New OT Rules Will Affect You

If you have salaried managers at your climbing facility that work overtime, either routinely or for special occasions, you may be paying more in wages come December 1. A new rule handed down by the Department of Labor allows everyone making less than $47,476 eligible for overtime automatically, regardless of their job duties. The DOL created the rule to provide a better deal for underpaid, overworked salaried managers and other “white collar” employees currently exempt from overtime pay. In the climbing gym business, this new rule will affect site managers, assistant managers and even some head routesetters. Overtime may not be a day to day issue, but climbing gyms regularly host special events like competitions, member parties or even special groups like lock-ins. And if you’re a gym that is expanding locations you may want to think twice about the added workload of your managers. These extra hours worked could put a pinch on your labor costs and force employers to dig deep into the Fair Labor Standards Act (“FLSA”).

Tough HR conversations

Mid-level salaried positions within a climbing gym are still a rarity but have been gaining in popularity as gym’s have become more profitable and the responsibilities of certain positions have become more professional. That momentum could all change with these new rules. More gyms may opt instead to keep assistant managers and head setters at an hourly pay and thus avoid the overtime rule. That’s because once their pay comes close to crossing the overtime threshold, the threshold may go up again. It’s currently scheduled to go up every three years. Many view earning a salary as a rite of passage — after years of punching a time clock, they feel they’ve finally reached professional status. But, even if these workers remain salaried employees and previously been treated as exempt from overtime they will now have to track hours worked, break times and meal times. This perception problem puts the onus on HR and employees’ managers to evaluate individual situations and find a way to assure employees they’re not being “demoted” or “losing status.” “Today’s overtime rule will reduce valuable middle management positions … [It] breaks the basic American bargain: If you’re willing to work until the job gets done, you can quickly climb the career ladder,” Alfredo Ortiz, head of the Job Creators Network, a business trade group told CNN Money.

What You Can Do

According to The Labor Department, the overtime rule simplifies and modernizes the nation’s overtime regulation − to ensure that extra work means extra pay.
There is a misperception that there is only one way for employers to comply with our new our new overtime rule when they have white-collar employees who earn less than $47,476 per year: change them from salaried to hourly employees. That is just not true. First, employers have a wide range of options for responding to the changes to the salary level. Employers can choose the one that works best for them. Options include: Raise salary and keep the employee exempt from overtime: Employers may choose to raise the salaries of employees to at or above the salary level to maintain their exempt status, if those employees meet the duties test (that is, the duties are truly those of an executive, administrative or professional employee). This option works for employees who have salaries close to the new salary level and regularly work overtime. Pay overtime in addition to the employee’s current salary when necessary: Employers also can continue to pay their newly overtime-eligible employees the same salary, and pay them overtime whenever they work more than 40 hours in a week. This approach works for employees who work 40 hours or fewer in a typical workweek, but have occasional spikes that require overtime for which employers can plan and budget the extra pay during those periods. Remember that there is no requirement to convert employees from salaried to hourly in order to calculate their overtime pay! Evaluate and realign hours and staff workload: Employers can ensure that workload distribution, time and staffing levels are all managed appropriately for their white-collar workers who earn below the salary threshold. For example, employers may hire additional workers.
Hrmorning.com notes that companies are facing a crisis of compensation and need to ask one important question: Do we expect newly non-exempt employees to be as productive working strict, 40-hour workweeks? (Note: This is assuming you’re not going to leave the door open for them to collect overtime on top of their regular pay.) If your answer is no, that begs three more questions:
  • Will you decrease their pay and allow them to work OT to catch up?
  • Are you willing to be lenient and allow them to work some overtime? or
  • Will you lessen their workloads?
No matter the determination you arrive at, it’ll require a carefully-crafted conversation — and that goes double if you’re taking duties off of someone’s plate. Ultimately, the most important thing for small-business owners to remember is to take proactive steps to prepare for compliance come December. According to Workforce.com, business owners should evaluate their organizations to better understand which employees may be affected, consider implementing time and labor tools that monitor their employees’ hours, and determine any changes they may need to make to ensure compliance. Kara Maciel, the labor chair of Conn Maciel Carey PLLC’s Employment Practice Group, shared insights with Club Industry on the rules’ potential impact on the health club business in a recent webinar. Maciel noted that many low-level managers and assistant managers may automatically be disqualified from exempt status unless their salaries are increased to meet the new salary threshold. This could lead to significant increases in labor costs for a health club business, Maciel said. To prepare for the rule, which was a proposal in April, Maciel said clubs should:
  • Audit the exempt classifications of the current workforce to ensure they meet the current requirements;
  • Pay special attention to those who are close to the salary threshold and those who hold “assistant manager” or “supervisor” type positions;
  • Review policies regarding overtime and hourly tracking systems as a result of the increased number of employees who will be entitled to overtime.

