Dmitri Yekimov, the Sport Life group of companies founder, told the Expert magazine about the ways developers can increase their sales under the current economic conditions and why Sport Life relies exclusively on its own means, avoiding loans.

- At the beginning of December, Sport Life signed a strategic partnership agreement with the K.A.N. Development company. There are similar agreements with the construction and development companies T.M.M and Liko-Holding. What term are these documents signed for? What are the advantages they give you?

- The cooperation agreements were signed without any time limits stated. But we should also note that our company is a professional tenant in the property market. Sport Life does not buy premises for its fitness clubs, but prefers to rent them for at least 15 years. Thus, all the cooperation agreements that we sign with developers, will be valid during this period of time. We agree to develop joint projects with our partners. For example, in the cooperation with the TMM Company we opened a fitness club in the Triumph residential complex in Zvirynetskaya Street 59 two years ago.

We have just started working with K.A.N. Development, but by 2012 Sport Life will have opened fitness clubs in their objects such as the 101 TOWER A-class business center and the Comfort Town housing complex. We have also agreed to open another club in 2013; it will be located in the A-class IQ Business Center and the negotiations on the development of a joint project based on the Ocean Plaza mall are currently being held. In addition, we have quite a strong partnership with the Liko-Holding company. A couple of months ago, we laid a capsule at the construction site of a new club in the Liko-grad residential complex. This fitness club is expected to be a unique one. In its territory, the placement of a professional swimming pool meeting all the Olympic standards with an area of 54x25 meters featuring a diving board at the height of 10 meters and stands with seats for spectators has been planned.

- The benefits that Sport Life gets are understandable. And what are the benefits that this partnership provides for the developers?

- I lived in America for a long time and I can confidently say that there when an object (a house, a shopping center or a business center) is formed, not just square meters but lifestyles themselves are sold or demised to people. And today those developers and builders benefit who offer people not only apartments and offices, but a qualitative infrastructure which allows them to live and work comfortably. It is the availability of infrastructure that gives the developer a powerful argument for the retention or increasing of the price per square meter. And besides, as I have already said, the Sport Life company only rents, and this is a guarantee of permanent cash generating. Yes, the developer can lease these areas at a higher price, for example, for beauty salons, shops, etc. But we do have an advantage: the fitness club can’t, unlike the retailer, avoid paying the rent and run away during two or three days. Due to the membership cards sold, we are bound to a place at least for a year, and therefore being a decent tenant is in our own interest. I can proudly say that to date, we are the only fitness club chain in Ukraine that pays the rent in full and on time.

- Can you specify the quantity of fitness clubs which are due to be opened next year?

- Today, Ukraine has 11 Sport Life fitness clubs operating. We are planning to expand the network by another 16 clubs in 2012, eight will be located in the capital and eight - in the regions. Thus, in the nearest future two clubs will open in Lviv, and both Chernivtsi and Vinnytsia will get one. By 2014 the company intends to consolidate the position of the absolute leader in Kiev and open its clubs in all regions of Ukraine. I think that just in the next three years 40 clubs of all formats will open. Concerning investments, the opening of the average club with an area of five thousand square meters is worth about five million dollars. So, further on you may make conclusions by yourselves...

- Are you going to invest your own money or borrow?

- Borrowing is not an option. Today, Ukrainian banks give loans at 25% annually in local currency. To be honest, I do not quite understand what real business being in the real sector is capable of paying back such a loan. Therefore, no loans will be taken.

- And what payback term do you expect?

- I believe that under the current economic conditions, the opening of new outlets is a fairly risky step. But the business of fitness, health business - it is perpetual. Therefore, even if the economic situation does not improve, but remains as it is, it means that the payback period of these investments will not start after two or three years, as we would like it to do, but in five to seven years.