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The following is an automated transcript that has not been checked for accuracy.

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Today on the show, Tim bainton.

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Tim is one of the biggest names in North American paddle.

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He is president of Blue Chip Sports Management, partner at Epic Padel, and involved in every facet of the racket sports industry.

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This episode is packed full of business insights into North American paddle, and Tim offers some valuable advice to those beginning their investment journey in paddle.

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Mike Vittorio here, welcome to The PadelCast, part of the US Padel Network, where our mission is to have a paddle in the hands of every American.

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We bring all the biggest names in North American paddle to one place and talk shop.

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We meet with players, coaches, and investors, club owners and designers and talk about one thing, paddle.

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Nice to meet you for having us.

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Man, you’re doing everything there’s to do in paddle right now.

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Yeah, it’s been a fun.

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As I look at my career, it’s probably a pretty natural trajectory, but nothing in life is that natural.

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So I look back at how this began.

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I’ve been in the racket sport.

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I’m a tennis guy, so that was my bread and butter, and found a way to, after playing, to stay relevant, I suppose, in the industry and make a career out of it, through everything from coaching to owning, operating basically tennis and tennis and health clubs.

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And then that migrated into larger scale projects and diversified into everything from corporate wellness to managing resorts to corporate gyms.

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We got into some of the owner’s representation process through facilities, sorry, building out facilities.

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And it’s been a fun ride.

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So here we are.

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And obviously being from England, I’ve been familiar with Padel for many years.

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And I’m not surprised at what is happening and what is going to happen here in North America.

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And to give you a quick backstory, about nine months ago, Blue Chip Sports Management, the company that I own or the majority owner of still, you know, our goal was, look, this is beginning to get some traction.

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We’re probably going to add a court here or there across some of our facilities.

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But I was approached about nine months ago from a group out of the United Arab Emirates that sort of had a different approach and wanted to really be an investor across multiple, we don’t like that word, competitors, because at the moment, I think we’re just in such a growth time that we sort of, you know, our colleagues, if you will, compadres.

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But we wanted to invest them and see and monitor kind of how they grow and how they navigate, and then also have our own ideas and ambition with what is now Epic Padel.

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And obviously, they were, you know, they were smart in that they had the resources.

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And I think the idea, especially seeing the growth of paddle in the Middle East, and sort of needed sort of the guy who, you know, is because my expertise has become really in the operating of facilities.

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And so that’s how those sort of two got married about nine months ago now, I think it was, or at least nine months ago, we started having conversations.

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Sort of the relationship is that Blue Chip Sports Management will basically be the operator for Epic facilities.

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And then, you know, we’ve obviously fruitful beginnings for our relationship with regards to sort of ladle and investments between the two companies as well.

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So, you know, I think we’re, when you put all of that together, we’re pretty well, for lack of a better word, weaponized to kind of cover a lot of our bases and to really know the North American market, I think probably better than anyone based on some of the pieces that have been put together.

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So, but like anything else, it’s a learning experience.

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And, you know, it’s not lost on me that, you know, it is still a very niche and new sport here in North America.

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And, you know, if you’re in the community, if you will, if I go down to the Starbucks downstairs from where I’m sitting and I ask everyone in there if they’ve heard of paddle and no one says yes, you know, it just gives you a benchmark of still how much in its infancy the sport is.

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But there are so many strong barometers as to where it’s going to go and how it is already beginning to take off.

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You know, again, it’s exciting to be a part of it.

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Yeah.

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So you’re from the UK originally.

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You came to the United States for college and then to play tennis.

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Let me ask you this.

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What was the biggest cultural shock for you coming to the United States?

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You know, I won a national championship indoor at 14.

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You know, I was one of the top juniors in the country, but the trajectory of my career was we were going to call it a day and go to go to university in the UK and sort of on to the next chapter of your life.

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But obviously, a lot of my peers and colleagues in the UK would come to the US, and they would use it as a gap here.

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They’d get a full scholarship and they’d come over here, bang some tennis balls around, enjoy the American culture and meet some American girls.

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Then, sorry to offend all of my American friends, but go back to England and get a proper education.

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That was the way it was looked upon.

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But when I came to the US, I went to school here in Washington, DC.

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I actually arrived in the United States three days before 9-11 happened.

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The reason why I bring that up on such a horrific day in, not just in the country’s history, but in the history of the world, is my idea of staying here for one year.

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I look back now 23 years later, and in a university that I’d never visited, that I’d never been to this part of the United States, I didn’t know anybody, very quickly had a real sense of community, which at the time completely lost on me, never looked.

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But now as I’ve got older and wiser and I’ve been asked that question, I look back and it was, I think that’s why one year became four years and then became the last 23, was it was a very strange time to be here, but one where people were, there was a real sense of brotherly love.

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Everyone came together and I think somehow got caught up in that and it was therefore a lot more assimilating and welcoming than maybe that experience could have been.

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And trying to find a good thing in obviously a terrible situation.

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Culturally, I’d always envisioned wanting to spend time in the US.

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I was very much enamored by everything from culture to TV to sports.

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I tell this story, I remember, I’m one of the world’s worst basketball players, but one of the biggest fans, even as a young 10-year-old in England, I used to stay up and watch the NBA recap show that came out on Channel 4 at like 1.30 in the morning every Sunday night.

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I had pictures of NBA players on my wall as a kid and so on and so forth.

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And so I think there was always that desire to be here.

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And then, but I also ended up in DC, which is an interesting place when you’re coming from the UK, you think Florida, New York, maybe California.

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And DC has been a fascinating ride with regards to a couple of things about DC.

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It is easily the most transient area in the United States, obviously because of the politics, political side and embassies, IMF, World Bank, everything else is here.

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So you’re not isolated in a part of America where you don’t feel like you can find your people.

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And I think that is pretty standard, I think for any culture now in the DC area.

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But then also there’s a lot of truth to DC being, there’s a lot of faults, but it is recession proof.

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And it is a place where there truly is significant opportunity, and especially a vast network, if you’re strategically smart, that you can create through the years.