Bad for Business, Good for the Economy

As mentioned in the video above, employers are not happy with the new overtime rules. Labor costs are the single biggest expense almost all business face and this new rule will only make this worse. In addition to extra costs it will put an administrative burden on HR to keep better time clock records and of course could dishearten hard working employee. But according to Goldman Sachs, total employment in the US in 2017 will increase by about 100,000 jobs as a result of this new rule. The idea is this: Companies whose workers are covered by the rule will try to avoid paying overtime, and they’ll hire additional workers to do this. The point is to keep from asking their existing employees to work more than 40 hours a week.

Super Bowl Wall Finds New Home

The climbing wall that wowed spectators at the 2015 Super Bowl will now be relocated to a park in Phonix, Arizona.
The former Super Bowl wall.  Photo: Bizjournals.com
The former Super Bowl wall. Photo: Bizjournals.com
One-third of the massive structure (30 feet tall and 28 feet wide), called the “Grand Canyon Experience,” will join the other rides and attractions at the Enchanted Island Amusement Park near Encanto Boulevard, Gregg Bach, spokesman for the Parks and Recreation Department told AZcentral. During the Super Bowl, climbers could choose between two climbing sections and watch as a video display and flowed a waterfall over the top of the “cliff”. Phoenix received the climbing portions as a gift after the festivities. The wall has since sat under a tarp in a city public works yard, Bach said. Bach said he wasn’t sure where the remaining section would go, but that it could be used for replacement parts.

What’s True In Climbing, Is True in Business

World Cup routesetter Jacky Godoffe has been climbing there for decades, and his routes are drawn from the motion of Font. For Jacky, this expression, and sharing it with others, is his happiness.

Bouldering Gym Headed for Loveland

A new bouldering-only gym is hoping to fill the gap in climbing facilities in Loveland, Colorada by open the cities first commercial climbing gym. The Wooden Mountain Bouldering Gym is led by climbers and Loveland locals, Evan Mann and Adam Lum.
Owners, Evan Mann and Adam Lum.  Photo: Craig Young  / Loveland Reporter-Herald
Owners, Evan Mann and Adam Lum. Photo: Craig Young / Loveland Reporter-Herald
The first-time gym owners told the Reporter-Herald that, “There are four gyms in Fort Collins, four gyms in Boulder, and there’s nothing in Loveland. And Loveland is the gateway to Rocky Mountain National Park,” Mann said. “There’s also not many family-friendly venues in Loveland. Lum and Mann bought a 2,000-square-foot portion of a commercial building in April and are in the process of getting plans and city permits lined up. The gym will feature 1,500 square feet of Vertical Solutions climbing wall as well as a cross-training area on the mezzanine level, with equipment such as a Moon Board, a standardized training wall that will allow climbers in Loveland to tackle the same problems with the same holds that people around the world are facing on their own Moon Boards. In addition to regular monthly members, the partners plan to offer 24-access memberships. They have hired Vertical Solutions of Salt Lake City to build their 1,500-square-foot wooden climbing wall, which will feature several different angles. The gym is estimated to open in September of 2016.

Summit Finds Industry at Turning Point

cwa2016
Clockwise: Butora; Working Class Holds; 360 Holds; plenary session; Friction Labs; Catalyst.
The 10th annual Climbing Wall Summit, an annual conference organized by the Climbing Wall Association, finds the indoor climbing industry at a pivotal point in history. The event, which took place this past week, attracted nearly six hundred climbing gym professionals from across the US, Canada, Australia and beyond to Loveland, Colorado for a two-day event aimed at educating and inspiring both long-time and aspirational climbing gym operators. Throughout the conference, attendees saw evidence that the business of indoor climbing is growing and changing rapidly, and is poised to enter a new era.

