Today we are starting a new section on the profitability of Padel clubs, a key point in every business plan. And to calculate profitability, first of all you have to be able to estimate your turnover.
To help you in this task, I analyzed during one month in September 2017, the reservation rate of 28 clubs of Padel including 17 Indoors. The graph below shows the average occupancy of the 17 Indoors clubs. Analysing only the indoors reservation rate allows us to remove the weather variable from the analysis (indeed, whether it rains or snows, we can always play indoor which allows us to have reliable data).
As you can see, the analysis of the reservation rate is done in steps. It’s easy to understand through this little example below.
You have a club that has 2 padel courts. Every hour, one of the courts is occupied. The conclusion is not that each course is occupied 2 hours on average, but that each hour, the club needs only one course to meet the demand. So we would have in the analysis of this table below a reservation rate of 4 hours for the first course and 0 hours for the 2nd (the 2nd court would therefore be totally useless and not profitable).
Let us return to our analysis on the profitability of indoors. As you have seen, this is an average, which means that there are clubs that have better booking rates (with a 1stshort busy 7h a day) and others less good (with a 1stshort busy less than an hour a day). Interesting (and sad) thing, the clubs that had almost the best reservation rates, pioneer clubs in the padel world, closed (Padel central in Lyon and Spot-In Rennes which is in judicial redress). This means that turnover and profitability are not necessarily on the same wavelength as we will see in other articles.
Regarding the turnover of a padel club, what are the variables that impact it? And what are a padel club’s sources of income?
Variables qui impactent le chiffre d’affaire
The turnover or sales figures of a Padel club, will depend on several variables that will be grouped into 4 “cyclical variables”, “structural variables”, “strategic variables” and “human variables” families.
These are variables which do not depend on us and are difficult to analyse but which must be taken into account when calculating your turnover and embarking on the adventure. Among them: the weather (important point outside to calculate the days during which you can play the padel), the global economic climate (is it a period of growth or economic crisis?), the global sports climate (do people play more and more sports? Do people increasingly prefer indoor sports? outdoors? physical?…).
Economic variables are short-term variables that can change (e.g. weather changes from year to year, economic crises too…).
These are variables that are easier to analyze because they are variables that are anchored over the medium-long term, they will not move much or nothing from one year to the next. Among these variables that influence the turnover we can quote: the size of your city, the age of the population, if it is a city known to move and try new sports, if it is a rich or poor city, the amount of sports structures already existing in your city (padel structures already existing?)?
The strategic variables include all the aspects of your strategy that you have implemented in your business plan to ensure the success of your project and the conquest of your customers. Among them we can mention: the price of your courts in off-peak and full hour, the location of your club, the quality of your facilities, the ease of access of your club, the facility to reserve a court, the number of courts you have (if there are too few courts, people will be tired of never being able to play for example).
Below are the results of a survey in Spain (in a mature market) on the factors that impact the choice of a paddle club over another.
Human (and therefore strategic) variables)
These variables are among the most important. These are the variables that concern human resources. Among these variables which impact the turnover we can quote the employees that you will recruit. Among them, the padel instructors or animators who will set up the dynamic padel (is the instructor a good teacher?, and especially, is he a pleasant person who can create a positive dynamic padel and gather people around him?), the person behind the bar or at the reception (is he nice, pleasant, empathetic, responsive?) and of course, yourself! You are an important variable in the success of this project. Are you ready to give everything for this project? Will the strategy you put in place be consistent? (on these points you can and should be accompanied)
Sources of income for Padel club.
Once we have seen the variables that influence the turnover it is time to analyze the sources of income of a Padel club. There are no official figures in this field, but the field returns I have been able to obtain and my experience in Spain allow me to establish a fairly accurate list of sources of income for a padel club.
1st source of income: Padel courts rental (This is clearly a big part of your turnover, the reservation rate of your courts is the number one variable of your turnover).
2nd source of income: Padel school and memberships by term or year (In a mature market, padel school, children’s school, subscriptions, represent an important part of your income. It is important to quickly establish a padel school in your centre because if children come to train at your home, it is very likely that parents will follow suit).
3rd source of income: tournaments and events (This is a real plus to round off the end of the month, amateur or federation sanctioned padel tournaments allow the club to fill up an entire weekend. At 25 euros the tournament per person, this quickly represents a nice small sum).
4th source of income: Padel rackets sales (the French padel market is a new and growing market, each new customer needs a snowshoe to play, which makes padel clubs a potential distributor to sell padel rackets and any other sport equipment).
5ème source of income: Sponsoring (you can find sponsors in exchange for naming your courts, for example the Adidas court, the Lacoste court, the Docteur X court…)
Last very important source of income: The restaurant / bar. This source of income can represent more than a third of the turnover if the dynamics of the club is well done! It is common for players to have a drink together after a padel match and eat something (snacks, sausage or cheese boards, chips… etc). The bar is a key point not to underestimate in the creation of its center so much the padel is a social sport (in Spain, they usually say that they go to the padel simply to be able to drink a shot afterwards…)
That’s all for today, in the next chapters we will see the other key points you will need to take into account to calculate the feasibility of your padel project.
See you soon,