Value for money, user satisfaction and frozen entry fees were among the reasons provided by the City of Newcastle CEO for choosing Bluefit as the preferred tender to operate the inland pools.
CEO Jeremy Bath outlined his reasoning in a report on the tender approval.
Beresfield pool users raised concerns that entry fees may rise and standards could slip under a private operator.
Mr Bath said while council's preference was to operate services internally "wherever possible", the Bluefit tender provided "value for money to ratepayers".
He said financial modelling was undertaken to compare the cost of council operating the five pools to Bluefit's proposed annual contract fee.
"The return to an in-house management ... would require the establishment of a new swim business within CN," Mr Bath said.
The first year net cost of an in-house management operation would be $4.034 million, Mr Bath said, compared to Bluefit's contract fee of $1.411 million.
"The net cost of an in-house management model reduces to $3.250 million in year two," he said. "The cost to ratepayers of Bluefit operating CN's five pools increases marginally to $1.449 million.
"Therefore, awarding the tender to Bluefit saves ratepayers a minimum of $2.623 million in year one of the contract and a further minimum $1.8 million for every subsequent year of the contract, when compared to an in-house operating model."
The initial term of the proposed lease is seven years, with two seven-year extension options.
Mr Bath said Bluefit would also contribute $5 million towards a $10 million indoor pool at Lambton, freeze pool entry fees for 2023/24 and reduce several fee categories including the entry fee to Beresfield and the hourly fee for the Lambton water slide.
The CEO said Bluefit's pay structure "exceeds the relevant award". He also quoted a 2021 council survey of people who used the four swimming centres operated by Bluefit, which found that 84.7 per cent of customers were satisfied or highly satisfied with the operation of the swim centres.
The decision was delegated to the CEO after Labor councillors declared conflicts of interest in the matter, meaning a quorum of councillors could not be reached to vote on awarding a tender.
