A few weeks ago, I took a flamethrower to the US padel scene after playing extensively across Europe & Latin America. Then I listened to what people had to say.
Aris, you are right. 30.000 in 2030 is fantasy with no backup in reality. Try also to see it from Production, Logistic, installation perspectiv. 29.000 courts in less than 4 years. There are so many so called “experts” talking about the Padel business without real knowledge about it. Imagine the workload producing and installing 500-600 courts every single months for almost 4 years.. just the man hours and and amount of teams to do it….many of the Big factories have a Production limit between 500-1500 courts a year…..it could very Well end up with 30.000 but it will take time and require a lot of changes to keep the prices/1h Down like in Europe. Is things will be done the right Way Padel Can be very Big in US. No doubt. Thanks a lot for a great post and I fully agree that the “experts” need to talk reality to avoid the business and people will take bad decisions. Best Morten
Thank you Morten! Really appreciate the note. Agreed it seems like a fantasy... sadly I think scenario #2 is right, and I hope those who vehemently disagree can come forward with concrete numbers and real points of proof...
scenario #2 is 100% right.. They Will not be able to explain or backup the numbers. They have no knowledge about the value chain and limitations in our world as producers, installers etc. but 90% of the “experts” are trying to make a lot of money pretending to be important on LinkedIn, fairs, meetings etc. and most of the Padel business/Clubs etc is done by entrepreneurs, investors and people who need support and help to create a great Concept for their Clubs, venues. Doing that we who know the business Can help to make it like its been done in Europe for many years. No matter where you are in the value chain we need to lift it together.
Aris, this generates a few thoughts for me... is high utilization possible for padel clubs in the near-term with lower pricing? High utilization could potentially generate more total revenue than higher prices. That is worth testing, and obviously needs to go hand in hand with strong marketing and programming. The cost of amenity build-outs can be pricy in some cases, but the bigger cost driver overall is still the lease. The lease cost and government subsidies make the international markets you mention a very different economic proposition. That is an apples to oranges pricing and club financial comparison with the US. The interesting comparison would be two US clubs in the same region with similar cost structure at materially different price points. A growing number of US clubs are positioned more for the masses. It is more obvious for them to do so if they are in lower cost and lower income regions. I'm not sure the "elite" US clubs wanted to be exclusive and exclusionary. I believe they all just wanted to be as profitable as possible over the long term.
Hans - really appreciate the thoughtful input. I'd break this down in a few ways:
Re high utilization with lower pricing: I think it's absolutely possible, but it requires operators to reframe their mentality. Right now, I see too many facilities stuck in low-volume/high-margin mode while simultaneously complaining about awareness. Their spreadsheet might say "charge more to cover costs," but in reality I think more operators need to be willing to take a strategic upfront hit to get as many people in their door as possible... they should be thinking of each of those people that come in that door as walking word-of-mouth advertisements of their club. Run aggressive promotions. Target the nimbler pickleball players directly, ie "try padel for the same price as pickleball. If you don't like it more, money back." Remember: with that 92% first-time retention, it's MUCH harder getting people through the door in the first place than keeping them
Re the lease/subsidy point: You're right that it's apples-to-oranges, and I've revised my thinking here. I documented how US operators face brutal cost structures that Europe/LatAm don't. But I still think there are a few (mind you smaller, but still helpful) levers operators can pull by cutting costs that don't actually move the needle, ie lights off on empty courts, less $ on aesthetics / decor, fewer unnecessary amenities unless you're genuinely competing with places like Life Time or Equinox. My hunch is that adjustments like these can change the model to $35/person/90 minute match instead of $40 for example, which reduces friction and makes it more mentally justifiable for folks to repeatedly come in and ~feed the addiction~
Rhetorically, the real question is whether US operators can *get comfortable* prioritizing volume over margin. The irony is that most still won’t make that shift, even though their current low-volume, high-margin approach clearly isn’t working...
It's certainly worth trying a variety of things, including pricing, to drive utilization. There is micro and macro awareness. The US doesn't have macro-awareness yet, but clubs can and will succeed by driving awareness, trial, and repeat visits in their community. Word of mouth, and bringing friends, are gold. I believe Santi was referring to his own clubs' repeat visits in the podcast that was quoted in the report you cited. He said 92% retention from someone who plays a second time to come back and play for a third time. The point is exactly the same - people who try padel LOVE it! Operators will likely get comfortable with whatever drives the most profit.
Agreed. And yep, I cited that 92% in the article - straight from the most recent Playtomic annual report. Another thing to add: I think some operators should consider abandoning membership models, especially in cities where multiple clubs exist (i.e. Miami, Houston, Philly). Memberships are unique to the U.S., and for the most part this model doesn’t exist in popular (and profitable) hotspots within Europe and Latin America. Folks just wanna find a way to play wherever and whenever, and that’s what matters most to them. I also think this just gets more people on the court more quickly and easily, especially for those new to the sport and wanting to figure out whether padel is worth pouring their time and money into. Match quality will also increase since folks won’t be stuck playing with the same people over and over again. And better match quality leads to stronger addiction aka more retention, a win for both the player and operator. Just spitballing with another loose thought…
Excellent analysis. I believe scenario #2 is more likely, that we are a decade away from 30,000 courts and mass accessibility. Scouts get arrows in the back, settlers get fat. The smart operators will learn from the first ones in, and build sustainable models.
Thanks Sean! Sadly I think you’re right. It’s a difficult environment for developers/operators today, and my view is that the eventual winners will be those who absorb the lessons from the missteps we’re seeing now.
