All The Angles S1 E14: Focus on a Padel Outsider View

This week we tried something different. An experiment. We played Devil's Advocate.

What if we gave two expert observers of the sports business industry a chance to opine on the sport of padel: both the participation piece and the professional piece?

Neither had much of a grounding in the sport apart from some context we provided and we asked them where they felt padel sat in relation to the rest of the industry and what they would do to help padel in its next global phase.

They were good sports. And raised some interesting concerns, theories and suggestions.

Thank you Eben Novy-Williams of leading US sports business platform Sportico and Roger Mitchell, Founder of Albachiara and author of highly acclaimed book on the changing circumstances around the sport industry "Sport's Perfect Storm".

Sometimes it is important to step out of your own ecosystem and hear what outsiders think. This is that epsiode.

Transcript

Introduction

Alex Inglot 0:05

Ladies and gentlemen, damas y caballeros, thank you forjoining us for another episode of all the angles business of padel podcast worldwide powered by the Hexton cup. This week we're doing something a little bit different. We're going to be stepping out right outside of the padel industry in order to try and give an insight into what people outside of it feel. I'm lucky enough to bring two titans of the sports business industry onto this podcast. From America. I have Eben Novy-Williams who is currently the deputy editor at sportico. He's been there for about five years. I think it's fair to say that sportico is probably the leading business publication in the u. s. That really elevated the conversation around financials and economics and commercials around sports to the next level, especially for the U. S. part of the market. Before that, he was a sports writer at Bloomberg News for almost a decade. So that kind of gives you a flavor of where he's coming from. And joining him I have Roger Mitchell. Roger Mitchell's CV is too long to go through, but he has a background as an auditor. He was the CFO at EMI music before becoming the founding CEO of the Scottish Pro Football League. Since then, he is been an investor, advisor and chairman for numerous sports and sport technology businesses. And is the founder of Alba Chiara, which is his consultancy and is the founder of the Como Sports Summit, a annual gathering of some of the most influential people in the sports industry. Both of them are not padel insiders. They are aware of the sport. But I wanted to try in this episode to zoom out the sport and where it sits in the wider context and in the broader international sports industry. Before we get started, if you enjoy this episode or have benefited from previous ones, please like, share, subscribe, it helps. So without further ado, gentlemen, let's get started. And I think we can start probably In the amateur part of a sport, so all sports have obviously an amateur side and a professional side, broadly speaking. And I want to start this podcast looking at the amateur side. So I think in that area, just to give you guys a bit of a grounding, I think it's fair to say that padel is in rude health when it comes to the amateur side. So apart from a few bubbles caused by unique circumstances, For example, Sweden being an obvious one due to COVID, lax planning regulations, cheap real estate, as well as plentiful PE money. The metrics are all positive. So in 2023, over 50 new clubs and over 100 courts were put up weekly around the world, with an estimated stabilized CAGR of 17%. Ending up roughly in about 70, 000 courts by 2026. This comes from the Playtomic report, which is considered the global Bible for the industry. So I guess the first question I want to put to you, gentlemen, is just generally speaking from your experience of observing other sports, how important is player base and growth to any modern sport and its ecosystem? And maybe, Roger, if you're okay, we'll start with you. And then we'll move to Eben.