Climbing is Big Money

Compared to the broader health club industry, which has more than 35,000 locations across the country, the climbing gym’s ascent to nearly 400 locations in the USA (and over 70 in Canada) seems almost trivial. But the industry is growing rapidly — the expansion rate is expected to approach 15% this year — and its economic impact is already significant. According to numbers shared at the Summit, indoor climbing gyms across the US brought in more than $230 million dollars last year, and facilities have more than 200,000 combined members. Rapid expansion doesn’t come without a set of major challenges. The trend of building large purpose-built facilities, with taller walls, more amenities and in more expensive markets means the cost of opening a gym can reach into the millions of dollars. However, most gyms are still funded by owner equity and bank loans, which can be challenging to obtain. Many of the larger operators are getting calls from venture capital firms interested in seeing how they can get a slice of the climbing pie. But the hurdle for grabbing some VC money remains prohibitively high, according to a presentation by Bill Flaherty, a finance expert at Consumer Capital Partners. Flaherty explained that private equity firms are looking for companies with millions in cash-flow. Even if they meet this criteria, investors want a clear exit plan, and today’s climbing gym companies are too small for an IPO and suffer from a lack of interest by strategic buyers. Furthermore, the rate of growth is limited by a climbing gym’s need for specialized real estate, which takes time to locate and develop, Flaherty went on to say. Nevertheless, many of the existing climbing gym operators at the Summit shared their intention to add additional locations, while a significant number of the attendees were hopeful entrepreneurs keen in adding their name to the growing list of climbing gym operators.

Summit Grows Too

Not surprisingly, the industry growth was mirrored by the number of people participating in the Summit. The event, which has been held in a number of different venues in Boulder, CO over the years, was relocated to a dedicated conference center an hour north to accommodate the growing number of attendees and vendors; despite the larger space the event still sold out the exhibit hall, which featured 49 different vendors, including climbing wall, padded flooring manufacturers and other companies that produce climbing holds, shoes, ropes and other gym equipment. In addition to upgrading the venue, the CWA put a great deal of effort into improving the quality of information provided during the event. Most notably, they tweaked the schedule to include more plenary sessions featuring professionals from outside the climbing industry that helped bring a broader business perspective to an industry that is sometimes guilty of navel-gazing.
Pictured left-right: Metolius; Solve; Motivation Volumes
Pictured left-right: Metolius; Solve; Motivation Volumes

Accident Stats

A key takeaway from the Summit is how important data is becoming for an industry that is starting to be seen as more mainstream by the general public. One area of particular importance is the compilation of accident statistics by Monument Sports Group, the designated insurance provider of the CWA. Of all incidents reported to MSG since they took over the CWA insurance program, 71% were bouldering injuries. Notably, first time and beginner bouldering participants accounted for the majority (57%) of the reported bouldering incidents. There are several reasons for the prevalence of bouldering injuries. Foremost is the fact that in bouldering, every fall is a ground fall (because there is no rope protection), and every fall holds the potential for injury. Furthermore, bouldering is the fastest growing segment of the sport, in part due to its low barrier to entry, as climbers don’t need a partner and don’t need to learn how to belay and pass a belay test. This points to an urgent need for climbing and bouldering-only gyms to do more to educate new climbers on the risks of bouldering, increasing knowledge on proper falling techniques and emphasizing the importance of respecting the limits of their abilities. Other suggestions for reducing injury rates on the bouldering wall included discouraging spotting (which has been shown to be ineffective and potentially dangerous in facilities with continuous, seamless padded floors), making good use of designated down-climb holds, practicing conscientious routesetting, and performing regular analysis of incident trends to determine if there is a particular routesetter, section of wall, or other factors that might be contributing to a higher incidence of injuries. These metrics also point to a larger challenge of gathering more accurate and relevant statistics that will help individual gyms and the industry as a whole continue to evolve and minimize risk. After collecting from gyms for 2.5 years, Monument only received 225 incident reports; this represents all self-reported incidents of varying levels of severity. Most gym owners and managers hearing this statistic expressed concern that this was a very low number, and pointed to their own lack of reporting, simply due to a lack of understanding or from fear that reporting all incidents might result in higher premiums. Mark Grossman, President of Monument stressed to audience members several times during the Summit that reporting incidents will not lead to changes in insurance rates. He and other gym owners discussed the importance of improving reporting of all accidents so the industry will have better data and can be more proactive in addressing existing and emerging accident trends.

