Understanding the economics of an indoor sports venue

The unit that matters: the court hour

An indoor sports venue sells time on a playing surface. Whatever the sport, the basic unit of supply is the court hour: one court, available for one hour. A venue's capacity is the number of courts multiplied by the hours it opens.

Take an illustrative venue with six courts that opens for 16 hours a day. It has 96 court hours to sell each day, or 672 a week. Those hours cannot be stored. An hour that goes unsold at 2pm on a Tuesday is gone for good.

Utilisation: how much of the capacity is sold

Utilisation is the share of available court hours that are booked or played. It is the first number to watch, and it is rarely even across the week. Evenings and weekends tend to fill first, while weekday daytime hours are harder to sell. Two venues with the same average can face very different problems: one may be turning players away at 7pm while sitting empty at 11am.

That is why utilisation is best read by hour and by day rather than as a single average. The pattern shows where pricing, programming and marketing can make a difference.

Revenue per court hour

The second measure is the average revenue earned for each court hour sold. It reflects the mix of ways a venue sells its time.

Memberships bring steadier income but usually less revenue for each hour played. Casual court hire can earn more per hour at peak times but is less predictable. Most venues use a combination, and the balance between them shapes both revenue and risk.

The cost of running a venue

The cost base of an indoor venue leans heavily towards fixed costs:

• Rent and outgoings, usually the largest fixed cost for a large indoor space
• Staff, from the front desk and coaching to cleaning and management
• Utilities, particularly lighting and climate control across a large floor
• Repairs and maintenance of surfaces, nets and equipment, and their eventual replacement
• Insurance, booking systems and marketing

Because so much of the cost is fixed, profit is very sensitive to utilisation. Once rent, wages and the other fixed costs are covered, much of the revenue from each extra court hour sold flows through to profit. Below that point, losses build quickly. This is why the first months after opening, while a venue builds its base of regular players, receive so much attention.

Spend beyond the court

Many venues also earn revenue from food and drink, equipment hire and sales, and functions. This spend is valuable because it comes from the same visit: a player who stays for a drink after a game adds revenue without using another court hour. A licensed venue, where one is permitted, can make a club a place to meet as well as a place to play.

Spend per visit is worth tracking separately from court revenue, because it responds to different things: the quality of the space, the service and the reasons people have to stay.

A worked example

The figures below are illustrative only. They are not the figures of any real venue, including House of Pickle Botany.

Consider the six court venue described above, with 672 court hours available each week, and assume an average of $50 earned for each court hour sold.

Moving from 25% to 50% utilisation doubles court revenue, while most of the venue's costs stay where they were. That simple arithmetic explains why operators work so hard to fill their quiet hours.

What this means for an owner

Indoor sports venues are simple to describe and demanding to run well. Capacity is fixed, much of the cost is fixed, and the result depends on filling hours that would otherwise be lost. In a business like that, day to day attention shows up directly in the numbers. The measures we follow most closely are listed in our approach.