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The Quick Points

➕ PBX adds to its roster. NHL Stanley Cup Champions (Kris Draper, Patrick Sharp, Fredrik Modin, and Dave Bolland) have committed to join PBX as it continues to fill out its roster of former star athletes looking to create exciting pickleball experiences. PBX’s focus on bringing big names into pro-am tournaments and pro-only matches continues to get more interesting to us as we consider the recent commercial success and continuation of events like Pickle Slam. We think any play above 4.0 with the right hook can be entertaining. It’s fun and even suspenseful at times to see your friends battle it out on king’s court. These former star athletes bring that immediate hook. They can instantly provide personality, drama, and entertainment and as long as long as it’s not banger ball or lob-city, it will be interesting to watch court-side. That’s certainly what we felt as we saw Agassi and Roddick play 4.0-4.5 pickle.

The challenge with the highest level pro pickleball today is that there aren’t enough consistent hooks into a streamed match. Those hooks could be 1. wanting to learn as an intermediate player how the experts hit shots, construct points 2. wanting to know how on-court drama or tension between players will play out or 3. being a fan of a specific player. The first needs a mature playing audience and we’re definitely not there yet nationally. The second requires A LOT of context and/or an addicted friend to give you the candid goss that a commentator can’t. And the third requires some context, not as much, but at this stage there aren’t more than a handful of distinct or bold personalities. Point is, PBX and other experiential pickle events are shortcutting a lot of those challenges by inserting brand names into the equation.

🏓 Mall ball. Picklemall launched last weekend in Tempe, Az. The asset-light model is taking a pretty unique approach to the facility space, by laying down non-permanent Pickleroll courts in vacant spaces in malls around the country. The courts bring a new degree of tech enablement as well, with courtside cameras that allow players to view & save recordings of their match. Some of our friends checked it out this weekend and you can get a look inside it here.

💎 Diamonds are a pickleball’s best friend. We read through a recent conversation online with Mary Weber-Rupert, who founded Austin-based Five Star Jewelry Brokers about her view on jewelry becoming more commonplace in pickleball. She referenced an interesting historical event for the rise of the “tennis bracelet”, after it was coined by Chris Evert during the 1978 U.S. Open when her diamond bracelet broke mid-match and was lost on the court. After her post-game interview, demand for tennis bracelets worn on the court during play exploded. We’ve written a lot about apparel brands taking a swing at pickleball, but this is one of the first bits of commentary we’ve seen around jewelry brands. It seems like a logical next step to us, as human nature tends to push individuals to seek out new ways to stand out from a crowd. As unique and trendy outfits inevitably become more mainstream and ubiquitous on the court, people turn to other accessories to help accentuate their outfit, style, and social signal - glasses, hats, wristbands, sun protective clothing (ahem Ben Johns), and logically, jewelry.

🏙️ Where Brooklyn At!? Last week, PKLYN, a new indoor pickleball facility, launched in Brooklyn, NY. The location will host 5 indoor courts in a premier brick building location in Gowanus. We think their decision to add amenities like locker rooms, showers, and rooms to take work calls will be valuable to keeping players in the facility for longer before & after their dedicated play time. These types of amenities often seem to go overlooked, but can be critical parts to an individual trying to schedule pickleball into their work/life balance. Keeping players in a facility for longer allows for better conversion on higher margin products like food & beverage, which while not a heavy focus for PKLYN (i.e. not eatertainment), will still be available for players after they get off the court.

David Friedman is the founder and CEO behind PKLYN and we have been fortunate to get to know him over the last two months. He struck us as a real professional who knows what he wants to exist in a world of operators slapping pickle into and onto everything without real taste. NYC is going to be a competitive market and many facilities will be there in the coming year. Given the homework he’s done (driving hundreds of miles to personally check out other clubs), his scrappy NYC pickle roots, and beautiful new location, we expect big things over the coming months.

