padelnomics/scratch/padel-hall-guide.md

Building a Padel Hall — Complete Guide

Table of Contents

1. Key Questions to Answer
2. Steps — In Detail
3. Plans You Need to Create
4. Expert Financial Calculation
5. How to Decide Where to Build
6. Corporate Finance & Valuation Perspective
7. Risk Register

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Key Questions to Answer

Market & Demand

• How many padel players are in your target area? Is the sport growing locally or are you betting on future adoption?
• What's the competitive landscape — how many existing courts within a 20–30 minute drive radius? Are they full? What are their peak/off-peak utilization rates?
• What's the demographic profile of your catchment area (income, age, sports participation)?
• Is there unmet demand (waitlists at existing facilities, people driving far to play)?

Site & Location

• Do you want to build new (greenfield), convert an existing building (warehouse, industrial hall), or add to an existing sports complex?
• What zoning and building regulations apply? Is a padel hall classified as sports, leisure, commercial?
• What's the required ceiling height? (Minimum ~8–10m for indoor padel, ideally 10m+)
• What parking capacity do you need?

Product & Scope

• How many courts? (Typically 4–8 is the sweet spot for a standalone hall; fewer than 4 struggles with profitability, more than 8 requires very strong demand)
• Indoor only, outdoor, or hybrid with a retractable/seasonal structure?
• What ancillary offerings: pro shop, café/bar/lounge, fitness area, changing rooms, padel school/academy?
• What quality level are you targeting — premium/club feel or budget/volume play?

Financial

• What's your total budget, and what's the split between equity and debt?
• What rental or land purchase cost can you sustain?
• What are realistic court booking prices in your market?
• What utilization rate is realistic in year 1, 2, 3?
• What's the breakeven point?

Legal & Organizational

• What legal entity will you use?
• Do you need partners (operational, financial, franchise)?
• What permits, licenses, and insurance do you need?
• Do you need a liquor license (if serving alcohol in lounge)?

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Steps — In Detail

Phase 1: Feasibility & Concept (Month 1–3)

1. Market research: Survey local players, visit competing facilities, analyze demographics within a 15–20 minute drive radius. Talk to padel coaches and club organizers.
2. Concept development: Define your number of courts, target audience, service level, and ancillary revenue streams.
3. Location scouting: Identify 3–5 candidate sites. Evaluate each on accessibility, visibility, size, ceiling height (if conversion), zoning, and cost.
4. Preliminary financial model: Build a rough P&L and investment budget to test whether the concept is viable at all.
5. Go/no-go decision: Based on the above, decide whether to proceed.

Phase 2: Planning & Design (Month 3–6)

6. Secure the site: Sign a letter of intent or option agreement for purchase or lease.
7. Hire an architect experienced in sports facilities. They'll produce floor plans, elevations, structural assessments (for conversions), and MEP (mechanical, electrical, plumbing) layouts.
8. Padel court supplier selection: Get quotes from manufacturers (e.g., Mondo, Padelcreations, MejorSet). Courts come as prefabricated modules — coordinate dimensions, drainage, lighting, and glass specifications with your architect.
9. Detailed financial model: Now that you have real cost quotes, refine your investment budget and operating projections.
10. Secure financing: Approach banks with your business plan and financial model. Typical leverage: 50–70% debt, 30–50% equity.
11. Obtain permits: Submit building permit applications, environmental assessments if required, and any change-of-use applications.

Phase 3: Construction / Conversion (Month 6–12)

12. Tender and contract construction: Either a general contractor or construction management approach. Key trades: structural/civil, flooring, HVAC (critical for indoor comfort), electrical (LED court lighting to specific lux standards), plumbing.
13. Install padel courts: Usually done after the building shell is complete. Courts take 2–4 weeks to install per batch.
14. Fit-out ancillary areas: Reception, changing rooms, lounge/bar, pro shop.
15. IT & booking system: Install a court booking system (e.g., Playtomic, Matchi, or custom), POS, access control.
16. Inspections and certifications: Fire safety, building code compliance, accessibility.