Industry Metrics

Unlike many other industries, the indoor climbing business sector has very few metrics to track the economic growth and health of the industry. CBJ has been tracking and publishing the growth in the number of commercial climbing gyms in the USA and Canada for a few years but there are no other industry-wide metrics that can help a climbing gym operator evaluate their financial performance. All climbing gyms in North America are privately held, and there has been a longstanding reluctance of climbing gym operators to share data, even with independent groups like the CWA. This all could change thanks to a new initiative by Rock Gym Pro, the software that most indoor climbing gyms use to track customers and sales. The Industry Metric Service (IMS) is an optional feature of the software that allows operators to opt-in to sharing anonymous aggregate data about their facility. This feature, which is currently being used by 51 commercial climbing gyms, allows facilities to compare a number of key metrics about their business to industry averages. For example, they can look at a dashboard that displays a graph of their gross sales, memberships and daily check-ins, and see how their current numbers and growth over last year compare to the national average. Chris Warner, President of Earth Treks and a member of the CWA Board of Directors, made a plea during the final plenary for members to start participating in this data sharing program. He stressed that in order for the industry to continue maturing, businesses must have access to accurate data that can inform managers on how they are performing and to help guide operational decisions. In addition, these metrics will become incredibly important for demonstrating the economic potential of the industry for brands that are looking to attract large amounts of capital from the private sector to fund the growth of their companies. Unfortunately for prospective gym owners, RGP has made it explicitly clear that this data will only be available to existing climbing gym operators that have opted into the program, and will not be sold to any outside parties.

On the Ledge

After three days of pre-conference workshops and two-and-a-half days of intensive conference presentations, the general mood of the attendees was one of excitement and speculation. Many gym operators and those wishing to start their first gym expressed a sense of the industry entering a new phase; a tipping point in where and how climbing is sold. Though none could point exactly to where the industry is headed, all those paying attention notice a shift in the competitive atmosphere. A shift that could force climbing businesses to step up their game in an effort to stay relevant, and in business.

Touchstone Announces Burbank Location

Touchstone Climbing announced earlier last week that they have secured a location for a new bouldering gym in Burbank, California. burbank “We have continued to search for a location to cater to climbers on the east side,” said Touchstone Climbing owner Mark Melvin. “While on the hunt for a rope climbing gym location, we stumbled across this fantastic space for a bouldering gym in the process! It was too good to pass up.” With 10,000 sq ft of climbing terrain, it will house a weight room, cardio equipment, yoga, and fitness classes. This facility is expected to be their fourth location in the LA area.

PG To Open 2nd Facility in Chicago

San Francisco-based Planet Granite has just announced their second location in Chicago, a mere month after announcing a full-service climbing facility in the city. chicago-2ndlocation From the Planet Granite Blog:
The second site at the Southwest corner of the intersection of N. Sheffield Ave. and W. Diversey Parkway will offer North Chicagoans a huge selection of quality climbing. This satellite bouldering gym is about two miles north of Planet Granite’s location at 1301 N. Kingsbury St. “Being able to offer a bouldering gym that both complements our flagship location at Kingsbury and operates as a stand-alone facility enables us to better serve the community and provide a ton of variety,” says Stephanie Ko Pound, Sr. Dir. of Marketing. “This bouldering gym will be an amazing facility in a great location, providing additional value to our members by offering a second location in such close range.” Located by a major metro stop, this expansive bouldering gym will have 24,000 square feet of space in a new custom designed building. The climbing facility will be on the second and third floors above a street level retail and will incorporate tons of windows and balconies to give a three-dimensional feel to the space. That brings the combined size for the PG Chicago sites to nearly 70,000 square feet. Both gyms will include yoga and fitness facilities—the combination is a signature characteristic of Planet Granite. Planet Granite began with a family of gyms that grew together in the Bay Area, so this model is tested and true. Each gym has its own dedicated expert staffers to coach youth teams, to set routes and to lead yoga and fitness training. The close proximity of the gyms enables our members to climb regularly at a nearby facility but then travel to other facilities for new terrain. “There is a good community of climbers in the Northwest corridor along Milwaukee and we hope to have an announcement about a third facility there soon,” says Pound. “Our goal is to open a pod of facilities in the Northwest quadrant of Chicago to give a similar variety of climbing as we offer with our three Bay Area facilities.” The Chicago gyms will be built from scratch with the same focus as other PG gyms: serving the broad community of climbers and yogis by responding to the needs of individual passionate athletes who make up the whole.

