San Francisco Recap

The Quick Points

🧠 Think like an owner. Tim Parks, owner of the SoCal Hard Eights, makes another podcast appearance with Rob Nunnery and Adam Stone. He was previously a main character on the Dink’s Pickle Pod. It’s worth watching to get perspective from a hedge fund numbers-loving trader who has fully enveloped himself in the sport and community. Few nuggets:

• Business is business when it comes to assembling a team

  • How much do you listen to existing players

  • Finding upside and value within a more efficient market

  • Challenger this year was filled with high-variance outcomes

  • How much should singles factor into draft stock

• Continually bullish (acknowledging his financial bias) on MLP

  • PPA tournament schedule tension as they both vie for top talent and the most marketable consumer product

  • Ideally, the 6 events per year turn into a full-length season

  • True believer in new leadership, which we previously covered here. Gives off hints that bigger, bolder experiments are ahead

🎯 Targeting the casual. Gamma and Target have a new retail partnership for the beginner player. Gamma’s Fusion $50 line (available in-store and online) is a Recess-like colorful vibey paddle offering. It undoubtedly is for the beginner or out-of-towner that needs a paddle in a hurry. Target, Big 5, and even Dick’s Sporting Goods are all great convenient options for that cohort looking to enter the sport. “Enter the sport” may even be a bit strong, it’s a bit more like “what equipment do I need to have fun outside with friends?”. It’s a notable business win for the legacy player as they have recently taken brand hits with an (in our opinion, unfair) PPA failed paddle test and the number 2 men’s player in the world Riley Newman leaving for a Takeya sponsorship.

🏢 Elevated living. New York’s Baccarat Hotel and Residences is listing a 5bd, 7ba, 4,200 sqft duplex condo for a mere $28.9M. Of course, this unit wouldn’t be complete without a 3,500 sqft white marble terrace, which, naturally, needs to include a pickleball court. This is taking building amenities to a new height to have it at the private residence level, vs. shared courts. We will play for a room.

What’s on our mind

Braxton was in San Francisco last week, so, naturally, he spent time checking out the local pickleball scene. Huge thanks to Pat and Michael from The Hub (San Jose), Ben from the Ballpark Series, and Elizabeth at Cassidy Ranch for taking time out of their week to chat and show me around. Some accumulated thoughts from the week.

Pickle4 Ballpark Series
The What: I had a chance to go play in Pickle4’s ballpark series tournament held at Oracle Park (SF Giants stadium) - big props to my kickass mixed doubles partner for carrying us into silver in the 4.5/5.0 draw, and if anyone’s looking for someone to hit with in the Bay Area, I know a gal. The Company is hosting tournaments at MLB stadiums around the country this summer, with the first one being played at Fenway Park (Boston). The multi-day event included open play, private court rentals, children’s clinics (taught by pros), 3.5-5.0 tournament play, and a pro exhibition match.

Thoughts:
1. People will pay up for unique experiences
Will say, when we first saw the price tag for private court rentals or open-play (~$150 a person), we were a little surprised. However, a relatively affluent demographic in San Francisco was clearly excited to get the chance of a lifetime - play a sport they're obsessed with on the field of an iconic stadium. The courts were packed at almost all hours, with some of the people I talked to all highlighting how excited they were for the event to come to SF. Even players I spoke with on public courts knew of the event coming to town and were at minimum interested in getting out there to see the pros. One-time experiences are able to command higher price tags.

2. Pros can draw their fans out among the pickleball crowd
Pretty interesting to watch (and hear from security guards) the frequency that pros were approached by fans to get a photo or paddle signed. This was an interesting environment, as I’ve often seen one of two scenarios play out: 1. Pros at the PPA/etc. events aren’t given the same celebrity status as other sports. 2. Many diehard pickleball rec players can barely name pro players. So, seeing spectators show up specifically to watch their favorite pro play (and get a shot at a photo or signature) was an interesting development. Probably something to be considered for both the players on tour and the MLP teams with respect to the value of doing fan / community activation events.

3. Ace Surfaces are higher maintenance than expected
Pickle4 utilized Ace Surfaces for the temporary courts during the tournament. Will first say that in fairness to Ace and Pickle4, I have no doubt that the Giants stadium put considerable restrictions on the court construction in order to preserve the underlying grass (e.g. security practically had an aneurysm if your bag strap crossed the rope fencing and touched the grass). With that said, the courts consisted of a thin sheet of their “gritted” surface, layered on top of plywood and a plastic foundation underneath. Put simply, this structure was insufficient to replicate the bounce and experience of playing on a typical concrete or asphalt court. It made for numerous dead spots and challenging shot anticipation when it would sometimes bounce normally and sometimes only bounce a few inches. The foundation clearly affected the courts performance, as well as external weather conditions, as the high daytime heat to cool night-time temperature swings caused visible contraction and expansion in the Ace surface topping, and undoubtedly the plywood underneath. To be fair, we need to take time to play on other temporary court surfaces before rendering a judgment on Ace specifically vs. the technology itself. Any follow-on companies / events absolutely need to keep the underlying foundation questions in mind when running these events - especially if there’s something at stake (e.g. money for pros). Some outstanding questions for anyone from a temporary court construction company are - how do adverse weather conditions impact the ability to use the courts in future events? Does it materially decrease its shelf life? Or are they able to return to ‘factory’ conditions once in normal weather?