Roger Mitchell 3:20

Well, listen, I think it is the cornerstone. You know all off us in our sports fandom usually start playing in an amateur level. Um, we probably have aspirations that we're going to be a pro at someday. Uh, we don't make it and then we become fans for a lifetime. That is the classic route, the classic playbook. Then it's just what my business colleagues would say, a top of the funnel game. You know, the wider the top of the funnel, the more chance you've get of getting elite athletes and having more of a fan base. So participation is really important. And in terms of padel, I have been aware of it, quite a lot. Certainly I've got an advantage over Eben is that, you know, padel maybe is the European version of what pickleball is there, i. e. in some way the challenger to tennis. Now the interesting thing, I would say Alex, is this, um, padel's USP over tennis was, you know, you can get going straight away. No barriers to entry. It's kind of like the democratization of racket sports. It's not like squash. You don't need to be part of a fancy club to get playing tennis. However, Alec, what I see is that it seems to be very middle class. it seems to be very much adopted by what's called in Italy, the figetti, the kindof like, the cool kids, like the celebrities, the ex players. You'll see Alex Del Piero and Totti playing padel and it'll all look great. But in terms of grassroots, you know, working man and woman connection, I'm in Italy. I must admit that my anecdotal evidence isn't there yet. And that's the disconnect for me. It needso be there. Participation is I just maybe think the construction of courts, and all of this has got a little bit of a head of itself. That would be my opening gambit.

Alex Inglot 5:19

Yeah, Eben, anything from your side, just as a starter for 10.

Eben Novy-Williams 5:23

Yeah, I think that I agree with what Roger said at the beginning, that the participation is critical, especially for a sport that is looking to break into new markets as padel is. Particularly here in the U S. At the top tier in American sports, you actually start to see a little bit of a disconnect between participation and popularity. The most popular sport commercially, professionally here in America, obviously is American football. It is not anywhere close to the most played sport in America, right? Basketball is six or seven times more popular from a participation standpoint. But the NBA is not at the NFL's level. But I think if you're going to the bottom in terms of trying to break into a market, yes, I think participation is critical. I think take a sport like cricket here in the U S where Almost nobody plays cricket. And it is a significant barrier for crickets growth in the U S. Cricket's one of the more popular sports globally. In specific markets obviously it's tremendously, tremendously popular. But the T 20 world cup was here, this year. It drew a lot of people who are first or second generations or even immigrants from places like Pakistan and India. But for a lot of Americans who have never played the sport. Turning it on and watching it is very, very difficult. They do not know what's happening and reading a quick blog or watching a quick YouTube video doesn't quite do it. So I do think that at some point as you grow and reach maturity, participation kind of starts to divorce itself from other layers of the sport, particularly at the top and particularly from a commercialization standpoint. But I think at the beginning, yes, I think getting people to play the sport is a critical piece and maybe even the most important piece to gaining popularity in a new market.

Alex Inglot 7:01

Yeah, I think to Roger's kind of anecdotal story, I think apart from Spain and Argentina, which obviously are the legacy power bases, padel in the new markets, such as Sweden, UK, USA, Middle East, Southeast Asia, the growth of the sport is predominantly driven by private investors who are looking for that quick growth and looking for those margins. And this is really kind of skewed the clubs towards the luxury offering. You see in Dumbo, some of the first centers that have been built in New York, you're paying 200 an hour rental. Which is eye watering for me, considering I pay about for a court 40 quid for an hour and a half. And I have to admit that's an exception because in the UK, a lot of the clubs are more expensive. So I think that is something that I've flagged numerous times in my musings around the sport, which is. I don't have a problem with luxury offerings, elite offerings. country club offerings, but there needs to be a balance. There needs to be for every one of those, there needs to be five to 10 of something much more accessible. So building on that point, Roger and Eben, do you feel that there is something to be concerned if that is the way things are going where federations or local government are nowhere near keeping pace in terms of building accessible or cheap courts and it becomes the domain of the rich and famous

Eben Novy-Williams 8:32

Yes. I think certainly a concern. Yeah. The balance between private money and their goals and, Federations that are either nonprofits or governing bodies, is a tough one for any sport. And it is interesting to me, Alex, that you're saying that it seems like most of the growth in new markets is being driven by private money, right? Because you're right. If I'm an investor in this sport and really all I care about, particularly for a lot of institutional money, which is a five year or 10 year time horizon. The 20 year investment in getting a new generation of players to play this sport actually doesn't help me at all, right. My goals, if I'm being selfish about my own wallet are to get as much money out of my investment very quickly. Right. And then sell it on to somebody else. So yes, it sounds like in some ways you are talking about a little imbalance of priorities here, where if the people who are driving this sport in, and again, I'm in the U S so, and you mentioned Dumbo, so let's keep talking about the U S for a second. If the people who are driving this sports growth in the U S participation wise, really are looking to capitalize on their money investment quickly, it makes sense that positioning this as a alternative to a golf or that type of demographic where court time is 200 an hour. And it's really an exclusive in both financially and in specific communities, it seemslike the logical thing for them to do and maybe not the best thing for the sport as a whole.