Phase 4: Pre-Opening (Month 10–13)

17. Hire staff: Manager, reception, coaches, cleaning, potentially F&B staff.
18. Marketing launch: Social media, local partnerships (sports clubs, corporate wellness), opening event, introductory pricing.
19. Soft opening: Invite local players, influencers, press for a trial period.
20. Grand opening.

Phase 5: Operations & Optimization (Ongoing)

21. Monitor utilization by court, time slot, and day. Adjust pricing dynamically.
22. Build community: Leagues, tournaments, social events, corporate bookings.
23. Upsell: Coaching, equipment, food/beverage, memberships.
24. Review financials quarterly against your model. Adjust.

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Plans You Need to Create

• Business Plan — the master document covering market analysis, concept, operations plan, management team, and financials. This is what banks and investors want to see.
• Architectural Plans — floor plans, cross-sections, elevations, structural drawings, MEP plans. Required for permits and construction.
• Financial Plan — the core of your business plan. Includes investment budget, funding plan, P&L forecast (3–5 years), cash flow forecast, and sensitivity analysis.
• Marketing Plan — pre-launch, launch, and ongoing. Channel strategy, pricing strategy, partnership plan.
• Operational Plan — staffing plan, booking and pricing model, maintenance schedule, supplier contracts.
• Legal/Permit Plan — timeline of all required permits, licenses, insurance policies, and legal entity formation steps.

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Expert Financial Calculation

Based on a 6-court indoor facility as a reference case.

Investment Budget (CAPEX)

Item	Estimate
Building lease deposit or land	€50,000–€200,000
Construction / conversion	€400,000–€800,000
6 padel courts (installed)	€180,000–€300,000 (€30k–€50k per court)
Lighting (LED, 500 lux per court)	€30,000–€60,000
HVAC system	€50,000–€120,000
Changing rooms, reception, lounge fit-out	€80,000–€150,000
IT, booking system, access control	€15,000–€30,000
Furniture, equipment, pro shop inventory	€20,000–€40,000
Architect, permits, legal, consulting	€40,000–€80,000
Marketing pre-launch	€15,000–€30,000
Working capital reserve	€50,000–€100,000
Total	€930,000–€1,910,000

Realistic midpoint for a solid 6-court hall: ~€1.2–1.5M.

Revenue Model

Core driver: court utilization × price per hour.

• 6 courts × 15 bookable hours/day × 365 days = 32,850 court-hours/year (theoretical max)
• Realistic utilization: Year 1 ~45%, Year 2 ~60%, Year 3 ~70%
• Average price per court-hour: €40–€60 (varies by market, peak vs. off-peak)
• Blended average: ~€45/hour

Revenue Stream	Year 1	Year 2	Year 3
Court rental (45%/60%/70% util.)	€665k	€887k	€1,035k
Coaching & academy	€60k	€90k	€120k
F&B / bar	€40k	€65k	€80k
Pro shop / equipment	€15k	€25k	€30k
Events & corporate	€20k	€40k	€60k
Total Revenue	€800k	€1,107k	€1,325k

Operating Costs (OPEX)

Cost Item	Year 1	Year 2	Year 3
Rent / lease	€120k	€123k	€127k
Staff (5–8 FTE)	€200k	€220k	€235k
Energy (lighting, HVAC)	€45k	€50k	€55k
Maintenance & repairs	€20k	€25k	€30k
Marketing	€40k	€30k	€25k
Insurance	€12k	€12k	€13k
Booking system / IT	€8k	€8k	€9k
COGS (F&B, shop)	€25k	€40k	€48k
Admin, accounting, legal	€20k	€22k	€24k
Total OPEX	€490k	€530k	€566k

Profitability

Metric	Year 1	Year 2	Year 3
EBITDA	€310k	€577k	€759k
EBITDA margin	39%	52%	57%
Debt service (assuming €800k loan, 5%, 10yr)	~€102k	~€102k	~€102k
Free cash flow after debt	~€208k	~€475k	~€657k

Key Metrics to Track

• Payback period: Typically 3–5 years for a well-run padel hall
• ROI on equity: If you put in €500k equity and generate €300k+ annual free cash flow by year 3, that's a 60%+ cash-on-cash return
• Breakeven utilization: Usually around 35–40% — below which you lose money
• Revenue per court per year: Target €150k+ at maturity

Sensitivity Analysis

Model what happens if utilization is 10% lower than planned, if the average price drops by €5, or if construction costs overrun by 20%. This is what banks want to see — that you survive the downside.