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And I think that’s one thing that I latched on to quite early being here.

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The humidity, the traffic, the cost, everything else, we’ll put that aside.

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But it’s been, you know, here we are now, like I said, 23 years later, and yeah, very, very grateful for the journey.

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That’s awesome.

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So one thing I wanted to get your opinion on, Novak Djokovic just came out and basically said he thinks that paddle will be the downfall of tennis.

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And now I know you’re a tennis lover.

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I know it’s your first love.

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So I’d love to get your, Yeah, so it’s funny.

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And you guys, I suppose, will get the scoop on this because I’ve been, I’ve been mulling whether to, you know, I have a few friends that sort of posted a response, if you will, some with a video message, some with like a written statement.

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And let me quickly talk about that real quick.

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I always, in the larger industry that I’m in, and I guess it could be the same for other industries.

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I can’t speak to them.

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But I, one thing that’s always served me well is, you hear these phrases like industry leaders and industry legends and all this, and I don’t subscribe to it personally.

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I like to think that, you know, I’m not Mick Jagger in the role in Stones.

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Nobody really wants to pay too much attention to what I have to say.

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So I try to, I try to be a little more selective these days with my responses.

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But here’s, I’ll try and be as succinct as possible.

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And here is the reality of the situation in North America, what I’m about to tell you, from somebody that interacts in every single possible facet of the racket sports industry and that knows it intimately across all verticals.

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So tennis, historically, and I’ve spoken on this at conferences, look, tennis is one of the top five most played sports globally.

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And the reason being is you can play from three to 103.

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It’s one of the, if not the leading sport with regards to gender parity, both playing and professionally in the world.

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That also matriculates from the television, where you would watch Serena in the final in primetime, the same way that you would watch Federer, all the way down to the club level, where you would have a group of 12 year old kids, and half would be boys, half would be girls.

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That sort of pedigree does not exist in pretty much every other sport.

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So, for those reasons, tennis in North America should be or should have continued to be as popular as it was back in the 70s and the 80s, maybe into the early 90s.

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Then you have two ways to look at it.

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Number one, obviously, we live in very different times.

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So that the people’s discretionary money, their ancillary money, and what they choose to spend it on has become significantly more competitive.

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The tennis has not evolved in the popularity based on the fact that it is extremely hard still to play.

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There is still the prevalence that it is a dinosaur sport and one that also, unfortunately, still has some even racial connotations behind it being a level playing field.

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And there has been significantly poor leadership across major organizations here in North America.

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So when you put all of this together, that is why leading up to COVID, tennis was on a rapid decline.

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And then COVID comes along and everyone’s locked up in their houses and tennis becomes the safest socially distancing sport, and people get out and play.

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They go to their local Walmart, they want to get out the house, they buy a racket, they buy some balls off Amazon, and they go play again.

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And the powers that be will pat themselves on the back, and you get these reports saying that tennis growth and participation and all this has gone way up, and it has, but it’s nothing to do with any infrastructure.

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Infrastructure in tennis has been declining for the past 20 years in North America.

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Clubs have been closed, repositioned at a rapid clip.

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So now as a tennis purist, like you said, and someone that if I had my way and could wave a magic wand, all we would have would be indoor tennis, and I would be very happy.

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So there’s tennis in a nutshell.

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So then let’s look at what happened here in North America that didn’t happen in the rest of the world, was the sport pickleball came along, right?

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And pickleball was not new, but it caught fire because specifically of COVID.

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You could play in your driveway, you could play with your grandkids, you could play with your aunt, your uncle, you could have an injury and still get around and enjoy it.

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And it’s easy to play for all the naysayers out there.

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And it’s very important that you hear me correctly.

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Pickleball is a vital part to the next frontier of growth in the industry that I’m in.

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Do I like tennis more than pickleball?

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Absolutely.

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Do I see the value of pickleball?

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Does my company have more than 30 locations that we offer pickleball at?

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Absolutely.

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Because at the end of the day, I’m a businessman.

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And if people want to come, pay, play, and stay, then why would I not offer it?

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I’m going to just focus on pickleball for a second.

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Let’s look at the business model behind it, though.

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In its very simplest form, you can put a pickleball caught up.

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I’m in a classroom right now at Marymount University.

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I could literally move the tables and have enough space and ceiling height to play pickleball in this classroom.

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You cannot do that with tennis and you cannot do that with paddle, and you can’t do it with a multitude of other sports.

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And that’s a benefit of pickleball, right?

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The adaptability of a space of real estate in order to play this has been something that I’ve struggled to find with tennis.

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I’ve audited the CVSs, the grocery stores, that you have no idea through the years how many of these I have gone in and tried to convert into indoor tennis clubs, especially at the middle tier.

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And you run into ceiling heights, column spacing and a whole host of other things.

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And if you’re building from scratch, the size of indoor tennis clubs become very, very challenging on your return on investment based on the size.

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So, Pickleball, you have a boom during COVID, you’ve got celebrities, you’ve got people buying franchises, it’s getting some media attention, you’ve got this social media influence and that is the society that we live in that are just drawn to this.

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And you’re beginning to see a lot of investment, something that tennis was not able to achieve in the past 20 years.

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All of these things, hear me out, are extremely beneficial to the growth of racket sports as a whole.

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However, we still to this day have the tennis people, the pickleball people, and we also have the paddle people.

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And the reality is everyone needs each other.

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And the reality from a history and from a media rights perspective is that none of them will ever touch tennis.

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Here’s the problem.

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Tennis has an issue with regards to participation and accessibility.

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Tennis does not have an issue with regards to owning the US Open, Wimbledon, the French Open and the Australian Open.

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The viewability, visibility and parity between genders will make and have proven historically, these are the most investible sports by corporations in the world.

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That will not ever come into to be challenged because at the end of the day, television rights and sponsorship dollars will win and they will not be as lucrative in paddle and pickleball.

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It doesn’t mean they won’t exist.

