Monday Memo: Starting the Year with a Look at the Last

Monday Memo:

As always, if you’re more into PDF & printable formats, today’s memo can be found here.

Quick note on MLP/PPA player contract discussions & other league developments:

We’re naturally following all the latest back and forth between MLP, PPA, and a newly formed players’ collective over the past month. For those that aren’t fully in the loop, here’s a brief summary from CNBC which covered the basic details. Nearly every pickleball podcast has covered this with different levels of rigor and sometimes slightly different perspectives. We’re intentionally holding off on making comments since we don’t have too much new perspective to add at the moment and would rather lay out the various considerations in more depth. Part of the problem with nearly all of these topics is the lack of details that have come out about the merger. In some ways, we get this. It’s hard to engage in negotiations if every conversation and piece of information is leaked. Similarly, though, there’s a lot going on within both the leagues and internally at this new players’ collective that no doubt are important details to the overall story. Suffice it to say, we’re following everything going on and will opine when we have a more detailed perspective / opinion.

Now onto the steady march of facilities after a year of volatility at the professional level…

If you’ve been following along for some time, you’ve heard us talk at great lengths about the critical role that facilities are playing in the growth of pickleball across the country. While many players begin their journey at their local public park, a good portion eventually work their way through the pipeline to seek out private dedicated indoor facilities. Some of this is in search of better & year-round playing conditions (no wind, rain, snow, or extreme heat to stop you), while others are looking to trade money for time, as the public parks become increasingly packed with enthusiastic players itching for their next game with friends & strangers alike leading to extremely long wait times. Facilities end up attracting a wide array of player profiles, and by dint of their offering tend to sit at the center of the industry. They serve as a place for rec play, professional tournaments, paddle companies, apparel & gear offerings, and new technology platforms to all converge under one roof.

As a result, this segment of the market has remained the most interesting and attractive to us from an investment perspective. Particularly given the expansion of formats and business models being rolled out across the country, from independent club owners and franchises to eatertainment concepts and pure-play pickleball facilities. We’ve been extremely fortunate to build relationships and conduct interviews with some true industry veterans last year like Michael Grewe at Missouri Pickleball Club, Christy Howden at Wolverine Pickleball, Ruth Milligan & David Kass at Pickle & Chill, Devan Egan at Club Pickleball USA, Ken Knight at Pickleball Island, and Jorge & Austin at The Picklr, as well as with emerging clubs like Pat Rolfes’ The Hub & Tim Klitch’s Austin Pickle Ranch, and last but not least, the upcoming launches of clubs like David Friedman’s PKLYN and Kim Copeland’s TX HOP Club. (No doubt there are countless others who have lent their advice and perspective over 2023, and we’re grateful for their contributions to our education as well!).

We remain positive on the opportunity for the right facility being built in any market, as almost no geography has yet reached a point of supply oversaturation relative to the continued demand for courts. When we say “right” though, we maintain our view that throwing concrete and lines on the ground in order to give people a place to play may have a short-term payoff, but will contribute to this inevitable oversaturation (most markets with long development times tend to overbuild) and ultimately get investors in these clubs burned. This is a result of fast money looking to make a quick buck on the ‘hottest trend’ by racing to throw down courts without much consideration to the cost they’re paying to get it opened, nor (more importantly) what they’ll do once they’re open to attract & retain members. As we wrote back in August in “Pickleball's Permitting Problem”,

This is one of the first principles on this side of the industry. However, we realize that it’s sometimes a challenge to think of every detail as an independent club owner looking at the ever-growing to-do list before and after opening.

So, to kick off this year, we wanted to take a look at the last by giving voice to one of our close friends, Ruth Milligan, not only to share the experience and current learnings after a year in business for Pickle & Chill, but to hopefully serve as some soft guidance for new and prospective facility owners watching their to-do list continue to pile up, with each of them appearing to be “top priorities”.

Turning the pen over to Ruth (with minor editing from The Reset for flow), and if you haven’t had a chance to check out what David Kass (also an MLP owner in the Columbus Sliders), Ruth, and the rest of the team have built, go give the website (and facility) a look.

Now onto the real insights…

When David Kass, my lifelong friend from childhood tennis and, since then, about a dozen subsequent meaningful business and life intersections, called to ask if I wanted to start a pickleball club with him, I said “tomorrow.” That was in October 2020. While it took a few years to open after that call, I’m writing today with a year of operations under wraps and my top 10 lessons for the next club owner to take from our experience. Remember I wasn’t on the sidelines, I was playing on the court both literally and figuratively of this business for the last 18 months.