What’s on our mind

💸 Preliminary thoughts on dollars chasing opportunity. We came across this headline that Dill Dinkers, a Maryland-based indoor pickleball fitness facility, is partnering with Franchise Well, a franchise consulting practice, to help chart their franchising strategy to bring the business nationwide. First off, we haven’t spoken with their management team yet, and we will give them credit that they have been running a facility since November’22, which is undoubtedly bringing them a lot of experience as they refine their approach. However, we had some initial thoughts to test out in the coming months as it relates to facilities jumping into the franchise model. It appears that the first wave of pickleball investment has been towards bootstrapped facilities rushing to raise capital and build courts to meet massive demand in their local communities. We anticipate that the next wave in the coming 12-18 months is going to be for facility owners to raise as much institutional capital as possible to franchise and expand, even if they haven’t fully proven their existing concept yet. The incentives are in place for franchise owners to pursue franchising, as institutional investors need return profiles bigger than a single facility location in order to justify allocating capital, something that the growth prospects of a national franchise can offer. Further, as a franchisor, even if you haven’t figured out a successful programming or facility playbook, then you can still roll the dice on a franchisee, since they’re putting the most skin in the game and a failed facility in Seattle doesn’t dilute the brand or impact the success of a well run, profitable facility in Jacksonville. Each location is relatively well insulated from the success & failures of another, and since the franchisee is shouldering the buildout costs, it runs the risk of creating perverse spray & pray incentives for an institutionally-backed franchisor to sell as many franchised locations as possible to gain market share. Undisciplined institutional capital backing unproven, opportunistic franchisors could risk flooding the market with capital chasing the same desirable real estate for facilities, pushing up prices for, and potentially crowding out, the high-quality franchise operators, all while creating an influx of low-quality court supply - eroding the brand and experience of pickleball. It’s an early consideration that we plan to have many more conversations around with investors and facility owners.

✨ Luxury experiences. You hear us constantly advocate for pickleball’s characteristics that bring in a new consumer demographic, as well as its ability to act as the glue to bring people together for an experiential event. There was a fun article in Forbes highlighting a slew of luxury experiences across the country built around pickleball. Your authors got to discussing this a little bit and we remain positive on the activity’s ability to almost instantly make a new group activity competitive with other established social events. Many social clubs benefit from the brand cache that its members feel by being a part of the same community. However, many of these places may be great at facilitating getting people in the door, but struggle making people feel like they can have a genuine spontaneous connection with a random person. Two individuals belonging to the same elite social club doesn’t change the human dynamic of needing to feel comfortable approaching a random individual, even if you both have the same membership card. Group activities force these connections in more authentic feeling ways. There are low transaction costs to get on the court, a natural way to segue into further conversation post-game, and almost no breakage fee if your time on the court with your partner/group wasn’t ideal and you want to move on. It’s like an organic social speed dating opportunity for members to build authentic connections.

For those at home who want to invite us to some of these luxury experiences, here are a few from the Forbes piece to pick from:

• Del Mar Wine & Food Festival, San Diego, CA - Whispering Angel sponsoring a celebrity tournament hosted by Drew Brees.

• Carneros Resort & Spa, Napa Valley, CA - 2 courts in collaboration w/Veuve Clicquot (covered in Breaking Ground in the past).

• Kimpton La Peer, West Hollywood, CA - new rooftop court in partnership w/Grey Goose.

• M Social Hotel, Times Square, NY - new court seven floors above Times Square in partnership with Grey Goose

• Ocean Edge Resort & Golf Club, Brewster, MA - 6 new courts at the resort with access to a Pickleball Pop-up Bar

• Chateau Elan Winery & Resort, Braselton, GA - weekend experience w/9 hours of pickleball instruction & court time + wine tours

Breaking Ground

The Reset tracks publicly available court construction data to better understand the locations, costs, and development priorities going into projects across the nation. Our tracker can be found here.

Featured Developments:
New Orleans, LA is getting a new eatertainment concept with The Exchange + Bar opening today. The 26,000 sqft facility hosts 6 indoor courts + 1 outdoor court. Like all eatertainment, the location will offer players a range of food, beverage, and other amenities (e.g. live music). Unlike some other eatertainment concepts we’ve seen, they do plan to lean into pickleball programming a bit more, with dedicated leagues, clinics, and tournaments, alongside the often higher value items like corporate events and conventions. The facility is large enough to accommodate 500 people. Renovations started in December 2022, and ended up costing $3M+ to develop, as well as other significant costs like stormwater management and rezoning. In line with our current perspective that eatertainment venues require the skillset of a restaurant group or hospitality business, The Exchange has installed Phil Papillion as their GM, who brings years of food & beverage experience across Louisiana to the facility.