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The goal of these sports being complimentary to one another is how Blue Chip, my company has been around and succeeded.

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It’s how Epic will be the market leader in this space and ultimately how those that invest or choose to work with our company will be the market leaders is because at its core, we are dealing with real estate and the utilization of that real estate is the most critical thing no matter how much you love one sport or another.

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The ability to have people like my favorite saying, come, pay, play and stay.

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I have seen so many facilities over the years go out of business because people are unwilling to adjust the blueprint of the square footage of their real estate.

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So let’s go back on topic here.

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Pickleball.

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The issue that Pickleball is running into, and it has not quite yet happened.

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And if you go on LinkedIn, you will see franchises and valuations that are sky high and open all across the country.

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This is not Domino’s Pizza or Pizza Hut.

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You have a problem with regards to the people that play Pickleball, the monetization at a membership.

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Membership is what keeps commercial clubs open, right?

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People are able to play this sport too easily, too freely without other ancillary drivers, and therefore they are unsustainable in commercial leases.

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You are going to open these clubs.

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And why are you doing it?

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Because there is a market for it right now.

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And who am I to say what to do with your money?

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But I would never invest directly in commercial pickleball at a mid-tier.

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If you are building pickleball courts at your country club, in your retirement community, in your tennis club on additional space and not repositioning, you’re a genius.

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You should do it, have people come, pay, play and stay, and add it to the amenities that you offer.

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Where it becomes problematic is when you have a pickleball franchise or a club that opens in say, and they convert a former CVS or a bed bath and beyond.

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You have to understand the triple net lease behind these.

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Commercial real estate was hammered during COVID.

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And as a result, Pickleball became an alternative to closing commercial footprints all across North America.

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The issue here is that these became very front-ended, competitive ways to get these leases signed.

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These are back-end leases that have to be supported either by someone with extremely deep pockets, or the business model has to be able to grow with regards to the membership model.

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This is problematic, and especially as they become more and more saturated.

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Padel could easily go the same way.

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I don’t believe it will, and I’ll tell you why.

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Not because there might not be the greed out there, or the strategic mistakes that people are making with regards to the geography and the position of these clubs, but the issue with Padel is Padel fills and thaws in the middle.

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The ability to convert indoor commercial existing real estate is not as easy as Pickleball.

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It’s easier than tennis, but it’s not as easy.

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And the accessibility of the courts as well, and a few other factors mean that hopefully the Padel world will be a little more smart and strategic with how they open these clubs.

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But once you start franchising these and you get these valuations, it’s concerning.

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And what will happen is, in 18 months, a couple of years time from now, a company like mine will go in and we will basically reposition.

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If they are solely Pickleball, we will get these leases at a discount.

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And maybe we add Padel, Pickleball, some golf simulators.

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I think that Pickleball and tennis are missing a massive market.

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Well, look, 60 foot tennis courts have been pushed for years.

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And the red ball space for junior development, just use a Pickleball court, right?

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You can be playing touch tennis, other variations.

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All of these things exist, but nobody is marrying them.

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And that’s where, look, if I’m wrong, I’m happy to be wrong.

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And you’re welcome to tease me for not investing my money in some of these Pickleball ventures, because trust me, I have been asked on a weekly basis.

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And again, it is not to say the sport is not going to grow.

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I’m not saying that.

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The sport is huge, right?

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There’s money being pulled into it.

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It will never hit the media rights and the television rights that need it to grow to the level of tennis.

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That will never happen.

00:21:54.840 –> 00:22:05.780
The other problem is, I do believe there will be saturation and I do believe because the ease of which you can put a court together and the lack of ancillary drivers, see tennis is supported heavily because of lessons.

00:22:07.180 –> 00:22:11.540
It’s not the case with Pickleball because it’s easier to play, you don’t need to take the lessons.

00:22:11.540 –> 00:22:17.060
And there’ll be some people out there that will argue with me, but they’re not me and they don’t know what they’re talking about.

00:22:17.060 –> 00:22:21.640
So choose to listen to who you want to choose to listen to, I guess.

00:22:21.640 –> 00:22:26.400
But as I said, I think that the overall, it’s very exciting.

00:22:26.420 –> 00:22:28.740
Now, let’s get on to Padel.

00:22:28.740 –> 00:22:31.220
Padel has a little different investment.

00:22:31.220 –> 00:22:39.240
Pickleball investment is coming from upper middle class people who are looking for ways to diversify their net worth.

00:22:40.080 –> 00:22:45.340
You’re getting a lot of mom and pops, guys and girls, who kids have now grown.

00:22:45.340 –> 00:22:47.340
And the same thing happened with tennis in the 70s and 80s.

00:22:47.340 –> 00:22:52.520
Independent clubs were built left, right and center because it was, mommy and daddy were doctors and lawyers.

00:22:52.520 –> 00:22:54.760
And what are we going to do?

00:22:54.760 –> 00:22:56.040
What’s the second phase of our career?

00:22:56.040 –> 00:22:57.120
We got some money in the bank.

00:22:57.120 –> 00:22:59.360
Where do we invest it?

00:22:59.360 –> 00:23:00.600
You’re not seeing that in Padel.

00:23:00.600 –> 00:23:06.800
Padel is getting money from outside of North America and is getting huge venture capital investment.

00:23:08.260 –> 00:23:12.980
So it’s a little bit of a different model in where that money is coming from.

00:23:12.980 –> 00:23:14.760
Not to say that neither is right.

00:23:14.760 –> 00:23:21.500
I have concerns over where the pickable investment is coming from because I think it lacks some direction.

00:23:22.740 –> 00:23:31.860
And I think it’s people with discretionary money to spend doing something they’re passionate about, which again, good for them.

00:23:32.180 –> 00:23:40.260
I’m not arguing that, but I think that the overall goal strategically is going to be tested because you’re going to have saturation.

00:23:40.260 –> 00:23:42.300
And I think that, I mean, I know this.

00:23:42.300 –> 00:23:57.960
I don’t need, I know, because I’m in the space, but monetizing on a membership clip monthly, residual membership dues in an indoor commercial pickable location that only offers pickable is extremely, extremely tough.