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How to Decide Where to Build

1. Catchment area analysis: Draw a 15-minute and 30-minute drive-time radius around candidate sites. Analyze population density, household income, age distribution (25–55 is the core padel demographic), and existing sports participation rates.

2. Competition mapping: Map every existing padel facility within 30 minutes. Call them, check their booking systems — are courts booked out at peak? If competitors are running at 80%+ utilization, that's a strong signal of unmet demand.

3. Accessibility: Is the site easy to reach by car? Is there public transit access? Is there adequate parking (rule of thumb: 2–3 spaces per court minimum)?

4. Visibility: A location on a main road or near a commercial hub generates organic awareness. A hidden industrial estate requires more marketing spend.

5. Building suitability: For a conversion, check ceiling height (10m+), column-free spans (a standard padel court is 20m × 10m, so you need clear spans of at least 22m × 12m per court including safety zones), floor load capacity, and utility connections.

6. Rent/cost level: Balance the desire for a premium location against the need for affordable rent. Padel halls need large floor areas (1,500–3,000 sqm for 4–8 courts plus amenities), so rent per sqm matters enormously. Industrial or light commercial zones often offer the best cost-to-space ratio.

7. Growth trajectory: Is the area developing? Are there new residential or office developments planned nearby? Building ahead of growth can give you first-mover advantage.

8. Regulatory environment: Some municipalities are more supportive of sports facilities than others. Check zoning, noise regulations (especially if considering outdoor courts), and the speed of permit processes.

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Corporate Finance & Valuation Perspective

NPV & IRR

Discount your projected free cash flows at your WACC (or required return on equity if all-equity financed) to get a net present value. The IRR tells you whether the project clears your hurdle rate. For a padel hall, you'd typically want an unlevered IRR of 15–25% to justify the risk of a single-asset, operationally intensive business. Compare this against alternative uses of your capital.

WACC & Cost of Capital

If you're blending debt and equity, calculate your weighted average cost of capital properly. Bank debt for a sports facility might run 4–7% depending on jurisdiction and collateral. Your equity cost should reflect the illiquidity premium and operational risk — this isn't a passive real estate investment, it's an operating business. A reasonable cost of equity might be 12–20%.

Terminal Value

If you model 5 years of explicit cash flows, you need a terminal value. You can use a perpetuity growth model (FCF year 5 × (1+g) / (WACC – g)) or an exit multiple. For the exit multiple approach, think about what a buyer would pay — likely 4–7x EBITDA for a mature, well-run single-location padel hall, potentially higher if it's part of a multi-site rollout story.

Lease vs. Buy

A critical capital allocation decision. Buying the property ties up far more capital but gives you residual asset value and eliminates landlord risk. Leasing preserves capital for operations and expansion but exposes you to rent increases and lease termination risk. Model both scenarios and compare the risk-adjusted NPV. Also consider sale-and-leaseback if you build on owned land.

Operating Leverage

A padel hall has high fixed costs (rent, staff base, debt service) and relatively low variable costs. This means profitability is extremely sensitive to utilization. Model the operating leverage explicitly — a 10% swing in utilization might cause a 25–30% swing in EBITDA. This is both the opportunity and the risk.

Depreciation & Tax Shield

Padel courts depreciate over 7–10 years, building fit-out over 10–15 years, equipment over 3–5 years. The depreciation tax shield is meaningful. Interest expense on debt is also tax-deductible. Model your effective tax rate and the present value of these shields — they improve your after-tax returns materially.

