Photo: Marvin Joseph/The Washington Post via Getty Images

SoulCycle is in the midst of an intense customer backlash, following reports that real estate billionaire Stephen Ross plans to hold a pricey fundraiser for President Trump.

Why it matters: In short, many prominent SoulCyclers believe Trump is antithetical to the fitness company's values (particularly around LGBTQ rights).

Why Ross: Because he's the owner and chairman of Related Companies, which in 2005 bought Equinox, the fitness chain that later acquired SoulCycle. The result is people threatening to boycott SoulCycle, arguing that their money is being indirectly funneled to Trump.

  • Both Equinox and SoulCycle distanced themselves from Ross and the fundraiser. In its statement, SoulCycle called Ross a "passive investor" who is "not involved in the management of SoulCycle."

So how is Ross, who also owns the Miami Dolphins, a "passive investor" if his company bought Equinox, which owns SoulCycle?

  • The answer is that, over the years, Related has been diluted via new Equinox share sales and some secondary sales by Related itself. For example, private equity firm L Catterton bought in two years ago.
  • An Equinox spokesman tells me that, as of now, Ross and Related are minority shareholders in Equinox.
    • Moreover, SoulCycle's shelved IPO docs show that Ross wasn't on its board of directors, even though he would have been (alongside one other Related rep) had the offering closed.
    • Ross is on the Equinox board, although is not chairman.
  • There is no publicly-available indication that Equinox or SoulCycle pay dividends or other profit cuts to Ross, although obviously he'd benefit financially were either company to be sold.

The bottom line: When you take on an investor, you sometimes take on more than just their money. And, for investors, your activities can have unintended consequences for your companies.

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