If you are considering opening an indoor sports facility, you’re likely wondering what kind of revenue to expect. In the past, we’ve talked about tips for increasing a facility’s profitability, which is the bottom line. In this post, we’ll look at concrete numbers on top-line revenue and what you can expect your facility to make.
Before jumping into revenue streams, let's look at some of the key costs involved in running an indoor sports facility. There are also hidden costs to watch out for that we’ve covered previously.
Depending on your location, size, and condition of the space, this will likely be your most significant expense. Most sports will be looking for industrial spaces notably for their high ceilings and large square footage. Unfortunately, the rent for these spaces across the United States has risen significantly since 2017.
Here in Toronto for example, industrial leasing rates typically range from $7 to $20 CAD per square foot per year. For a facility of small size (6,000 SQ), this could be roughly $45,000 to $120,000 a year in rent.
Monthly utility bills can be another sustainable expense for an indoor sports facility. When establishing a budget, energy costs for lighting, heating/cooling, and other maintenance are important to consider.
Costs here once again largely depend on your square footage and facility layout. However, you can find a rough estimate with a quick search for your state. Across New York, for example, industrial spaces' monthly average retail price of electricity was seen from 7.54 cents to 9.72 cents per kilowatt-hour depending on the time of year.
Bringing on more staff as you grow your business is always a good thing. For facilities heavily centered around lessons, classes, clinics, and camps, then instructor costs will be a large ongoing expense. Whereas facilities operating more as a practice space for teams and individuals will generate their revenue from rentals which can be easily automated with technology like 24x7 door locks, allowing you to cut staff payroll almost entirely.
For growing sports facilities, retaining your instructors can also become an increasing expense especially if there are numerous rival facilities in the area. To learn more about hiring, charging, and retaining instructors, check out this guide.
Having a comprehensive insurance plan is key to protecting your business against unforeseen events and accidents. These expenses can include property insurance, liability insurance, and workers’ compensation.
PS: ensure your clients have signed a liability waiver to reduce your risk. Use our free liability waiver template to get started.
Keeping your indoor sports facility running smoothly will require modern facility management software. This software will typically cover key features such as online booking & payments, membership management, packages & credits, payroll, reporting, and more.
Investing in the right software will be a revenue generator, not a sunk cost. It should save you and your staff hours of manual work, and open up new sources of revenue that you may not have previously considered.
Generating revenue as an indoor sports facility or sports complex is quite straightforward. After working with hundreds of sports facilities at Swift, we have found that the majority of your revenue will come from four primary sources.
Every sport & facility has some sort of rental component. This could be cages, courts, fields, or a myriad of other “spaces” unique to your sport/niche. If it’s a physical space, it can be rented. However, rates may change depending on the size of the space, the time of day, the day of the week, or differentiate between a public and member price.
Rental services are typically divided into two subcategories: individuals and teams. For example, in baseball, an individual typically rents a single cage, while a team might book the entire facility or a block of cages for weekly team practice.
As a recurring fee, memberships offer a steady stream of revenue to your facility. Members typically pay a monthly or annual fee to gain access to exclusive perks. These membership benefits can include perks like access to members-only hours, discounted rates on services, credits, priority booking, and numerous other offers.
Learning from the facilities utilizing Swift, we have learned that tier memberships offer the most flexibility and revenue-generating potential for sports facilities. These tiers are typically constructed into two pricing structures. One relies on membership discounts, while the other leverages credits to offer members cardless online payments.
Here’s a quick look at an example membership tier offering from our Facility Pricing Guide:
Graduating from simple space rental, your sports facility can host instructor-led training sessions in a variety of formats. Whether it’s private lessons, holiday camps, or recurring clinics, offering a variety of training options can attract a diverse clientele.
Building on your service offering, many facilities will offer “packages.” These are bundles of credits towards services purchased upfront, typically at a discounted rate. For example, instructors love offering their regular clients 5, 10, or 15-pack bundles for private lessons. This will encourage customer retention and generate additional bulk spending similar to gift cards.
Below is a typical package offering for a baseball facility.
While often thought of as a secondary revenue source, high revenue-generating facilities leverage retail & product sales to boost their profits. Many athletes will appreciate being able to grab a quick protein bar or sports drink after their training. While offering custom-designed facility apparel can catch the eye of your members and serve as a secondary marketing tool.
The profitability of your indoor sports facility will depend widely on factors such as:
A facility in a high-demand area with a large population will likely attract more customers and generate higher revenue. Demographics like average household income will also play a large role in determining your profitability.
Scoping the right location is also a balance between scarcity and demand. How many facilities are within a 20-mile radius? How accessible are they by highways? What is the demand for your main sports offering in the area? Furthermore, even if there are rival facilities in the area, if customers are constantly fighting for space, then it still might be a good opportunity for you to open a location nearby.
Facilities with larger square footage will have the potential to generate more revenue due to more foot traffic. However, a large square foot will also incur larger costs. A bigger space also means more room for amenities like a dedicated weight room, multi-sport space, parent lounge, etc. For facilities with limited space, it is even more important to tap into revenue streams for off-peak hours.
Using tactics like flyers and local ads or creating engaging social media content to reach your target audience can significantly impact your sports facility’s success. Offering promotions, creating email marketing campaigns, using paid social ads, sending mobile push notifications, or partnering with local organizations can be a large step forward in attracting and retaining customers.
Although your indoor sports facility will be sheltered from the weather, there may still be seasonal trends. For facilities in the Northeast or in Canada, snow days can still impact your business and cause weather-related cancellations (pro tip: create a cancellation policy to negate these last-minute cancellations). Depending on your sport, your revenue will also likely be the highest at certain times of the year when athletes are out of competition. You may notice other trends too like collegiate athletes home for the summer helping give your facility an extra revenue stream.
Alright, we’ve covered quite a lot so far. So, how much can you actually make by running your indoor sports facility? While it’s impossible to give you a firm number, with the hundreds of facilities on Swift, we’ve seen an average annual revenue of around $100k, going up all the way to $1M+.
Profit margins also vary considerably, with many facilities' margins falling between 10% and 20%. Thus, a facility generating $250,000 in revenue might see profits between $25,000 and $50,000.
This revenue (and profit) potential is widely influenced by utilization. Put simply, the busier your facility is, the more revenue you’ll generate. One way to think about how “busy” you are is how often your spaces remain occupied. That’s exactly what Swift’s new utilization report highlights.
Opening a new indoor sports facility can be a profitable venture if you carefully consider the costs and revenue streams.
Leveraging the reports generated in facility management software like Swift can help you make data-informed choices and plans to increase your profitability. If you found this article helpful and are interested in more tips and tricks on running a successful sports facility, read through our other articles for additional insights.
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