00:23:57.960 –> 00:24:04.360
So you had mentioned that you’re seeing a lot of overvaluations in clubs that are unwilling to change their blueprints, right?

00:24:04.360 –> 00:24:08.840
When you said that, are you saying clubs aren’t moving to these newer sports?

00:24:08.840 –> 00:24:12.540
So from tennis, adding, taking a court and adding pickable courts?

00:24:12.540 –> 00:24:14.740
There are tennis courts, and I have to be careful, right?

00:24:14.740 –> 00:24:16.600
Because do I wear my passionate tennis guy?

00:24:16.600 –> 00:24:18.780
How do I look at it from a business?

00:24:18.780 –> 00:24:21.940
Look, tennis courts are being repositioned into pickable.

00:24:23.520 –> 00:24:26.520
It’s terrible to see it, but it should only happen for one reason.

00:24:27.300 –> 00:24:34.300
One reason, if the tennis courts aren’t being used because they’re not being programmed correctly, then it’s real estate.

00:24:34.300 –> 00:24:37.360
So it doesn’t matter if it’s pickable or something else.

00:24:37.360 –> 00:24:38.620
They need to be repositioned.

00:24:39.200 –> 00:24:41.120
That’s just a savvy business.

00:24:42.320 –> 00:24:51.540
If tennis courts are used, but there’s pickable voices that are a little louder right now that are getting them converted, that’s problematic.

00:24:53.200 –> 00:24:55.680
And both of those things are happening.

00:24:55.680 –> 00:25:00.380
I mean, the sport of pickable has an army behind it right now.

00:25:00.380 –> 00:25:03.420
Where the utilization is smartest and what…

00:25:03.420 –> 00:25:14.860
I mean, look, clubs that I have ownership over or management, we put up to four pickable courts on one tennis court.

00:25:14.940 –> 00:25:15.820
You just have the lines.

00:25:15.820 –> 00:25:17.980
You don’t reposition the court.

00:25:19.520 –> 00:25:25.180
You know, that in its purest sense is the best way to utilize the real estate.

00:25:25.180 –> 00:25:30.400
Because at any given time of day, I can use the square footage and monetize it.

00:25:30.400 –> 00:25:35.160
Now, the tennis players are like, well, you know, we’ve got pickable lines and that’s a distraction.

00:25:35.160 –> 00:25:40.820
Well, I also would say that that’s one of the biggest issues with tennis historically is the dinosaur nature of it.

00:25:40.840 –> 00:25:44.260
Quiet, please wear whites, mind your P’s and Q’s and all this.

00:25:44.780 –> 00:25:47.060
We don’t live in that world anymore and it’s detrimental to tennis.

00:25:47.220 –> 00:25:54.440
So, don’t get me wrong, tennis purists, not a believer in those sort of dinosaur policies that exist.

00:25:54.440 –> 00:26:01.160
But the ease in which you can add pickable lines to a tennis court is very, it’s not expensive in the slightest.

00:26:01.160 –> 00:26:03.140
It costs you 2,000 to 3,000.

00:26:03.140 –> 00:26:09.220
You can do it yourself, but if you wanted a contract to come out, cost you about $3,000 per pickable court.

00:26:09.220 –> 00:26:18.000
The idea of repositioning, laying from scratch on the tennis court and putting and laying 4 new pickable courts is significantly more expensive to do that.

00:26:18.000 –> 00:26:19.540
Plus, you lose the tennis court.

00:26:19.540 –> 00:26:28.180
But there is also truth to the fact that there is a ton of tennis courts across the country that are not used, that are bashed up, beat up, and people haven’t invested in.

00:26:28.180 –> 00:26:31.820
And that’s not just tennis, that’s a lot of sporting infrastructure.

00:26:31.820 –> 00:26:40.420
Maybe it’s in parks or places across the country that tax dollars haven’t been spent, or even clubs privately haven’t been reinvested.

00:26:40.420 –> 00:26:42.140
So it’s a case by case basis.

00:26:42.460 –> 00:26:43.920
But again, look at the other side.

00:26:43.920 –> 00:26:49.460
If you are a thriving, successful tennis club, why would you add any of this stuff?

00:26:49.460 –> 00:26:50.600
You see what I’m saying?

00:26:50.600 –> 00:26:51.660
You should be savvy.

00:26:51.660 –> 00:26:57.780
What you should do is you should say, you know what, I’m not going to reposition tennis courts, but can we extend in the parking lot?

00:26:57.780 –> 00:26:58.940
Do we have additional land?

00:26:58.940 –> 00:27:00.060
Can we build up?

00:27:00.060 –> 00:27:00.920
Sure.

00:27:00.920 –> 00:27:02.040
That makes a lot of sense.

00:27:03.020 –> 00:27:10.260
And people that are active, you know, owners and operators that are the best in this industry, that’s how they look at it.

00:27:10.260 –> 00:27:11.480
You know, it’s not reactive.

00:27:11.600 –> 00:27:15.000
It’s not, and that’s what a lot of the mom and pop tennis clubs did.

00:27:15.000 –> 00:27:16.100
Oh, tennis, pickleball.

00:27:16.100 –> 00:27:17.060
We got to do pickleball now.

00:27:17.060 –> 00:27:17.860
Everyone wants pickleball.

00:27:17.860 –> 00:27:18.200
Pickleball.

00:27:18.200 –> 00:27:19.180
They have no idea how to money.

00:27:19.180 –> 00:27:22.460
They have no idea about the ability to monetize it.

00:27:22.460 –> 00:27:25.720
It’s just like, oh, we’re not making the money we want on tennis.

00:27:25.900 –> 00:27:30.500
And they have no focus on why and who’s at fault for that.

00:27:30.500 –> 00:27:31.700
Instead, it’s reactive.

00:27:31.700 –> 00:27:37.840
Oh, that’s quickly now spend X more, change these to pickleball courts and yeah, yeah, yeah, we’re going to be a home run.