Value of Lessons & Coaching as an Onramp to the Sport and Your Club

The first tip is actually from Dustin DeMerit from Pickles NE. I’m putting at the top as a homage to his prescient advice.

“You may serve the existing pickleball player but your membership will be largely those you teach to play.” 

He wasn’t kidding and that’s been a bold reality. We’ve taught nearly 2000 people how to play and our intro classes still sell out every week.

Migrating these New Players from First Time Lessons Up the Pipeline

This is related to Dustin’s point above. We were sort of prepared, but not really, in how to handle those new players. It took us a while to get into a groove of how to migrate them from intro to level 1, level 2, etc. This is instructor-dependent, but lots of people can teach basic skills who have been playing a while - you need the “pros” for the higher-level players.

Stick to Hourly Court Reservation Blocks

A basic: keep all reservations for an hour. David was insistent on this point from experience with tennis clubs - and he was spot on. People may want to play 90 minutes but that’s a trickier business proposition when you have a lot of empty half-hour slots for those that only want to play an hour.

Fair, Competitive Play

Level play is the holy grail. We were told this up front but didn’t appreciate how much it drives everything. Our leagues sell out immediately, and we now have self-organized leagues beginning to take hold for those who have found their people or can’t play in the league at their level due to a conflict. We have 20 open plays a week. We started with zero a year ago.

One Technology Solution Won't Serve All Your Needs

There is not one technology solution for everything. We positively love Play by Point; every time we want something better or different in a report they work to make it happen. But it isn’t an event tracking software or a tournament bracket platform or a place for people to meet up or QuickBooks. Be prepared to juggle a few different ones to manage your club business.

Avoid the Allure of Apparel

Ignore merchandise sales (initially). We have largely for now, and it has saved us a huge time and staff distraction. Now that we have built out a little space and actually have members, we are starting to discuss the modest play in wearables and equipment. But the return is not worth the investment when you are trying to figure out an open play schedule that does serve the members’ needs.

Enhancing the Member Experience Pays in the Long Run

We had 500 basic custom-branded paddles made that we use for learners, camps, charity requests, and guests. Some people charge to rent but we don’t (you can buy one if you really want one). While this news may suck for the big brands, trust me, getting 2,000 people to play with a basic paddle has allowed them to benefit when they all go look for their more expensive “second” one. The market is way too diversified to pick one or two brands to make it worth the small return in a pro shop. We also buy balls and let everyone use them. Until we know that the new Selkirk ball actually lasts a year, they all crack so frequently that we’d have to install a vending machine. It’s a benefit of membership.

You Open the Doors, You Open the Floodgates for Event Requests

Be prepared for special event requests from day 1. This can be a daunting prospect when you barely know a league schedule. But take time before you allow private events to take place so you can establish member programs and then work around them on your schedule.

Pickle & Chill’s Membership Model

Our model on membership pricing ($10 month after $89 initiation) was meant to do two things for our members- give them earlier access to book and a cheaper rate on courts and programs. We like the model since it keeps expectations modest and allows us to be variable with program pricing based on demand. There’s no one best model but we like ours so far.

Eye on Open Play

Open plays need an initial monitor until you establish the right norms. We had our head pro watch every open play for several months until they became self-policing with the values we cared about (level play with kindness). They are never perfect but they must be close since all 20 of them sell out every week.

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A huge thank you to Ruth for kicking off this year’s newsletter with her year of insights at Pickle & Chill.

Lastly, as a start to our year, we want to express how appreciative we are of all our readers who have come with us on this open-ended exploration into the relatively niche business world of pickleball in 2023. Like our time on the courts, this endeavor has brought us immeasurable enjoyment and gratitude getting to meet and speak with so many like-minded people in the industry equally passionate about the sport - from your local rec player, to your MLP owner. Without everyone’s continued support and interest in what we’re doing here, we wouldn’t have the same capacity to research, contemplate, and write about so many exciting topics.

We look forward to bringing you our perspectives and learnings in 2024, and as always, hit us up any time you want to dive into a topic.

Wishing everyone all the health, happiness, and success both on & off the court this year. See y’all out there.