Alex Inglot 9:53

Roger. You wanted to jump in?

Roger Mitchell 9:54

Well, I just think this is an incredibly philosophical question. Because it hits every single sport in the world. let's just remember, Eben very correctly talked about basketball. Basketball and soccer, have got a huge advantage that you can just roll up and you can find a hoop somewhere, or you can put down a couple of jumpers and you've got goal posts in a park and you're away. That is why those sports have got what I love to call working man and woman connection and they then build everything else on top of that. Any other sport that tries to come in without the sponge of that in the bottom and just go directly for the icing and the jam, you're going to have a problem. Because Ultimately, this is my view, when you think about it that way, it is a business equation that you're trying to work out. You're trying to say, is the market big enough? Do I have a revenue model? We can come on to that later, Alex, when you want. And then you say, Is that going to give whoever's going to invest in this a return? And Ebens right, that means that you're already thinking like a business person. and padel for me, this is, correct me if I'm wrong, but I'm a very simple guy at the end of the day. padel, if it is going to win, has to do something and take market share away from tennis. It has to. It has to. What is it doing? Is it making fancy 200 an hour courts for some people that maybe make a little bit in return on that little real estate play? Or is that something that's going to try and help them topple tennis and then ultimately pickleball? So I always say to a new sport, a challenger league or an existing sport, what do you want to be in life now? What do you want to be? Are you some kind of like general social thing that you can build a professional game on top? Or are you just trying to find a little business opportunity angle? And my answer to you, pushing it back to you Alex, is I can't see what padel thinks it wants to be when it's grown up. I can't see it yet.

Eben Novy-Williams 12:08

Alex, do you know, for people who try padel, are they tennis players? Are they non tennis? What's the biggest entry point into trying the sport?

Alex Inglot 12:17

So I think in places like Spain and Argentina, the courts are everywhere, so it is just prevalent. It becomes almost the de facto. thing that you do as a sport because so many cheap courts have been built everywhere. You can't throw a stone for not hitting a padel court. So it's the equivalent of a community tennis court or a community basketball court. In these new countries, shall we say Sweden, UK, USA, it tends to be the initial thing is people who have a tennis background. So they have the racquetball skills, the hand eye coordination, and they want something a little bit more social. They want something a little bit more relaxed and they want something which feels new. Frankly, it has a certain buzz. I think that's the entry level for a lot of people. Then obviously they can bring their partners, their kids, things can evolve from there, but the price point does cause a segmentation immediately in the market. I mean, you look at Miami. Again, they have a range of products, but a lot of those are still fairly expensive. You're putting up courts that are 30, 40, 50, 000 a pop, and then you've got private investors who have come in as PE. You put those two things together and you want good real estate opportunities. So that price is not cheap to buy the land because you don't want to be in the sticks. You want to be in the center or somewhere trendy or cool. Initial capital is quite heavy. So I applaud those clubs that are now trying to think: right, we're in phase two now. How do we get the kids in? How do we work with local schools? How do we work with local universities? Can we get some kind of funding from boroughs to get people moving quote unquote? But that is definitely not the primary driver that I'm seeing in a lot of these projects and brands.