00:27:37.840 –> 00:27:38.920
It doesn’t work like that.

00:27:38.920 –> 00:27:43.180
That’s to do with the culture, infrastructure, your outreach, your marketing, your community.

00:27:43.180 –> 00:27:45.520
There are so many other factors at play.

00:27:45.520 –> 00:27:48.460
The same could be true of a restaurant, a bar, anything.

00:27:48.620 –> 00:27:49.460
It’s the same premise.

00:27:49.460 –> 00:27:51.940
People have to come, pay, play and stay.

00:27:51.940 –> 00:28:00.220
And you have to be very clued in to what you are offering your consumer and what they want and their propensity to buy from you.

00:28:00.220 –> 00:28:03.720
Those things change at a rapid clip in today’s world.

00:28:06.240 –> 00:28:16.080
So that’s something where paddle is going to come in and it’s new, it’s sexy, it’s funner to play than pickleball, it’s easier to play than tennis, it’s that hybrid between the two.

00:28:16.080 –> 00:28:21.100
There is investment from all around the world and it’s the globalization of the sport.

00:28:21.100 –> 00:28:24.400
You got to know pickleball is not a global sport.

00:28:24.400 –> 00:28:27.140
The rest of the world is going to look at pickleball the same way most people do.

00:28:27.300 –> 00:28:28.380
It’s a backyard game.

00:28:28.380 –> 00:28:29.720
It’s like playing cornhole.

00:28:29.720 –> 00:28:32.420
But remember, it doesn’t mean you shouldn’t do it.

00:28:33.180 –> 00:28:35.560
I’m a big proponent of it.

00:28:35.560 –> 00:28:44.420
But at the moment, the roles in which these sports, the positions in which they slot is very convoluted.

00:28:44.420 –> 00:28:46.720
We live in North America.

00:28:46.720 –> 00:28:49.760
This is where you can start a business and good for you.

00:28:49.760 –> 00:28:52.780
And I love that all this stuff is going on.

00:28:52.780 –> 00:29:01.600
And I don’t know all the answers, but I think we’ve got a good sense as to where some of this will land, or especially where we are taking it.

00:29:02.640 –> 00:29:11.980
The companies that I’m involved with and how we are going to direct our investments, it is cautiously in the commercial pickleball space.

00:29:11.980 –> 00:29:23.680
Do you had mentioned that early on in Tennis was mom, pod type shops, pickleball kind of the same way, but you’re seeing a lot of venture capitalists in paddle, person who wants to open their own paddle facility.

00:29:23.680 –> 00:29:30.440
What would you say are like the biggest speed bumps to get over or how would they know that they’re on the successful route?

00:29:31.620 –> 00:29:36.600
The real estate is always going to be the biggest hump, right?

00:29:36.600 –> 00:29:39.960
I will use ourself as an example.

00:29:39.960 –> 00:29:46.480
We have three locations that will open here in the DMV in the next few months.

00:29:46.480 –> 00:29:59.460
Each location is very different, not by design, but because we weren’t building anything from the ground up because it does not fit our model at least at this point in time.

00:29:59.980 –> 00:30:20.720
So we are leasing existing indoor, outdoor facilities and to give you an idea, we have a location in Tyson’s Corner that we are doing two outdoor locations, one on the top of a parking lot and one in an existing parking lot, and therefore maybe some canopies, but it’s outdoors.

00:30:20.720 –> 00:30:30.500
The other location in Alexandria is going to be indoors, but we have to convert an existing car dealership.

00:30:30.500 –> 00:30:32.820
It’s 42,000 square feet.

00:30:32.820 –> 00:30:43.120
Fun fact, and if any of the pickleball people think I really get, we are going to add a couple of indoor pickleball courts in there to complement what is a paddle club.

00:30:43.120 –> 00:30:50.020
Ten indoor paddle, we will sublease to a coffee shop, a micro brew, Pilates studio and a few other things.

00:30:50.020 –> 00:30:53.220
The third location is in the suburbs of Baltimore.

00:30:53.220 –> 00:30:59.440
That is a newly constructed 38,000 square foot indoor warehouse.

00:31:00.860 –> 00:31:03.100
A lot less with regards to repositioning.

00:31:03.100 –> 00:31:05.220
It’s pretty much plug and play.

00:31:05.220 –> 00:31:08.480
Just put the courts in, you’re good to go.

00:31:08.480 –> 00:31:20.160
So three locations all under the Epic brand, all with very different build outs and the process in which permitting and the legalese and the leases have been negotiated.

00:31:20.160 –> 00:31:36.000
Just because say I have a dozen courts there and a dozen courts there, the finances behind how we got there with regards to the lease and the terms are vastly different because we are at the mercy of the landlord.

00:31:36.020 –> 00:31:44.640
And we are also talking in this particular situation of clubs on the doorstep of one of the wealthiest cities in the United States.

00:31:45.700 –> 00:31:50.040
So, let’s now go back to answering your question.

00:31:50.040 –> 00:32:00.800
The easiest way to get into the paddle space is to add a court or two to an existing facility in which you work, own or operate, okay?

00:32:00.800 –> 00:32:02.320
And we are going to do that.

00:32:02.320 –> 00:32:04.080
That’s again, a big part of my company.

00:32:04.080 –> 00:32:09.280
We’ve got, I’ve got my hands in 90 sports facilities and 30 under direct management.

00:32:09.280 –> 00:32:14.000
So, we’re in negotiations with all of these with regards to adding, do we have space?

00:32:14.000 –> 00:32:14.980
Can we add one court?

00:32:14.980 –> 00:32:18.300
Can we reposition to get people familiar?

00:32:18.300 –> 00:32:23.820
And then the nice part there is you already have a built-in audience because you’re adding it as an additional and amenity, right?

00:32:23.820 –> 00:32:29.340
So, for example, say you go to a country club and you say, look, we’re going to pay for six courts.

00:32:29.340 –> 00:32:31.840
I’m going to have an epic brand of six paddle courts.

