GYM owners look set to mount a legal challenge against a Launceston Aquatic fitness centre, saying it cannot work as planned and could need a ratepayer subsidy.
Launceston City Council aldermen will today at a planning meeting debate the fee structure for the gym to open next year.
Launceston Aquatic is a big money-loser but council officers estimate a $6.907 million loss reduction over seven years with a gym and other health and fitness programs.
But Health and Fitness World and Fernwood part-owner, restaurateur Rod Ascui, warned yesterday that the council had a flawed business plan with incorrect figures.
Mr Ascui said he and other gym owners would almost certainly mount a challenge through the Government Prices Oversight Council alleging improper competition.
He said government bodies had to ensure competitive neutrality and apply full cost attribution.
But he said on the figures he had seen, gym charges would be too cheap to recoup costs without a subsidy.
These costs include $460,000 in capital works and $60,000 a year to lease gym equipment.
Fitness franchisee Mark Connelley also questioned the plan, saying full costings must include set-up, room hire, equipment lease, wages, franchise fees (to run classes) and training.
The council estimates a loss of $13.466 million over seven years without changes to Launceston Aquatic operations.
Launceston City Council general manager Robert Dobrzynski said across Australia, aquatic centres and gyms went hand-in-hand.
``Councils compete in the private sector all the time, from the supply of building planning services to car parking facilities and funeral services.'' Mr Dobrzynski said.
``Nearly all contemporary Australian aquatic and leisure centres have dry facilities to provide a suite of services to the community.
``The proposed fees and charges have been set to ensure there is no cross-subsidisation from rates.
``We are very concerned not to undercut the fees of other gyms.''
He said Hobart City Council had a gym at its aquatic centre.
Mr Ascui said there were 36 gyms in the Launceston area, so the council's plan to add another one and make substantial profits was a joke and a scandal.
``There is a whole bunch of other ideas (such as water-based rehabilitation) that they could get into that nobody else is doing,'' he said.
``But instead they are threatening the livelihood of many smaller gym owners.''
Zap Fitness owner in Tasmania, Bob Cheek, said the council's plan was a disgrace as it would add more gyms to an already crowded market.
``I do not think it will do very well but even if it does not, they will be able to prop it up with ratepayer funds,'' Mr Cheek said.
The Fitness Academy in Boland Street co-owner Thomas Baird said he suspected the gym area would be too small for the numbers the council wanted and would have to work hard to out-compete the competition.
``It's quite tragic really, because I do not think they have fully considered the requirements (to make the venture a success),'' Mr Baird said.