Business owners: YMCA has an unfair advantage
MAPLEWOOD, Minn. - Ken Graack isn’t afraid of competition. He owns the American Strength Training Center, where he whips competitive weightlifters into shape.
But competition has to be fair. That’s why he is bothered by the YMCA-managed fitness center in Maplewood.
It’s only one mile away, with a bigger weight-lifting area and 80 fitness classes per week. Unlike Graack’s business, it pays no federal income tax or sales tax, and has an $11 million facility built by the city of Maplewood.
Y officials say the YMCA is a nonprofit that provides fitness programming for low-income people — and it doesn’t compete with private businesses.
“You have to wonder how they can say that,” said Graack, looking around his gym, which is the size of a basketball court. “That doesn’t really have any logic for me.”
He and a growing number of fitness entrepreneurs are asking why they subsidize YMCAs, which can put them out of business. Ys have the financial advantages of nonprofits, and also receive millions from cities eager to build their own fitness meccas.
Gayle Winegar resents it.
“I pay $60,000 a year in taxes,” said Winegar, owner of SweatShop Health Club in St. Paul. Her city taxes pay for competition from St. Paul’s recreation centers, and her United Way contributions pay for competition from YMCAs.
“That is crazy,” said Winegar, who struggles to keep her customers from fleeing to the cheaper, subsidized classes. “I feel like Sisyphus every day of my life.”
YMCA says it has 'a different mission’
The YMCA started in 1844 in England, as a charity to improve the health of urban youth. It’s a worldwide organization today, and the YMCA of the Greater Twin Cities has about 18 fitness centers in the metro area.
Joann Schimml, director of communications and marketing, said in an email that the Y’s mission is “social responsibility, youth development and healthy living.” It also provides a range of programs and social services, all with subsidies available for low-income people.
When asked if Ys compete with private businesses, she cited the “very different missions.”
“YMCAs are affordable to all, used by all and supported by all,” Schimml said.
In 2018, the Y paid $11.5 million to help about 72,000 individuals — which is equal to about 19 percent of the Y membership of 370,000. The Y reported revenue of $167 million in 2017.
In addition to tax breaks, YMCAs have another advantage over private businesses: Direct subsidies from cities.
- In 2007, Hastings paid $250,000 for a $7.1 million YMCA, and Lino Lakes paid $2.5 million for an $8.4 million facility.
- White Bear Lake contributed $2.7 million to a $6.7 million YMCA remodeling project in 2010.
- Forest Lake agreed to pay $9 million — plus contribute a $1 million plot of land — for a $14 million YMCA facility in 2015.
- Elk River kicked in $8 million for a $12.9 million building in 2008.
Critics say the Ys have wandered far from the mission of helping poor urban youth. They say that with help from cities, they have evolved into fitness juggernauts that crush small entrepreneurs.
Meredith Poppler, vice president of the International Health, Racquet and Sportsclub Association, said she applauds the goal of helping the disadvantaged.
But the Y’s primary business, she said, is competing with businesses for customers who can pay the dues.
“Selling fitness services to adults who can afford them is a business,” said Poppler. “A tax-exempt fitness center that operates like a business should be taxed like a business.”
The group says that the Y’s nonprofit status gives it a 25 percent cost advantage over private businesses, and its mission is eclipsed by “duplicating services to the affluent.”
Indeed, the programming of metro-area Ys and businesses does overlap.
For example, the Woodbury YMCA has classes in pilates, spin-cycling, Zumba, tai chi, yoga, Barre, kickboxing and water aerobics — also available at the 20 fitness businesses in Woodbury.
While Y officials may not see themselves as competing, the public does.
“It’s definitely like having a club membership at a fraction of the price,” gushed one Google website commentator, talking about the Dayton YMCA at Gaviidae in Minneapolis.
“That yoga room is fabulous and the rooftop facility is breathtaking during warmer months!”
If they were not competing, say the small-business owners, then why would the YMCA open facilities in wealthy suburbs like Woodbury and Edina? Do those locations help poor urban youth?
“Look at the mission of the Y. Now, look at the demographics of Woodbury,” said SweatShop’s Winegar. “The Woodbury Y is a country club. All they are missing is the cocktails.”
The YMCA’s Schimml explained that dues from all Y facilities go into a pool of money that subsidizes programs for low-income people, including eight overnight camps, 10 day camps and 90 child care sites.
The impact of having a large, subsidized competitor doesn’t end with competing programs, said Strength Center’s Graack. They compete for hiring teachers for fitness classes. They compete with better equipment.
They even compete for low-income customers.
He said anyone can come to his gym and pay $35 a month less than the Y’s basic rate of $70 per month. In fact, the rates of fitness chains including Anytime Fitness, Snap Fitness and Planet Fitness are a fraction of the Y’s basic rate.
“It comes down to one word — convenience,” said Shaila Cunningham, whose YogaHotDish business competes with the yoga classes of the Shoreview Y and the $25 million Shoreview Community Center.
They offer day care, ample parking, long hours and a combined total of 49 yoga classes a week.
“They are going to win the convenience play every time,” said Cunningham. “That is quite an advantage.”