00:32:31.840 –> 00:32:33.640
You’ve got a piece of land there.

00:32:33.640 –> 00:32:37.420
And the way we’re going to do this is your members are going to pay X more per month.

00:32:37.420 –> 00:32:39.000
And we’re going to take a clip of that.

00:32:39.000 –> 00:32:41.400
And that’s how we’re going to make our money and we’ll service it.

00:32:41.480 –> 00:32:48.560
And everyone’s a winner and you’ve got this $600,000 investment that you didn’t pay for and off to the races.

00:32:48.560 –> 00:32:55.280
Now, that doesn’t work for every country club because some country clubs have more money than God and they don’t need your help.

00:32:55.280 –> 00:32:57.400
But there is a market for that.

00:32:57.400 –> 00:33:04.620
Homeowners’ associations, swimming tennis clubs, private schools, municipalities, gyms, resorts, you name it.

00:33:04.620 –> 00:33:09.480
There are avenues, if they have land already, that you can possibly add a court or two.

00:33:12.660 –> 00:33:14.420
So that’s the issue.

00:33:14.420 –> 00:33:25.620
It’s where do you get either to purchase or to lease at a rate that your membership or your financial model will support.

00:33:25.620 –> 00:33:29.140
And I will tell you, that is not easy.

00:33:29.140 –> 00:33:33.200
And that doesn’t matter because again, you’re dealing with a tricky space.

00:33:33.200 –> 00:33:38.360
And you’re going to, for the most part, depending on where you are in the United States, but where we are, we would prefer to have it indoors.

00:33:39.800 –> 00:33:47.360
You know, again, if you’re in Lubbock, Texas, and there’s a ton of land and you’re in a growing area, I mean, we’re looking at a project in Leighton, Utah.

00:33:47.360 –> 00:33:50.900
It’s one of the fastest growing suburbs in the United States.

00:33:50.900 –> 00:33:57.540
We can get land a lot easier, but is the market yet going to support it and this and that?

00:33:57.540 –> 00:34:00.120
So do you do diligence?

00:34:00.120 –> 00:34:06.540
I will say this, every single location is different, and there will be subtleties with every single one.

00:34:07.300 –> 00:34:10.720
But the biggest barrier to entry is the location.

00:34:10.720 –> 00:34:16.320
Once you get a favorable lease, then the rest is pretty plain sailing.

00:34:16.320 –> 00:34:21.200
Get the courts up, make sure you’re up to code, market the hell out of it, and take care of your community.

00:34:21.200 –> 00:34:23.380
The rest becomes pretty straightforward.

00:34:23.380 –> 00:34:27.200
But that’s where the biggest challenge lies.

00:34:27.200 –> 00:34:33.780
What type of market analysis do you perform prior to investing in a given market or specific location?

00:34:35.420 –> 00:34:36.040
Absolutely.

00:34:36.040 –> 00:34:49.420
So the owners, the guys behind Epic, were smart to seek out me because, well, my company, because this is our expertise, is understanding the demographics and the data.

00:34:49.420 –> 00:34:53.040
Remember, data’s got absolutely no intrinsic value unless you know what to do with it.

00:34:53.040 –> 00:35:06.020
So we’ve been focused on understanding propensity to spend everything from traffic patterns, zip code analysis, credit history, a lot of this stuff.

00:35:06.020 –> 00:35:13.080
If you know where to look, it’s not hard and whether it’s even the data you’ve curated yourself through your own clubs and systems and network.

00:35:13.080 –> 00:35:19.560
If you’re a big box gym in a metropolis city, people aren’t going to travel more than 3.8 miles to you.

00:35:19.560 –> 00:35:35.400
When you start to get into more niche environment, say it’s your youth, kids, soccer league or little league or then you get into a more specialized sport like, I don’t know, diving or fencing or equestrian or something like that, then obviously their travel time can become way north of an hour.

00:35:37.600 –> 00:35:40.480
Padel will fit that mold initially.

00:35:40.480 –> 00:35:48.440
It will have to because obviously the density of people that know about it is going to have to grow.

00:35:48.440 –> 00:35:51.520
I mentioned the locations we have here in Tysons and Alexandria.

00:35:51.520 –> 00:36:04.260
For those who are unfamiliar, you are literally a couple of miles from Washington, DC where you have a huge European Middle Eastern contingency, embassies, corporations, the lot.

00:36:04.260 –> 00:36:12.740
Therefore, we feel and we have done our research that we can bear a higher lease cost in those locations.

00:36:13.840 –> 00:36:23.840
When you go out to the middle of nowhere and you think you’ve got this field of dreams piece of land and it’s cheap and you can build on it, at the end of the day, you have to have the audience.

00:36:23.840 –> 00:36:24.740
They’re going to want to come there.

00:36:24.740 –> 00:36:31.740
So you have to be very clued in to census data, economic data.

00:36:31.740 –> 00:36:38.800
We are huge, huge proponents of surveying across all mediums that we offer at Blue Chip.

00:36:38.800 –> 00:36:42.240
So yeah, look, it’s a culmination of all of these things.

00:36:42.240 –> 00:36:45.760
I think that’s where Pickleball is making some mistakes.

00:36:45.760 –> 00:36:57.960
I mean, it’s concerning when you drive down a street in Washington, DC and there’s three commercial Pickleball clubs within a one-mile radius, that starts to bear some questions.

00:36:58.060 –> 00:37:04.520
Because like I said, it’s saturated, and that saturation is only going to continue out to the suburbs.

00:37:04.520 –> 00:37:18.520
So and again, at the end of the day, you’re not an essential service, you know, for lack of a better, but like the franchisee model of a Domino’s Pizza is, Domino’s is an essential service.

00:37:19.120 –> 00:37:20.960
It’s a cheap, easy food.

00:37:21.220 –> 00:37:26.240
It’s an essential part to society, you know, not getting paid by Domino’s to say that.

00:37:26.860 –> 00:37:33.700
That’s why you see a Domino’s Pizza or a Papa John’s in every strip mall in the United States.

