David Lloyd

267,000 people left David Lloyd in a single year. It still paid £330m up to its parent companies. The business borrowed to pay it.

ALL BREAKDOWNSTHE BREAKDOWNFEATURE

10/29/20266 min read

267,000 people left David Lloyd in a single year.

It still paid £330m up to its parent companies.
The business borrowed to pay it.

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THE SETUP

David Lloyd was a Davis Cup tennis player before he was a brand. He opened his first club in Heston, west London, in 1982.

The business has changed hands three times since. Whitbread paid £200m in 1995, when there were 18 clubs. A consortium led by London & Regional paid £925m in 2007. TDR Capital bought it in 2013 for £750m, putting in about £190m of its own money and borrowing most of the rest.

TDR has added more than 40 clubs in the UK and 30 across Europe. Membership has nearly doubled. The workforce has tripled to 11,600.

On the surface it looks like one of the best run leisure businesses in Europe. There are 137 clubs, 108 of them in the UK. Membership rose by 37,000 in 2025 to 822,000. EBITDA climbed 21% to £280.9m.

Members turn up too. They made 62.3 million visits last year, about six and a half a month per member. The Net Promoter Score is +44, the kind of number most gym chains would frame and hang in reception.

Then you open the cash flow statement.

In 2025 David Lloyd raised £1,293m of new borrowing and repaid £910m. That's about £383m of fresh debt. In the same year it paid a £330m dividend.

A dividend doesn't have to come out of one year's profit. A company can pay it from reserves built up over time. But the cash still has to come from somewhere and in 2025 it came from lenders.

That's the David Lloyd story. A club its members love, financed the way a property company is financed.

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THE PLAYBOOK

1. Turn the club into somewhere families spend the day

A budget gym sells a treadmill and a locker for the price of a takeaway.

It competes on price and price is the easiest thing in the world for a rival to copy.

David Lloyd built something a budget gym can’t fit into a unit on a retail park. Picture a Saturday morning. The kids are in the pool for their swimming lesson by nine. One parent is on a padel court with the same three people they’ve played with since spring. The other is in the spa, one of 52 the group now runs, 16 of them with outdoor cold plunge pools. By lunch the family has been there four hours and nobody has touched the weight rack.

Padel is the money spinner. At the end of 2024 David Lloyd had 66 courts. Twelve months later it had 253. Hydro-massage and cryotherapy are live in 16 clubs, with eight more on the way. Fourteen clubs got premium refurbishments in 2025 and 16 more are lined up for 2026.

The app ties the week together. 530,000 people open it every month and book 1.8 million classes through it. Tuesday spin and Saturday padel go in the calendar like the school run. Once the club is built into the week, the direct debit stops feeling like a gut-punch.

That’s why the price rises stick. Members complain online about crowded classes and fee increases. Most of them renew. Leaving means finding the kids another swimming lesson and yourself another padel game and nobody wants to rebuild their whole week from scratch.

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Takeaway: The more hours a customer spends inside your product, the harder it is to leave and the easier it is to put the price up. Usage is where pricing power comes from.
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2. Sell a third of the membership again every year

About 267,000 members left David Lloyd in 2025. That’s 34% of the members it started the year with.

Net growth was 37,000. To get there, David Lloyd had to sign around 300,000 new members, more than 800 a day. Each club loses roughly 160 members a month and has to replace them before it can count any as growth.

That changes what the business is. A member in their first year is still a sales problem. The value sits with the families who stay for years and they are what the lenders are lending against.

That changes how you value a member. David Lloyd took £860.8m in revenue in 2024 across an average of roughly 770,000 members. By my fag-packet calculation, that’s about £1,100 a member a year. When a third of members leave every year, the average member stays about three years, so a typical member is worth around £3,300 over their lifetime.

Not every member is worth £3,300. A member who joins in January and cancels by the summer pays around £550. A member who stays five years pays around £5,500 and more each time prices go up. That’s ten times the value from the same sign-up.

The long stayers carry the business. They are also what the lenders are lending against.

Every gym loses members. At David Lloyd the problem is how many. Almost nine in every ten new sign-ups in 2025 only replaced someone who had left.

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Takeaway: Count how long your customers stay before you count how many you have. A customer who stays five years is worth ten who leave in six months.

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3. Let the lenders pay the shareholders

EBITDA of £280.9m makes David Lloyd look like a cash machine. The cash flow is tighter.

After lease payments and interest, the clubs had about £190m of cash in 2025. Keeping the existing clubs in shape cost another £40m, leaving about £150m.

New clubs and refurbishments cost about £175m. So, the year was already £25m short before shareholders got anything.

£330m still went out. It wasn’t a cash windfall for TDR’s investors. It went up to David Lloyd’s parent companies and paid off a PIK loan, a debt where the interest was added to the balance instead of being paid in cash.

The money came from two places. David Lloyd sold some of its property and rented it back. Then in November 2025 it replaced its old debt with around £1.3bn of new bonds.

That debt isn’t cheap. The interest on the sterling bonds alone is about £58m a year, more than the whole group paid in interest in 2025. It’s happened before. By 2021 TDR had already taken out more than £550m, nearly three times what it put in.

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Takeaway: Always ask who’s paying the dividend. If it’s the lender, the customer pays for it later through higher prices.
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ONE MORE THING

TDR tried to sell David Lloyd in 2017. It tried again in 2023. Neither time did a buyer meet the price.

So in September 2025 TDR sold it to itself.

A new continuation fund called TDR Capital Titan bought majority control from TDR's older fund. The cash came from secondary investors including the Children's Investment Fund Foundation, Coller Capital, Apollo, CVC Secondary Partners and Hollyport. Reports put the value at around £2bn.

For anyone outside private equity, a continuation fund is how a firm keeps an asset it can't sell at the price it wants. The old fund sells to a new fund run by the same people. New investors put up the money.

Investors in the old fund could take their money and walk away. TDR kept running the business, with more than £100m set aside to open more clubs.

The new bonds have to be repaid in 2031 and 2032.

That’s TDR’s deadline. By then the bonds have to be repaid or refinanced. A sale or a float could do that, but TDR’s new investors came in at around £2bn and will a profitable return.

TDR is already looking for its next buyer.

In June 2026, reports said TDR was weighing a London stock market float at around £4bn. Four months later there’s still no float and TDR hasn’t said anything publicly.

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