4. Unique experiences can make up for the shortcomings of the playing environment
Despite nearly unanimous agreement among players we spoke to (and overheard from pros) about their displeasure with the Ace surface, almost everyone had a very positive experience given the highly unique opportunity to play in such a venue. The event drew out very solid competition in all the brackets, and it had a great mix of pro<>fan engagement opportunities, a fun atmosphere, and serious playing time. These types of creative playing experiences probably have some wiggle room to fall short on some details, as they’re quite hard to replicate and undoubtedly difficult to put on. Props to Pickle4 for experimenting with this concept and making it happen in a real way.

The Hub and Indoor Facilities
The What: I went down and had the chance to meet with the General Manager and co-owner of The Hub in San Jose, which is their new 20-court facility that will soon be open to members & the public (their first location is already open in San Diego).

Thoughts:
1. The playing experience of a well-designed facility is hard for public courts to compete with
First off, we continue to believe that the quality of a facility’s members and community are key determinants of success. Additionally, I heard from multiple players at the Ballpark Series tournament that they weren’t running to join The Hub, or any other private indoor facility for that matter, since ‘free’ public parks with preexisting strong communities, skill, and culture can be difficult to compete with if there are a sufficient number of courts and the local private facility alternative is charging you $100+/month. However, taking a moment to solely observe the pure playing experience ceterus paribus, the climate-controlled nature of an indoor club with high-quality court surfaces, lighting, and spacing make for a very desirable playing environment. There’s a strong draw to a facility like The Hub when you go many consecutive days and weeks throughout the year with strong wind and rain, not to mention the visibility into planning one’s schedule around guaranteed court time. With that said, many of these benefits will be commoditized through the emergence of new facilities, bringing us full circle to the importance of building something more than just ‘courts in a box’ - that first-mover advantage likely creates some customer lock-in, but it’s unclear to us whether members are willing to stay if the community, leagues, clinics, and general atmosphere fall short.

2. Design can unconciously improve the player experience
Seemingly every design consideration was meant to improve the player experience down to pretty small details. Padding and a turf-like surface outside the courts are meant to reduce the sound amplification inside a massive facility when 20 courts are at full utilization. It doesn’t take long to realize how loud an indoor facility can get when everyone is playing, cheering, talking, etc., and as we’ve talked about…sound can be a feature of the game, not only a bug. Additionally, color coordination of the background walls and courts subconsciously provided a surprisingly pleasant experience that I didn’t really recognize until after playing. You never lost track of the ball, compared to a facility I more recently played at where all the sponsors were on white banners around the backs of the courts, making it frustrating how often you’d lose the ball against the backdrop. Every net had spacing at the bottom to roll the ball underneath to the other side, creating a simple convenience and way to keep players from constantly lifting & pushing on the nets, which affects tension & net height over time - saving money on maintenance. Could go on about other design observations, but will give their team a lot of credit for thinking through sometimes seemingly minute details that we believe will improve the atmosphere of the playing environment.

3. Entry-level players can be some of your most valuable
Every facility would benefit from having Ben Johns and Anna Leigh Waters play / practice there daily. Sadly though, we are not all Ben Johns and Anna Leigh Waters, creating a long tail of highly skilled players who are very serious about drilling and playing for hours a day, week after week. Unintuitively though (at least to me), these aren’t always your highest-value members. While all members have the potential to benefit the culture, community, and, importantly, skill level of a facility, a location with too many highly skilled players can leave some value on the table for the facility. This cohort of players often come with their own pre-set groups to play with, book hours of court time to play amongst themselves, and given their playing+drilling focus, typically aren’t your most social members. As a result, the club is missing out on players who will spend incremental hours in a club talking to other members, joining social mixers & clinics, buying food & bev, and taking group lessons. Conversely, many entry-level players fit this bill, as they’re drawn in by a love for the game and stay to experience the community and improve their skills alongside other like-minded players - which increases the customer lifetime value of this member demographic. Of course, this isn’t to say that the highly competitive players in a local market aren’t valuable customers to serve, but it took some thinking and observation to realize that there is a dense customer demographic who may be better suited to building the social dynamics of a facility, and plainly offer a facility more opportunities to upsell them on other membership experiences.

4. Tournaments are a careful balancing act
Tournaments have the potential to be a relatively high dollar and high margin offering for a club, with a higher price point per player, food & bev sales, and fairly material sponsorship revenue opportunity the provide. The knee-jerk reaction would be to try to fill the calendar with tournaments, as a facility can benefit from the better economics^, as well as the ability to bring new players into the facility who aren’t currently members. Some percentage of this new foot-traffic will convert to new members at best, and at worst some percentage will now be motivated by the high-quality indoor experience to at minimum do pay-to-play or join leagues, clinics, and social events. However, tournaments can come with a few downsides to consider if not managed well. First and foremost, a bad tournament can reflect very poorly on the club itself. Oftentimes, tournaments are hosted through third parties, but players tend to associate the facility with the experience put on by the third party even if they had little input into the tournament design / logistics. Second, unless you get very high member participation in the tournament, facilities risk degrading the experience for their members who are looking to get court time on a Fri-Sun, but now are unable to play due to the tournament running all day. If we believe that one of the core value props of being a member to a facility is trading money for time (i.e. you’re paying for the convenience to know you can get a court), then any programming that breaks this value exchange between a facility <> member risks eroding their experience and impacts retention.