Aris, you are right. 30.000 in 2030 is fantasy with no backup in reality. Try also to see it from Production, Logistic, installation perspectiv. 29.000 courts in less than 4 years. There are so many so called “experts” talking about the Padel business without real knowledge about it. Imagine the workload producing and installing 500-600 courts every single months for almost 4 years.. just the man hours and and amount of teams to do it….many of the Big factories have a Production limit between 500-1500 courts a year…..it could very Well end up with 30.000 but it will take time and require a lot of changes to keep the prices/1h Down like in Europe. Is things will be done the right Way Padel Can be very Big in US. No doubt. Thanks a lot for a great post and I fully agree that the “experts” need to talk reality to avoid the business and people will take bad decisions. Best Morten
Thank you Morten! Really appreciate the note. Agreed it seems like a fantasy... sadly I think scenario #2 is right, and I hope those who vehemently disagree can come forward with concrete numbers and real points of proof...
scenario #2 is 100% right.. They Will not be able to explain or backup the numbers. They have no knowledge about the value chain and limitations in our world as producers, installers etc. but 90% of the “experts” are trying to make a lot of money pretending to be important on LinkedIn, fairs, meetings etc. and most of the Padel business/Clubs etc is done by entrepreneurs, investors and people who need support and help to create a great Concept for their Clubs, venues. Doing that we who know the business Can help to make it like its been done in Europe for many years. No matter where you are in the value chain we need to lift it together.
Aris, this generates a few thoughts for me... is high utilization possible for padel clubs in the near-term with lower pricing? High utilization could potentially generate more total revenue than higher prices. That is worth testing, and obviously needs to go hand in hand with strong marketing and programming. The cost of amenity build-outs can be pricy in some cases, but the bigger cost driver overall is still the lease. The lease cost and government subsidies make the international markets you mention a very different economic proposition. That is an apples to oranges pricing and club financial comparison with the US. The interesting comparison would be two US clubs in the same region with similar cost structure at materially different price points. A growing number of US clubs are positioned more for the masses. It is more obvious for them to do so if they are in lower cost and lower income regions. I'm not sure the "elite" US clubs wanted to be exclusive and exclusionary. I believe they all just wanted to be as profitable as possible over the long term.
Hans - really appreciate the thoughtful input. I'd break this down in a few ways:
Re high utilization with lower pricing: I think it's absolutely possible, but it requires operators to reframe their mentality. Right now, I see too many facilities stuck in low-volume/high-margin mode while simultaneously complaining about awareness. Their spreadsheet might say "charge more to cover costs," but in reality I think more operators need to be willing to take a strategic upfront hit to get as many people in their door as possible... they should be thinking of each of those people that come in that door as walking word-of-mouth advertisements of their club. Run aggressive promotions. Target the nimbler pickleball players directly, ie "try padel for the same price as pickleball. If you don't like it more, money back." Remember: with that 92% first-time retention, it's MUCH harder getting people through the door in the first place than keeping them
Re the lease/subsidy point: You're right that it's apples-to-oranges, and I've revised my thinking here. I documented how US operators face brutal cost structures that Europe/LatAm don't. But I still think there are a few (mind you smaller, but still helpful) levers operators can pull by cutting costs that don't actually move the needle, ie lights off on empty courts, less $ on aesthetics / decor, fewer unnecessary amenities unless you're genuinely competing with places like Life Time or Equinox. My hunch is that adjustments like these can change the model to $35/person/90 minute match instead of $40 for example, which reduces friction and makes it more mentally justifiable for folks to repeatedly come in and ~feed the addiction~
Rhetorically, the real question is whether US operators can *get comfortable* prioritizing volume over margin. The irony is that most still won’t make that shift, even though their current low-volume, high-margin approach clearly isn’t working...
It's certainly worth trying a variety of things, including pricing, to drive utilization. There is micro and macro awareness. The US doesn't have macro-awareness yet, but clubs can and will succeed by driving awareness, trial, and repeat visits in their community. Word of mouth, and bringing friends, are gold. I believe Santi was referring to his own clubs' repeat visits in the podcast that was quoted in the report you cited. He said 92% retention from someone who plays a second time to come back and play for a third time. The point is exactly the same - people who try padel LOVE it! Operators will likely get comfortable with whatever drives the most profit.
Agreed. And yep, I cited that 92% in the article - straight from the most recent Playtomic annual report. Another thing to add: I think some operators should consider abandoning membership models, especially in cities where multiple clubs exist (i.e. Miami, Houston, Philly). Memberships are unique to the U.S., and for the most part this model doesn’t exist in popular (and profitable) hotspots within Europe and Latin America. Folks just wanna find a way to play wherever and whenever, and that’s what matters most to them. I also think this just gets more people on the court more quickly and easily, especially for those new to the sport and wanting to figure out whether padel is worth pouring their time and money into. Match quality will also increase since folks won’t be stuck playing with the same people over and over again. And better match quality leads to stronger addiction aka more retention, a win for both the player and operator. Just spitballing with another loose thought…
Excellent analysis. I believe scenario #2 is more likely, that we are a decade away from 30,000 courts and mass accessibility. Scouts get arrows in the back, settlers get fat. The smart operators will learn from the first ones in, and build sustainable models.
Thanks Sean! Sadly I think you’re right. It’s a difficult environment for developers/operators today, and my view is that the eventual winners will be those who absorb the lessons from the missteps we’re seeing now.