Working Capital Cycle

Padel halls are generally working-capital-light (customers pay at booking or on arrival, you pay suppliers on 30–60 day terms). But model the initial ramp-up period where you're carrying costs before revenue reaches steady state. The pre-opening cash burn and first 6–12 months of sub-breakeven operation is where most of your working capital risk sits.

Scenario & Sensitivity Analysis

Model three scenarios (bear/base/bull) varying utilization, pricing, and cost overruns simultaneously. Identify the breakeven utilization rate precisely. A Monte Carlo simulation on the key variables (utilization, average price, construction cost, ramp-up speed) gives you a probability distribution of outcomes rather than a single point estimate.

Exit Strategy & Valuation

Think about this upfront. Are you building to hold and cash-flow, or building to sell to a consolidator or franchise operator? The exit multiple depends heavily on whether you've built a transferable business (brand, systems, trained staff, long lease) or an owner-dependent operation. Multi-site operators and franchise groups trade at higher multiples (6–10x EBITDA) than single sites.

Optionality Value

A successful first hall gives you the option to expand — second location, franchise model, or selling the playbook. This real option has value that a static DCF doesn't capture. Similarly, if you own the land/building, you have conversion optionality (the building could be repurposed if padel demand fades).

Counterparty & Concentration Risk

You're exposed to a single landlord (lease risk), a single location (demand risk), and potentially a single sport (trend risk). A bank or sophisticated investor will flag all three. Mitigants include long lease terms with caps on escalation, diversified revenue streams (F&B, events, coaching), and contractual protections.

Subsidies & Grants

Many municipalities and national sports bodies offer grants or subsidized loans for sports infrastructure. In some European countries, this can cover 10–30% of CAPEX. Factor this into your funding plan — it's essentially free equity that boosts your returns.

VAT & Tax Structuring

Depending on your jurisdiction, court rental may be VAT-exempt or reduced-rate (sports exemption), while F&B is standard-rated. This affects pricing strategy and cash flow. The entity structure (single GmbH, holding structure, partnership) has implications for profit extraction, liability, and eventual exit taxation. Worth getting tax advice early.

Insurance & Business Interruption

Price in comprehensive insurance — property, liability, business interruption. A fire or structural issue that shuts you down for 3 months could be existential without BI coverage. This is a real cost that's often underestimated.

Covenant Compliance

If you take bank debt, you'll likely face covenants — DSCR (debt service coverage ratio) minimums of 1.2–1.5x, leverage caps, possibly revenue milestones. Model your covenant headroom explicitly. Breaching a covenant in year 1 during ramp-up is a real risk if you've over-leveraged.

Inflation Sensitivity

Energy costs, staff wages, and maintenance all inflate. Can you pass these through via price increases without killing utilization? Model a scenario where costs inflate at 3–5% but you can only raise prices by 2–3%.

Residual / Liquidation Value

In a downside scenario, what are your assets worth? Padel courts have some resale value. Building improvements are largely sunk. If you've leased, your downside is limited to equity invested plus any personal guarantees. If you've bought property, the real estate retains value but may take time to sell. Model the liquidation scenario honestly.

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Risk Register

Existential Risks

• Trend / Fad Risk: Padel is booming now, but so did squash in the 1980s. You're locking in a 10–15 year investment thesis on a sport that may plateau or decline. The key question is whether padel reaches self-sustaining critical mass in your market or stays a novelty. If utilization drops from 65% to 35% in year 5 because the hype fades, your entire model breaks. This is largely unhedgeable.

• Force Majeure / Pandemic Risk: COVID shut down indoor sports facilities for months. Insurance may not cover it. Having enough cash reserves or credit facilities to survive 3–6 months of zero revenue is prudent.

Construction & Development Risks

• Construction Cost Overruns & Delays: Sports facility builds routinely overrun by 15–30%. Every month of delay is a month of carrying costs (rent, debt service, staff already hired) with zero revenue. Build a contingency buffer of 15–20% of CAPEX minimum and negotiate fixed-price construction contracts where possible.