From Silos to Suburbs

upper limits - silo
Climbing inside the silo. Photo: Upper Limits
By Kimberley Donoghue The story of Upper Limits climbing gym, on the precipice of opening its fourth location in the midwest later this fall, began back in 1989 when some Army buddies convinced Chris Schmick, co-owner, to go rappelling — even though he wasn’t feeling great after a long night of drinking. “We had our Army boots on … we were the typical idiots,” he recalls. They ran into “some weird looking dudes in tights and all of this shiny gear,” and Schmick discovered climbing. “I fell in love with it that day,” he says. His story may sound familiar: he went to the outdoor store, bought some “how to rock climb” books and started climbing every weekend. Schmick eventually dropped out of college in Arizona because there was too much good climbing around to go to class. Nevertheless, his path to climbing bum stalled when a bad fall in Red Rocks grounded him. During his recovery, he worked as a welder and met his soon-to-be wife, Pam, a veterinary technician who gave his cocker spaniel a haircut. In 1994, shortly after they married, their local climbing gym in Peru, Illinois, was put up for sale and they seized the opportunity.

Abandoned Grain Elevator

From the start, “we knew we needed a bigger space and a better location,” says Schmick of the original gym which was located in a converted racquetball court. So they began the search in nearby Bloomington, IL. “We looked and looked…and looked. Since it’s a flat state, it’s easier to sprawl out than go up.” The Schmick’s were nearly ready to give up on the area when they found some abandoned grain silos, including a 110-foot grain elevator. After securing a bank loan, adding in their life savings and another loan from Chris’ grandmother, the Schmick’s became the proud owners of the silos. Then, the hard work began: three months of cleaning rotted soybeans and scrap metal from the grain storage facility that had been vacant for more than 10 years. Schmick then spent three months building climbing walls and drilling thousands of holes into the concrete silos so that climbing holds could be attached. After $250,000 and countless amounts of elbow grease, Bloomington opened just in time to host the Junior Competition Climbing Association (JCCA) regional competition on September 2, 1995. “As a climber, I thought: ‘This is awesome.’ As a business owner now … it freaks me out,” Schmick admits. Named one of the “Seven of the Most Innovative Gyms in the World” by Smithsonian in January 2016, Upper Limits – Bloomington offers a 110-foot outdoor wall with top-rope and lead routes and a 1,700-square-foot outdoor bouldering area, both lit at night for climbing. Customers can also take an elevator ride to the top of the building and rappel 120-feet off the top. Of the five grain silos, three are round and two are uniquely shaped, featuring stem and chimney type climbs. The main area includes slab, aretes, roofs, dihedrals, cracks, and a wave wall. The gym got its first claim to fame in December 1995 when Schmick – jonesing for some ice climbing – rigged a sprinkler system to create a frozen waterfall on the outside of one of the silos. A local climber and journalist caught wind of the experiment and wrote a story for her newspaper. The story went viral (the old-fashioned way) and Upper Limits made it into the Chicago Tribune, Paul Harvey, The National Examiner, Good Morning America, and other national news outlets. Despite the attention, Schmick hasn’t re-created that frozen waterfall.
upper limits - ice4
Silo ice climbing. Photo: Upper Limits

Moving to St. Louis

In 2001, Schmick and his wife began the search for a location in downtown St. Louis, Missouri in part because the city was located closer to Jackson Falls, the crag in southern-Illinois Schmick was helping to develop. Their new location was a departure from the silos, with 34-foot ceilings and 10,000 square feet of climbing surface built by Eldorado Wall Co. Once St. Louisans had a taste of the climbing spirit, they wanted more. In 2010, the Schmick’s once again began their search for a new location and found it in an industrial warehouse in West County, about 15 miles west of their St. Louis location. The building had just one problem: a 20-foot ceiling. Undaunted, they raised the roof to 45 feet and, this time, contracted with Rockwerx to build 14,000 square feet of climbing. Nearly 1,000 people walked through the doors of the new location on its opening day in 2011.