Eben Novy-Williams 13:57

Yeah, it's interesting. I've been thinking a bit as you guys have been talking about ice hockey here in the U S which is growing quite a bit into new markets in the U S. They have an issue of ice. Which is a very heavy upfront costs that you need to build. The benefit for ice hockey is that the surface can get used for a lot more than hockey, right? So you can have a community skating rink and there can be people that can learn to do figure skating on it. Or there can be people who are just curious to go out and, Try and see what it's like. There's overlapping opportunities there. Padel actually feels kind of similar in some ways. The more I think that the multi user multi sport surfaces are available. Maybe there's an opportunity there honestly, in collaboration. And I was going to ask you, cause I'm curious what the relationship between padel and pickleball is, because I do have a sense of what the relationship between tennis and pickleball is here in the U S. But in some ways I do think that these sports can help each other, even if they look at each other as competitors as well.

Roger Mitchell 14:53

Can I add something, Alex, just on this, because this is an interesting point from Eben on the ice hockey. The more he was speaking and you've been speaking, you know, five aside soccer is a very, very popular activity in Europe, very popular for guys Probably do it after work. You know how it goes, right? It's a social thing. There is no real professional side of the game at all. And inrecent years, a lot of private equity and a lot of investors have come in to create new conglomerates that are venues, you know. The famous one would be goals. So what you're explaining to me about padel is exactly the same as how some people have tried to, let me say, professionalize a little bit the experience of five a side football. So, if that is a parallel that holds, you need to ask yourself, well, what's happened to five a side football as a sport? The answer is nothing. It is another version of soccer that amateurs play to get their jollies with their mates and their level of player. And for what I can see, that is what padel is. It's tennis for those that are either too old for tennis, too old for paddling. Can't be bothered with the angst or we're never good enough and they'll just hang out in a padel court.

Alex Inglot 16:18

I think that really brings to a really interesting last question about this transition. We're moving towards the transition between amateur and professional. And there is a basic assumption in many sports industries, which is: If there are a growing amount or a healthy amount of amateur participants, therefore it stands that there will be a professional scene with ready made fans. It's not obviously a like for like. It's not every single player is a fan. But a healthy percentage Will translate. I want to question that as an assumption prima facie because in esports: gaming obviously is a huge, huge industry with loads of people playing computer games. There was the assumption that if you love computer games, you're going to love eSports in some shape or form. The translation is roughly 1 percent in terms of numbers of viewers. And then the next question is how much of those 1 percent are willing to spend any money on eSports, which is the next question. And that has also been another tripwire for the eSports industry. So, Have you found that actually that dogma that if we grow the player base, we're going to grow the pro sport. It's inevitable. It has to happen. Do you believe in that? Do you question that? Do you have examples where That is not the way things work, unfortunately. It's not so automatic.

Eben Novy-Williams 17:37

You took the words outta my mouth with the eSports thing. It's the perfect example of a sport or pastime, however you want to characterize it, that has a tremendous amount of participants. And even from a viewership standpoint, a tremendous amount of viewers, monetizing it is very different. We were talking a bit earlier about the demographics of padel, which are in some ways as I think we correctly said, maybe hindering the sport from a pure number ship growth. But from a money spending growth, in some ways, again, going back to what perspective you are in the padel world, this is the demographic you want, right? You don't want the 18 year old gamer who's playing Fortnite between high school classes and doesn't have a credit card, doesn't have access to money and isn't going to buy season tickets to anything. I think that that showed out in the e sports world that, that building an entire business and ecosystem around those types of fans was not a successful endeavor. So yeah, in some ways having the upper class money to spend group can be an asset. If golf had the same audience it had, but a different demographic, it would not be this sport commercially that it is right now. It benefits so much from the fact that so many people who watch it and play it have a lot of money to spend. And companies, high end companies that make watches and nice liquor and fancy cars really want to pay a lot of money to be a part of it. So as much as the current padel demographic maybe holds back the participation growth. As we start to shift this conversation into commercial opportunities, it is a very valuable demographic. That's for sure.

