gym located at the swimming pool. The town ran this until the community facility opened. Then there was a locally owned gym, smaller than the one just recently built, but it had all the equipment and junk you workout guys need to get your aggro on. There was also a Curves, the workout place for ladies who are either fat or don’t want to be ogled by the horny guys jacked up on testosterone at the regular gym.
It’s been 4 months or so since this new facility opened. How have the existing gyms fared in this time?
The gym at the swimming pool closed faster than when that guy showed up at my door to sell me a vacuum cleaner. The regular gym has easily lost 50% of their clientele, at least according to unscientific surveys I’ve done. (i.e. talking to people who work out at that particular gym) The Curves? It struggled for a couple months, and just recently pulled the plug. At least in my town, ladies no longer have an ogle free workout zone.
You can probably figure out the problem I have with this whole situation. There is zero way my local government can make money running this facility. It’s costing them – and, directly, the taxpayers – probably hundreds of thousands of dollars to run this thing per year. It cost approximately $10M to build. No business would invest a dime in something that takes a $10M investment that’s virtually guaranteed to lose money every year. And yet, the government did it.
Of course, governments have different goals than business. Governments should be looking ahead and investing in things that will probably not see a monetary benefit, but will make the lives of the constituents better, thereby increasing this government’s chance of sticking around. Libraries will never make money, parks need to maintained, and swimming pools don’t fill themselves. What’s the difference between these things and the gym my town built?
You can figure out the difference, and it’s HUGE. There aren’t private swimming pools or libraries, but there were two private gyms. One was obviously in a somewhat weak position before the facility opened, since it only lasted a couple months. There’s no doubt the other one has suffered since their new competition showed up.
I think this is a pretty low blow by the town. How can private enterprise compete with something that has no incentive to make money? All the town cares about is getting their membership numbers up so they can justify the huge expenditure to taxpayers. Sure, this encourages wellness, but at what cost?
But, I’m getting sleepy, so I’ll stop rambling. The comment section is all yours. What do you think of the situation in my town?
We have the same problem where I live, only it’s the University threatening private business. Our city doesn’t handle any recreational programming (summer camps for kids, swimming, gymnastics, dance, yoga, fitness classes, etc.) so the University sport and recreation department has become the default recreation and direct programming provider for the community.
The University is subsidized by the Provincial government and can afford to offer these programs much cheaper than a private business. The facilities are paid for, and they don’t pay for electricity, cleaning and general maintenance.
Needless to say, the programs offered at the University are a big hit with the community. But there are private businesses who run their own dance studios, gymnastics facilities and fitness classes, and are arguably better quality than what the University offers – they’re just more expensive.
When the University expanded their dance and gymnastics programs, private businesses were forced to shut down because they couldn’t compete. Not a good situation, since the University mandate should be to provide facilities and recreation opportunities for its students, first and foremost, and not affect private business in the community.
The city recently decided that we need a large recreation centre (maybe similar to the one in your town), but they still don’t want to be in the business of managing and operating the programming side of the business. Would it make sense for the city to contract that business out to the University, since they would be the most efficient and lowest cost provider? How fair is that to private business?
Agreed with the Uproar and B & E. I hate when public properties undercut private corporations. It is happening more and more in this country as well. More and more entrepreneurs are making their decisions based on subsidization or lack of government involvement as opposed to true market outcomes. There is really no way to measure the overall impact of this climate. The really sad part is the more government money that flows the more bueracracy is needed. Once more bureaucrats are in place, they need to justify their jobs so they propose spending more money. Then the downward cycle picks up steam… rinse and repeat forever.
PS – At least we live in small towns, so the grass is definitely greener on our side (as opposed to the concrete world people seem to want to inhabit).
For a minute I thought you were writing about my town! We got a new fancy pants gym/community center awhile back, though they did remodel an old school instead of building a whole new facility. It’s very nice but I hate the effects on the privately owned local gym – it has been here for years and the owner really got hit hard. However, one interesting thing I’ve noticed (now that the community center has been open for 2 years) is that a lot of people are returning to the smaller gym. They don’t like that sense of being on display since so many people go there just to show off, and the wait time to use the equipment is inconvenient for a lot of people.
I can’t say much about this from personal experience since I’m allergic to exercise, but I keep up with the exercise-related gossip. I keep wondering how the community center is sustaining itself, then I remember the local taxes I pay so that other people can go sweat. Hmph. (Get off my lawn, etc.)
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I can’t say I have heard before someone complain about a community centre threatening the local gyms. They usually cater to very different clientele.
The only way it makes sense is if somehow they can justify it by saying that it somehow increases your property value, if you’re an owner. “Like, hey, there’s a great new gym right up the street” – similar to what people say about schools.
Would I buy one home over the other because there is a great affordable gym near? No.
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Amen, brother. Believe it or not, I once argued with a former high level Progressive Conservative staffer about this issue (he was a Chief of Staff for a core minister under Mike Harris). He was playing devil’s advocate, but was saying that because fitness is a public good and kids are fatasses these days, the government should operate fitness centres. I argued that gyms aren’t a market failure — the free market, in any given city and without government intervention, will offer multiple fitness venues. Maybe not a swimming pool in small towns, but certainly gyms.
The government shouldn’t even operate hospitals. The gov should operate public insurance to prevent the race-to-the-bottom (well, to-the-top on prices) that we’ve seen in the US. The gov should set minimum standards for hospitals and accredit Doctors. But we shouldn’t be in the business of operating those hospitals. Ontario has now completely left the private-delivery model with its LIHNs. What proliferates? Hospital administrators. Middle managers. Bureaucrats. Not front-line healthcare. The measurement of service standards becomes an end in itself. Canada, by having private delivery and public insurance, was the perfect balance. Now we’re moving toward the true socialized European model of public insurance AND delivery. It’ll be disastrous.
Roads, on the other hand, are a service that should be owned by government. Sure, contract-out the road resurfacing, but the government should operate/police the road. Further, every divided highway should be a toll road. That’s the only way congestion will ever get resolved. That, or hover cars. Privately-owned roads create small monopolies (just look at the insanely expensive 407 rates). Publicly-owned non-toll roads are a perfect example of a tragedy of the commons. Publicly-owned toll roads are the solution.
The best book on this economic issue that I ever read was actually written by a philosopher, by the name of Joseph Heath. The book is called The Efficient Society. It was published in 1999 but he was really forward-thinking – he even talks about why everybody would someday pirate music, so we should embrace it. And embrace it we have.
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