00:37:33.700 –> 00:37:35.960
So that’s not the case.

00:37:35.960 –> 00:37:50.120
When you’re dealing with paddle, tennis, pickleball, golf, these are ancillary services that people have got to have the disposable income in which to integrate into your business model.

00:37:50.120 –> 00:38:04.160
We also are living right now in a world of significant inflation and cost awareness that is the current culture that we are in.

00:38:04.160 –> 00:38:05.460
But you have to know your audience.

00:38:07.940 –> 00:38:12.340
You can’t just go build something because you think it’s the right place to build it.

00:38:12.800 –> 00:38:13.840
That’s not going to work.

00:38:14.520 –> 00:38:16.020
You have to do your homework.

00:38:16.020 –> 00:38:18.180
You have to know the audience.

00:38:18.180 –> 00:38:21.540
You have to know what the average net worth.

00:38:21.740 –> 00:38:31.580
You have to know the distance in which you’re pulling from with regards to traffic patterns, geography, everything from education levels to ethnicity backgrounds.

00:38:31.580 –> 00:38:33.040
All of these things factor into it.

00:38:33.040 –> 00:38:33.820
And that’s true.

00:38:33.840 –> 00:38:35.520
Look, I mean, I didn’t invent that.

00:38:36.680 –> 00:38:41.340
That’s Hilton, Marriott, McDonald’s, whoever it may be.

00:38:41.340 –> 00:38:44.240
These guys have this down to a science.

00:38:45.320 –> 00:38:52.720
And that’s how they’re successful and they grow because they know the demographics in which they’re trying to build a new activation.

00:38:52.720 –> 00:38:54.860
And the same is true here.

00:38:54.860 –> 00:38:57.040
So you get somebody, they’ve got their lease.

00:38:57.040 –> 00:39:00.640
What would you say would be the best route for them to go to garner more investment?

00:39:00.640 –> 00:39:06.320
To not sound cliché and quote Mark Cuban on every episode of Shark Tank.

00:39:06.340 –> 00:39:10.260
It’s, you know, without sales, you don’t get investment.

00:39:10.260 –> 00:39:13.440
So you have to prove the concept, right?

00:39:14.020 –> 00:39:31.320
When you have a lease, when you’re opening a club, when you’re pre-market and you say need extra investment, or you would like extra investment, you know, the easiest way to do that is by pre-selling memberships, you know, legacy memberships, whatever it may be, whatever you want to call it.

00:39:31.320 –> 00:39:53.360
But if I can say, turn around to an investor and say, look, I need another million dollars to build phase two of this, but I already have 100, 200 members that have committed to founding legacy members and have paid X pretty resounding reason to invest, right?

00:39:53.360 –> 00:40:02.000
If you turn around to someone and say, look, my idea is to open a paddle club and people are just going to come because I tell you they’re going to come and I want a million dollars, it’s not.

00:40:02.000 –> 00:40:13.440
Proving the concept or at very least, maybe at least like I mentioned surveying, there’s people that will invest if you have enough lead generation there, even if they haven’t yet spent.

00:40:15.660 –> 00:40:19.940
Where you get the investment is very important.

00:40:19.940 –> 00:40:28.360
I’m proud to say, like I built Blue Chip without taking, I mean, we didn’t take any outside investment until 2020.

00:40:28.360 –> 00:40:31.020
So we were 15 years in the business.

00:40:31.020 –> 00:40:40.300
There is truth to the bootstrapping it, see if mom and dad can help you out, extended family and stuff like that, because you really don’t want to deal with investors if you don’t have to.

00:40:41.480 –> 00:40:45.780
It is also true that the cheapest money you will ever get is from a bank.

00:40:45.780 –> 00:40:50.180
So developing those relationships, and again, we live right now in North America.

00:40:50.180 –> 00:40:56.160
Economic policy is not driven really to support small business right now, and that’s not to be political.

00:40:56.160 –> 00:41:06.400
It’s just the reality between the rates in which to borrow and some of the eases which you can access small business loans and things like that, and incentive programs.

00:41:06.400 –> 00:41:12.360
But I’ve also been around long enough to know that it ebbs and flows, depending on who’s in charge.

00:41:12.360 –> 00:41:27.700
again, to summarize that, if you don’t have to take the investment, I wouldn’t try and bootstrap it, prove the concept, whether it’s through pre-sale or at least through proving that you’ve had X amount of people, register an interest.

00:41:27.700 –> 00:41:30.520
I would also take investment if you have to in phases.

00:41:30.520 –> 00:41:33.040
I wouldn’t take it all up front and make sure you have outs on it.

00:41:33.040 –> 00:41:50.620
Say for example, you need 100 grand, but you really need 25 to get where you think you need to be, and try to have some outs in that agreement, so that you might be able to get to where you need to be without having to take on the rest of the investment and potentially diluting yourself.

00:41:50.760 –> 00:41:57.960
But also look, the ability to get investment from the VC side right now has never been easier.

00:41:57.960 –> 00:42:03.060
There’s a lot of people with a lot of money looking to get into the sports and recreational spaces.

00:42:03.060 –> 00:42:06.440
However, it depends on the route that you want to take.

00:42:08.400 –> 00:42:21.540
We’ve already deployed $3 million in lateral investments across a variety of paddle-related verticals, everything from Padel39, Hexagon Cup, Tutu, Bond in New York, you name it.

00:42:21.540 –> 00:42:26.480
We just invested in Padel India, and we will continue to do that.

00:42:26.480 –> 00:42:32.460
We’ve actually got a total north of 20 investments in a variety of paddle activation.

00:42:32.460 –> 00:42:35.500
We’re doing that because we’re not really trying to compete.

00:42:35.820 –> 00:42:40.580
Our goal with Epic is to have the most courts.

00:42:40.580 –> 00:42:45.740
We’re not trying to have the highest end, most exclusive clubs.

00:42:45.740 –> 00:42:51.540
We’re looking to have the highest volume of courts of any operator.