5. Facilities are a unique training ground for new player development
Full-time coaches will now have dedicated court space to develop new players. Right now, many coaches need to coordinate time at local parks, requiring them to manage public court availability, while engaging in customer acquisition (i.e. finding new players to coach). The value trade for coaches with facilities is the economics of each student, in exchange for customer acquisition. Like tennis centers for decades before them, pickleball clubs will be able to aggregate the supply of new players seeking coaching and match them with coaches seeking new students. This line of business for facilities also has a future growth catalyst if there are material steps forward in pickleball becoming a collegiate sport with scholarships - conceivably driving parents and kids to seek out higher level coaching.

6. New facilities are the startups of the pickleball world
Many will succeed, many will fail, and almost all will have the exciting task of testing new concepts, seeing what works, and pivoting when things don’t go as planned. We remain very positive on the impact that facilities will have on the growth of the industry, as they sit at the nexus of all things pickleball, will be a place for new player acquisition as well as existing player development, and engender a strong sense of community among the members.

Public Parks
The What: Pickle passion is everywhere. It was fascinating to go play at three different public parks and observe how the unique cultures, rules, and playing formats all developed. As an econ major, the nerd in me couldn’t stop thinking about this being another real-world example of spontaneous order at play. Despite there clearly being the “regulars” at the park, no one I spoke with could articulate how the parks’ systems came into being. They seemingly all emerged over time through social interaction and continuous iteration to achieve the most optimal outcome at that moment. As player density, skill, and culture shifted, new rules and norms seemingly emerged on their own through unwritten consensus. One example was someone telling me about how the courts over the course of the past two years shifted to first be based on private group play, then to fully open play, then to designated courts by skill, and now to an even mix of courts split by skill + courts for players needing partners. Another example was how their challenge court will unanimously shift between allowing the winners to stay on for 2 games vs. 3 vs. 4 based on how many paddles are in line to challenge - no one could answer how it came into being, but everyone had a sense of when the shift would occur.

Thoughts:
Other than giving our reader a look into our odd brains at times, we think there’s a potentially overly simplistic piece of information here for facility operators to keep in mind from these observations. While we wholeheartedly believe that best practices exist and the ability to replicate a positive membership experience is doable and valuable to the business model of clubs, the spontenous design of local public courts suggests that there’s a need to stay closely attuned to what your member base is seeking in terms of offerings and general membership structure. Your members may be unintentionally designing a more efficient system in front of you, and giving them some flexibility to inadvertently educate you on new opportunities may pay off.

Experiential Pickleball and Cassidy Ranch
The What: I had the chance to go play out on a local farm set next to a winery. Quite the picturesque scene, and would definitely recommend booking a court and also spend some extra time there checking out all the farm has to offer while getting to know Elizabeth and everything they’re building.

Thoughts:
Will keep this one shorter, but these types of experiences seem like great value-adds for the core business. It introduces the core demographic (i.e. those there for the farm produce & flowers) to pickleball, and brings in a new demographic (i.e. those solely there to play pickleball) to learn about everything else the farm has to offer. Similarly, it creates new ways to cross-market the core offering around the pickleball experience. If our thesis that pickleball is one of the ultimate group/social activities has any merit, then using the sport as the starting point to get people to come meet their neighbors and learn about everything else the farm has to offer should be able to drive additional traffic to the farm over the longer term. If something like this existed in Austin, it would be a great way to get a different playing environment on a weekend when you’re looking for something more than competitive play or the standard eatertainment food+alcohol combination.

Breaking Ground

The Reset is tracking publicly available court construction data to keep track of locations, costs, and development projects across the nation. Our tracker can be found here.

Featured Developments:
Toon Town entertainment & sports complex in Jacksonville, FL is adding four more indoor courts to complement their existing two courts. The space has seen substantial demand since it opened, and serves as a tailgate location before the Jacksonville Jaguars games (pair this with the new Jaguars pickleball events at their stadium). The renovations and expansion are expected to cost $300k for 16k sqft of work.

Best of the Rest:

• Assembly Union Park within the Highland Bridge development in St. Paul, MN is opening its first 3 permanent pickleball courts, alongside a playground, basketball court, and picnic area.

• Lower Saucon Township, PA is in the middle of approving 4 new courts in Polk Valley Park. The project is expected to cost $100k.

• As we’ve talked about in recent issues, new property developers are continuing to add pickleball as one of the new amenities for the communities they build. This time, it’s developer Caldwell Communities breaking ground on The Highlands amenities center in Porter, TX which will include two pickleball courts, among many other offerings.