Property & Lease Risks

• Landlord Risk: If you're leasing, you're spending €500k+ fitting out someone else's building. What happens if the landlord sells, goes bankrupt, or refuses to renew? You need a long lease (15+ years), with options to renew, and ideally a step-in right or compensation clause for tenant improvements.

Competitive Risks

• Cannibalization from New Entrants: Your success is visible — full courts, long waitlists. This attracts competitors. Someone opens a new hall 10 minutes away, and your utilization drops from 70% to 50%. There's no real moat in padel besides location, community loyalty, and service quality. Model what happens when a competitor opens nearby in year 3.

Operational Risks

• Key Person Dependency: If the whole operation depends on one founder-operator or one star coach who brings all the members, that's a fragility. Illness, burnout, or departure can crater the business.

• Staff Retention & Labor Market: Good facility managers, coaches, and front-desk staff with a hospitality mindset are hard to find and keep. Turnover is expensive and disruptive. In tight labor markets, wage pressure can erode margins.

• Court Maintenance & Replacement Cycle: Padel court surfaces, glass panels, and turf have a lifespan — typically 5–8 years for artificial turf, longer for glass and structure. Budget for a major refurbishment cycle. If you don't maintain court quality, players notice quickly and leave.

• F&B Complexity: Food and beverage is an entirely different business with its own regulatory requirements (health inspections, liquor licenses), spoilage, staffing challenges, and thin margins. It can easily become a distraction or loss-maker if not managed well. Consider outsourcing to a third-party operator.

• Seasonality & Weather: If you have outdoor courts or your market has strong seasonality, indoor utilization may swing significantly. Model monthly cash flows, not just annual averages — a bad quarter can create a liquidity crunch even if the annual numbers work.

Financial Risks

• Energy Price Volatility: Indoor padel halls consume significant energy. Energy costs spiking can destroy margins. Consider locking in energy contracts, investing in solar panels, or using LED lighting and efficient HVAC to reduce exposure.

• Financing Environment: If interest rates rise between when you plan the project and when you draw down the loan, your debt service costs increase. Lock in rates where possible, or stress-test your model at rates 2% higher than current.

• Personal Guarantee Exposure: Banks lending to a single-asset sports facility will almost certainly require personal guarantees from the founders. This means your personal assets (house, savings) are at risk if the business fails.

• Customer Concentration: If 30% of your revenue comes from a few corporate clients or one large league, losing that client is painful. Diversify your revenue base.

• Inflation Pass-Through: Energy costs, staff wages, and maintenance all inflate. If you can't fully pass these through via price increases, margins erode over time.

Regulatory & Legal Risks

• Noise Complaints: Padel is loud — the ball hitting glass walls generates significant noise. Neighbors can complain and municipal authorities can impose operating hour restrictions or require expensive sound mitigation. Check local noise ordinances thoroughly before committing.

• Injury Liability: Padel involves glass walls, fast-moving balls, and quick lateral movement. Player injuries happen. Proper insurance, waiver systems, and court maintenance protocols are essential.

Technology & Platform Risks

• Booking Platform Dependency: If you rely on a third-party booking platform like Playtomic, you're giving them access to your customer relationships and paying commission. They could raise fees, change terms, or steer demand to competitors.

Reputational Risks

• Brand / Reputation Risk: One viral negative review, a hygiene issue, a safety incident, or a social media complaint can disproportionately hurt a local leisure business.

Currency & External Risks

• Currency Risk: Relevant if importing courts or equipment from another currency zone — padel court manufacturers are often Spanish or Italian, so FX moves can affect CAPEX if you're outside the Eurozone.

Opportunity Cost

The capital, time, and energy you put into this project could go elsewhere. If you could earn 8–10% passively in diversified investments, a padel hall needs to deliver meaningfully more on a risk-adjusted basis to justify the concentration, illiquidity, and personal time commitment.