Padel Courts and a Gym: A Worked Example of Utilisation and Return

An illustrative calculation for a small sports facility in Saudi Arabia, showing how court hours, membership and a fixed cost base combine into a return on capital.

Sports facilities are utilisation businesses. The building cost is modest compared with a hotel and the revenue depends entirely on how many hours the courts are booked and how many members renew. This worked example takes a small facility from capital cost to earnings and shows how quickly the return moves when court hours fall, using illustrative assumptions throughout.

The situation

An owner holds a plot in a residential district of a Saudi city and plans a covered facility with four padel courts, a gym, changing rooms and a reception. It will be operated by a small local team. The owner wants to know what utilisation the facility needs and how fragile the return is.

Assumptions (illustrative)

• A covered hall of 1,400 square metres at an assumed SAR 1,750 per square metre for a steel structure with a simple envelope.
• Four padel courts at an assumed SAR 180,000 each for structure, glass, surfacing and lighting.
• Gym fit-out and equipment assumed at SAR 950,000; changing rooms and reception fit-out at SAR 380,000.
• Design and supervision at 6 per cent and contingency at 8 per cent, both applied to the hall and courts.
• Court utilisation assumed at an average of 9 booked hours per court per day at an average of SAR 110 per hour.
• Three hundred gym members at SAR 2,400 per year, plus SAR 180,000 of coaching and retail revenue.

Step 1: Assemble the capital cost

The hall is 1,400 multiplied by SAR 1,750, which is SAR 2,450,000. Four courts at SAR 180,000 add SAR 720,000, giving construction of SAR 3,170,000. Design and supervision at 6 per cent adds SAR 190,200 and contingency at 8 per cent adds SAR 253,600. Gym fit-out and equipment add SAR 950,000 and changing rooms and reception add SAR 380,000. Total capital excluding land is SAR 4,943,800.

Equipment and fit-out are SAR 1,330,000, which is 27 per cent of the total. A sports facility is closer to a hospitality project than to a shed, because much of the spend wears out and has to be replaced.

Step 2: Calculate court revenue from hours

Four courts multiplied by 9 hours multiplied by 365 days gives 13,140 booked court hours. At SAR 110 per hour, court revenue is SAR 1,445,400.

Nine booked hours per court per day is a serious level of use, concentrated in evenings and weekends. The daytime hours are hard to fill in most districts, which is why the average matters more than the peak.

Step 3: Add membership and ancillary revenue

Three hundred members at SAR 2,400 gives SAR 720,000. Coaching and retail add SAR 180,000. Total revenue is SAR 1,445,400 plus SAR 720,000 plus SAR 180,000, which is SAR 2,345,400.

Membership income is the stable part of the model and it is also the part that requires the most operational effort to retain, since members who stop attending stop paying at renewal.

Step 4: Apply the operating costs

Assume staff at SAR 780,000, utilities at SAR 290,000, maintenance and a resurfacing reserve at SAR 160,000, marketing at SAR 120,000, insurance and licences at SAR 55,000 and consumables at SAR 70,000. Booking platform fees at 3 per cent of court revenue add SAR 43,362. Total operating cost is SAR 1,518,362.

All but SAR 43,362 of that cost is fixed within a season. Lighting a covered hall and staffing a reception cost the same whether the courts are busy or empty.

Step 5: Reach earnings and the return on capital

Earnings before interest, tax, depreciation and amortisation are SAR 2,345,400 less SAR 1,518,362, which is SAR 827,038. Against capital excluding land of SAR 4,943,800, that is 16.7 per cent.

That looks strong, and it depends entirely on the nine hours per court. The capital is modest, so the return is highly geared to utilisation rather than to construction cost.

Step 6: Test the return at lower utilisation

At 6 booked hours per court per day, court hours fall to 8,760 and court revenue to SAR 963,600. Total revenue becomes SAR 1,863,600, platform fees fall to SAR 28,908 and total costs to SAR 1,503,908, leaving earnings of SAR 359,692 and a return of 7.3 per cent.

Three hours less use per court per day removes more than half the earnings. That sensitivity is the single most important fact about a sports facility investment.

What changes the answer

• Hourly rate 10 per cent lower at SAR 99: court revenue falls by SAR 144,540 and earnings by about SAR 140,200, taking the return to roughly 13.9 per cent.
• Membership at 220 rather than 300: SAR 192,000 of revenue disappears with no cost saving, reducing the return to about 12.8 per cent.
• A competing facility opening within the same catchment: the effect appears first in daytime hours and in renewals rather than in peak bookings.
• Court resurfacing arriving earlier than planned: the maintenance reserve has to rise, which reduces distributable earnings every year.

What the numbers tell you

• Utilisation, not construction cost, decides whether a sports facility works; model it at a level you would be disappointed by.
• Almost the entire cost base is fixed within a season, so lost hours convert directly into lost earnings.
• Equipment and surfaces wear out, so a replacement reserve belongs in the model from the first year.
• Membership revenue is the stable component and needs deliberate retention effort rather than passive renewal.
• Daytime demand is the hardest to fill and the assumption most often inflated in a business plan.

Limits of this example

Every figure above is an illustrative assumption used to show the method, not a quote, valuation or market rate. Costs, rates, fees and regulations change and must be confirmed with the relevant authority, lender or supplier before you commit.

Domira designs, builds and manages projects across Saudi Arabia for owners who are based abroad: land appraisal, feasibility, design, construction, handover and asset management under one accountable contract. Send us the plot or the brief and Domira will put the numbers in front of you before you commit.