The West Michigan Sports Commission announced that the Meijer Sports Complex expansion in Rockford, MI is closer to its funding targets after a $1M gift by Meijer. The Sports Complex is expected to add a softball field, 20(!) pickleball courts, a concession building, and an additional 300 parking spaces to the existing 8 baseball + softball fields (originally cost $7.5M for the first build). The project is expected to cost $11M and is over halfway there after raising $5.8M in private donations plus +$1M in government grants. The city estimates that the improvements will add an additional $1M in annual visitor spending, and has already brought Kent County an additional $52M in direct visitor spending after hosting 148 travel events, 7,500 teams, and 240k+ visitors. These types of numbers have to make city governments seriously consider the economic benefits that pickleball can bring to their town, in addition to the non-quantifiable social benefits.

Sunriver Resort is opening its first outdoor pickleball complex today, with 10 courts after converting the existing tennis courts on-site. They are planning a second phase, which will feature another 8 indoor courts with an indoor food & beverage station that is expected to launch in the fall. The resort is planning to offer a membership program starting at $175/mo + $400 initiation fee. Members are also given access to a suite of other amenities, such as an indoor lap pool, hot tub, steam room, fitness center, fitness classes, and discounts on Sunriver Resort restaurants, bike rentals, boat rentals, and spa services. This is exactly the type of bundled package that we think more facilities should be considering to get people to cancel their bespoke memberships for different things - give people one place to spend almost their entire non-work day.

Best of the Rest:

• Props to the City of San Clemente parks & rec for reviewing a city proposal to build a massive brand new pickleball complex at the Richard T. Steed Memorial Park. The new complex would host 24 courts, with one stadium seating court, as well as a part, seating area, and large parking lot. It won’t be cheap though, with project estimates coming in at $10.9M.

• The City of Castle Pines in Colorado is opening 5 courts at Coyote Ridge Park. The original project was slated to cost $250k for 4 courts + lighting, fencing, and nets. Assume the final bill was slightly north of that for 5 courts.

• The Town of Clifton is voting on a proposal to build 10 new pickleball courts in Veterans Park, as well as a covered pavilion. The project is expected to run the city ~$538k.

Heard on The Street

In honor of Q2’23 earnings season being in full swing, we are highlighting some recent mentions of “pickleball” in the latest quarter’s earnings calls, investor days, and conferences. Sometimes we’ll have analysis, sometimes it’ll just be a few callouts. Enjoy.

“Pickleball” Mentions Tracker: 6 (5 earnings calls; 1 industry conference); 23 YTD

Company Callout: Stryker Corporation (SYK)

Company background: Stryker manufactures medical devices and surgical equipment, including those utilized in orthopedic and spine surgeries (~42% of revenue in FY22)

Call context: Evercore ISI analyst noted during the Q2’23 earnings call that the company’s 10% organic growth in orthopedic & spine was impressive and sought out commentary on whether procedure trends could help support that organic growth into FY24.

Company Commentary: “Again, this innovation cycle we have is tremendous. The procedure demands are strong. We're -- as you see, we're growing very fast. Even though the market's elevated, we're growing above market in virtually every one of our businesses. So that gives us confidence that we're going to continue to be able to grow at the high end of med tech.

And for this year, we've already -- half the year is already in the bag. And yes, the Q4 last year was abnormally fast, growing over 13%. So we -- in our guidance, we do reflect a little bit of a slowdown in the growth rate just related to those comps. But we do expect, based on backlog of surgery demand, aging population, more people playing pickleball, you name it, right, activity, causing injuries. So this will continue to be a tailwind.”

The Reset’s View: Remember to do some dynamic stretching and functional warmups before going 110% on the court, unless you want to be a line item in Stryker’s Q3’24 earnings call.