00:42:51.540 –> 00:42:54.520
And I don’t think anyone’s really come with that vision.

00:42:54.520 –> 00:42:58.740
We’ve seen some very good operators that are opening clubs.

00:42:58.740 –> 00:43:07.400
For the most part, in major metropolis cities, at a very, very expensive accessibility rate.

00:43:07.400 –> 00:43:10.580
We’ve invested in these, so I’m not saying they’re wrong.

00:43:10.580 –> 00:43:19.340
We’re looking at it more as being part of the global growth, or sorry, the North American growth of paddle as a whole.

00:43:19.340 –> 00:43:36.080
And doing what tennis historically did well in the 70s and 80s, was hitting the middle class pocketbook, making it accessible more to a wider audience, and sort of taking that approach.

00:43:36.080 –> 00:43:49.360
Might also put 12 courts in a public park, you know, with much better accessibility than, you know, a club that costs 10 grand just to pay the initiation fee.

00:43:49.360 –> 00:43:54.240
We’re not, like, for the last 20 years, our success at Blue Chip has been by not limiting that.

00:43:54.240 –> 00:43:55.860
We’re not trying to be in a singular space.

00:43:57.100 –> 00:43:59.780
So, I think that’s going to be mirrored with Epic.

00:43:59.780 –> 00:44:09.820
And I also think that as Epic grows, you will see Padel is always going to be the forefront of Epic and its brand.

00:44:09.820 –> 00:44:24.820
But we will be very wise to not be just Padel-centric, depending on the location and how best we can operate and monetize, and also what ultimately the consumer wants.

00:44:25.580 –> 00:44:36.060
So, don’t be surprised that you would walk in to an Epic club and also find other ancillary sports that are there as well.

00:44:36.540 –> 00:44:41.660
But don’t get me wrong, Epic is a paddle brand and paddle first.

00:44:41.660 –> 00:44:43.680
I think this is a growth industry.

00:44:43.680 –> 00:44:47.520
And again, I think we’ve got an exciting few years ahead of us.

00:44:47.520 –> 00:44:56.980
I think that Epic is, you know, I’ve seen a lot of missteps by other sports in other industries through the years.

00:44:56.980 –> 00:45:05.420
And we’re going to be pretty savvy as to trying to be proactive that we don’t do those things too.

00:45:05.420 –> 00:45:10.440
We plan to have 250 courts across North America by the end of 2025.

00:45:10.440 –> 00:45:30.800
We will continue to make, you know, lateral investments in paddle related companies that we feel share similar values and that we can benefit from sharing information, expertise, operational prowess, whatever it may be.

00:45:30.820 –> 00:45:32.580
And I think it’s exciting.

00:45:32.580 –> 00:45:38.080
I think don’t be my last thing to sort of leave with the audiences.

00:45:38.080 –> 00:45:58.400
If you want to be the guy or girl at the end of the day that’s sitting on an empire, you have got to understand the different ways that not just racket sports, but all amenities can complement ultimately where your passion is.

00:45:58.420 –> 00:46:04.380
And there are already some paddle clubs that have opened that are going to probably have some issues there.

00:46:04.380 –> 00:46:08.760
We mentioned Pickleball and tennis for many years did a poor job of this.

00:46:08.760 –> 00:46:14.580
Golf is another sport that does a terrible job of this, is understanding at the end of the day you have a piece of real estate.

00:46:14.580 –> 00:46:17.800
And how do you get people to come pay, play and stay?

00:46:17.800 –> 00:46:25.540
And the way that you do that is by surveying and being extremely in tuned with your consumer.

00:46:25.540 –> 00:46:28.280
We like to play a little game called Rosebud Thorn.

00:46:28.280 –> 00:46:34.340
So Rose would be something that had just happened that you’re very happy about, very proud about.

00:46:34.340 –> 00:46:37.080
Well, I had my first child almost three years ago.

00:46:37.700 –> 00:46:38.380
Does that count?

00:46:38.380 –> 00:46:38.720
It does.

00:46:38.960 –> 00:46:40.520
Congratulations.

00:46:40.520 –> 00:46:41.960
Thank you.

00:46:42.280 –> 00:46:47.020
My wife and I did everything in the wrong order because we only actually got married three weeks ago.

00:46:47.020 –> 00:46:48.500
So that’s even more relevant.

00:46:48.500 –> 00:46:51.260
The bud is something you’re looking forward to?

00:46:51.260 –> 00:46:55.080
Any chance to play golf is good.

00:46:55.080 –> 00:46:59.660
I was looking forward to England, hopefully finally winning a major soccer championship.

00:46:59.800 –> 00:47:01.620
But that doesn’t work out.

00:47:01.620 –> 00:47:05.240
I’m in a period right now where there’s not a whole lot of travel.

00:47:07.740 –> 00:47:08.860
I am a professor.

00:47:08.860 –> 00:47:15.940
I run the Sports and Hospitality Management Program at Marymount University in Arlington, which is actually where I’m calling from today.

00:47:15.940 –> 00:47:18.020
Our semester doesn’t start till the end of August.

00:47:18.020 –> 00:47:23.880
So I’m looking forward to just hanging out by the pool and playing some golf for the next few weeks.

00:47:23.940 –> 00:47:25.640
Thanks, Tim.

00:47:25.640 –> 00:47:26.240
Thank you, Michael.

00:47:26.240 –> 00:47:28.200
You have a lovely day.

00:47:28.200 –> 00:47:31.600
If you’d like to learn more about what Tim is up to, check him out on LinkedIn.

00:47:31.600 –> 00:47:34.560
Also, check the show’s notes for all the social media links.

00:47:34.560 –> 00:47:36.700
Thanks for listening to this episode of The PadelCast.

00:47:36.700 –> 00:47:38.360
That wraps it up for today’s show.

00:47:38.360 –> 00:47:43.980
Don’t forget to check out our YouTube channel where we post the best highlights from recent matches, as well as more paddle media.

00:47:43.980 –> 00:47:46.600
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