Sports facilities are expensive, but they can be very lucrative if done right. We commonly get questions whether these ventures are profitable, and the answer is always “Yes, but…”. Having worked with a plethora of facilities via Swift scheduling software (runswiftapp.com), our team has identified five ways in which successful sports facility owners can maximize profitability.
1. Focus on Revenue Per Square Foot
At the end of the day, your goal is to maximize revenue per square foot, regardless of how much space you have. Size doesn’t matter! It’s what you do with it that counts. Rentals, specifically open rentals for the public, are an enticing trap. They look really easy to run, but in the long run, one-off rentals eat into valuable time that you could be offering to larger groups.
Offering public rentals also means you run the risk of exposing your equipment (like a HitTrax machine) to folks that have no experience in the sport. This increases the chances of damage, failure, and maintenance costs. Focus on larger group sizes (teams for rentals or lessons and classes for instructor-based training) as opposed to random public rentals.
The golden egg for any business owner is recurring revenue. Especially given how seasonal the sports facility business is, profitability and revenue can vary drastically if all your revenue sources are ad-hoc. To get recurring revenue, offer monthly, tiered memberships with discounts like unlimited access to spaces when they’re not in use, discounts on private lessons, classes, retail equipment, etc.
Sports facility management software like Swift can automatically track members, their discounts and credits, and regularly charges their credit cards.
Another service you can offer is camps and clinics that run across multiple weeks. This isn’t “recurring” in the traditional sense, but it does make up for the cost of using your space over multiple weeks. You can also start your own travel team or sports organization, which can be great for branding, as well as open up another source of recurring revenue. Together, these tactics can be a great way to diversify your income sources and avoid the downsides of low season.
Finally, consider opening up a retail store inside your facility for equipment.
I wouldn’t suggest this for folks starting out (unless you have a large amount of capital you’re willing to invest), but as you grow, retail equipment can be another great source of income that helps optimize revenue.
2. Multiple Uses for Large Spaces
Your space is your biggest asset and your biggest liability. To ensure that it appears “in the green” when you do your finances, it’s important to use the space to its fullest. Open up larger spaces to the public for things like birthday parties, corporate events, and other gatherings. You’d be surprised at how often these services get booked.
Talk to your neighbors and offer them the space for a discount if they’re looking to host an event. We’ve seen everything from coffee tastings to protein powder launches done at sports facilities, and this is done in partnership with nearby businesses.
Recognize that with some new paint lines, you can open up your facility to a whole new sport! With a full gym, you should definitely be offering your facility to as many sports as possible—and all you need to do is paint the court lines accordingly.
3. Understand Seasonality and Plan Your Finances Accordingly
The indoor sports business is highly seasonal. If you live in a city with regular winters (or super-hot summers), those are usually your most profitable months. When the weather is nice, athletes and kids everywhere will play outside. This is natural, so instead of trying to fight it, you need to plan around it.
As a rule of thumb, 70-80 percent of your annual revenue will come in the three-to-five months of “poor” weather, whatever that means for your location. This means that during low season, you’ll need cash reserves to continue to pay for rent, your staff, and generally keep the lights on.
Even if you don’t think of yourself as a math person, it’s important to do this planning up front to avoid any potential downsides during the lower months. And hopefully, if you’ve been following the steps above, your “low season” shouldn’t actually be that low!
4. Automate Your Facility
One of the biggest life-improvements you can have when managing your sports facility is freeing up your time. If your time (and energy) is currently spent on the phone fielding calls and messages from customers, you won’t be able to actually grow your business and maximize profitability. How can you automate your facility?
5. Invest in High-Tech to Differentiate
- Use a modern sports facility management software like Swift to allow your customers to book online.
- Hire a front-desk person to field the remaining calls. This will eat into your margins (and your profits), but if you’re using the right scheduling tool, you’ll find that the number of calls that you’re receiving will significantly decrease.
- Invest in things like automatic door locks, video cameras, etc. to give members off-hours access. This will free up facility space during peak hours, which you can then rent to larger groups to further maximize facility profits.
While sports facilities might not be as competitive as the corporate world, there needs to be reasons why athletes, instructors, and customers will train at your facility instead of the other one down the road.
High-speed cameras offer slow-motion footage to your athletes; software programs can help instructors track the training and performance of their athletes. You can also bring in therapists, coaches, and trainers to hold weekly “seminars” for semi-pro and professional athletes.
A final word
Owning a sports complex is hard, but it can be a really rewarding business (both financially and otherwise) if you do it well! If you have any questions, or need more advice, feel free to drop me an email at [email protected]