The Evolving Climber Demographic

In September 2015, Upper Limits invested in a $60,000 upgrade to the West County location by adding a training room called “The Boardroom”, which is open 6 am to midnight. Though it has 40-50 members (who pay an additional fee for access), it hasn’t done as well as Schmick expected. “There’s not a ton of hard climbers here,” he says of the slow growth. “But, it’s not a disappointment [because] we really built it for the climbing team. We needed to create a space for them, with the added bonus of having this place for hardcore climbers,” Schmick adds. That doesn’t mean there is a shortage of people wanting to climb, they just look a bit different than the dudes Schmick started climbing with in the late eighties. For instance, the only women you used to see in the gym were the girlfriends of climbers, Schmick says; now it’s almost a 50-50 split. Schmick says his primary goal is to create a safe environment for people, of all ages, to have fun rock climbing. “I try to get kids, adults …because you never know who’s going to like it,” he says. “We’ve had people who are 50, 60 years old who try it for the first time and fall in love with it. We also have members who are 89 years old. It’s a lifetime sport; it’s not football.”

Kids in the Burbs

Upper Limits newest location in Chesterfield, a suburban community just outside of St. Louis, is scheduled to open September 2016. “It might be the last good location” in St. Louis, Schmick muses. (Downtown St. Louis is also home to the Climb So iLL gym.) “I also said I wouldn’t build another gym after West County — so who knows?” he adds. The impetus for the Chesterfield gym was a dad on the kids’ climbing team, who suggested, and even scouted the location. “We weren’t super aggressive about it. It was an opportunity that was too good to turn down. Everything lined up perfectly — except the ceiling wasn’t 40 feet tall,” Schmick says. The $1.1 million gym sports 24-foot ceilings and will include 7,000 square feet of bouldering, 1,500 square feet of top-rope, and a large “kid-zone.” This time, Walltopia is erecting the walls. “It’s the best price right now,” Schmick explains of their decision. Located next to a trampoline park, a cheerleading gym, and a karate place, it should do well with the 30-and-under crowd and families with kids, he says. Targeting the youth market is no accident. The secret sauce for a successful climbing gym is age (kids and young adults) and income level, says Schmick. “I learned a long time ago that climbers don’t pay the bills. Birthday parties and Boy Scouts do.”
upper limits - chesterfield3
Rendering of the kids zone at Upper Limits – Chesterfield

Keeping up with the Joneses

Even though the Schmick’s have been busy with the new Chesterfield location and The Boardroom expansion, they have continued to improve their practices and infrastructure at all of their locations. Over the past year Upper Limits has upgraded from shredded tire rubber to foam padding for its floors at their downtown and Bloomington locations, and has switched from drag pads to a seamless flooring system in their West County bouldering area. “It was an expensive year for us!” Schmick says. Upper Limits also began providing its own lead ropes to climbers – an idea that occurred to the Schmick’s after climbing at another gym. “You do things for years and you don’t think about them,” Schmick says. “It’s just another thing that can go wrong; this way, we inspect them and we know they’re safe.” It probably costs them about $5,000 a year, he acknowledges; both in purchasing the ropes and not selling as many ropes at the pro shops. “We do everything we possibly can to keep people safe, but it really comes down to people double-checking,” he says. “It comes down to human error and that’s one thing you can’t get rid of.”

Creating a community in a corn field

“If you look at St. Louis now, 15 years later, we’ve probably created thousands and thousands of rock climbers,” Schmick says. “It’s neat seeing kids who learned how to climb in Bloomington – in the middle of a corn field – that are now adults, have kids of their own, and are still rock climbing as a family.” The Schmick’s also enjoy running into past and present members of the Upper Limits community all over the world. Once, in Maple Canyon, UT, they ran into a climber sporting an Upper Limits competition t-shirt from 15 years earlier. “It’s cool to have members and friends from all these years, spread out throughout the United States, that got their start at Upper Limits,” says Schmick. “I’ve changed their world and they’ve changed mine.”