Roger Mitchell 19:11

That's a great question and a great point from Eben there. Listen what you said there, I believe, in the new world of the sports industry is one of the great fallacies. You can call it whatever way you want to call it, build it and they will come. your version of that is if we get people participating in padel, there will ultimately be a professional game. everything you look at in sports now with the polarization about where the media dollars going and the absolute paucity of progress of olympic sports outside of that once every four years, Let's you understand that you have to think about it the other way with one simple question, Alexander. Do we have a revenue model for this sport that will allow our elite athletes to make a living worthy of their talents? That is the golden question in sport. And if you apply that to every single sport: swimming, lacrosse, cricket in America, rugby League, Triathlon, one of the ones that's very close to me. You have got to pass that ACID test, because you have to say, well, am I going to have any media dollar revenue? Probably not these days if I'm not top tier, probably not. Am I going to be able to have participation fees like Triathlon has, Ironman, everything like that? Probably not. Am I going to have host city fees like the model that's going around these days? Probably not. So where's your money coming from to pay your elite athletes? That's the question you need to ask yourself, Alex, because this is the old thinking of governing bodies, grow the participation, that it will naturally become a professional game and happy days. The reality is that nine out of 10 sports, their elite athletes are on the breadline and can't find a way to pay for their rent at the end of the month. And you got to work back. What is your business model for this sport? And then you re engineer it.

Alex Inglot 21:10

And I think, Roger, you're diving straight into the questions about the professional scene. And I think that's really where we need to head to, because that's the focus of this podcast. So just to give an overview of the professional scene. We've got the premier padel tour, which is the equivalent of the ATP or WTA tour. It also includes the grand slams. So it doesn't have that fractious situation. In theory it's WTA ATP and slams all in one. So immediately like wonderful. And it's got the Federation in it as well. So all the acronyms that are tearing tennis are in theory gone. The premier padel: you've got the federation who are driving it; you've got QSI, the Qataris who are financing it. You've got both players associations involved in it. Wonderful. So that's one issue you don't have, which is people pulling it apart. You've got a situation where the equivalent five years ago, which was the World padel Tour, 70 percent of its events were in Spain because of the center of gravity for the sport. Now it's got 24 events in 16 countries. This week it's in Egypt against the backdrop of the pyramids. You've got events at Foro Italica. Which is the well known Rome location. You've got Roland Garros, the French Open location. In terms of media, we've got every tournament on YouTube until the quarterfinals. Then from quarterfinals onwards, it is on Red Bull TV for free. Which is interesting that Red Bull decided to step in. They already sponsored a couple of players in the last few years, but they've decided to dive in on this commercial and Broadcasting and content creation partnership with padel. Mainly endemic sponsors at this stage: equipment balls. And then you've got red bull and qatar airways, which are the two tentpole non endemic sponsors. Bearing all that in mind, and feel free to ask questions if you want, I'm trying to understand where does that place padel in the rankings of global sports? And perhaps more importantly than that, where does it head for? What can it achieve? Can it achieve tier one status? What does it need to survive, let alone thrive and move up tiers, from your point of view, based on the information I've given you. And one thing I would also add, at this point, and I think it's really important, is the cost base. So the players. As I understand it, prize money has gone three X in the last five years, so there's a significant amount of money being put on the table in terms of prize money. They've also got appearance fees that are coming from proams and extras around the world. Sponsorship money is coming in. So actually, the people who seem to be making the most out of it are actually the players. The immediate question is are costs exceeding revenues? And if costs are exceeding revenues, is this the typical grow rather than profit model? What are your thoughts based on that kind of context that I've given?

Pro Padel on the US Radar

Eben Novy-Williams 23:57

I would assume it's not making money profitable wise. I mean, no sport at this stage in its growth is to my knowledge. And if it is, then I'd love to see the economics of what all of that looks like. But it doesn't have to be right. There's a lot of people who are investing in a whole lot of sports right now, knowing that they are going to be funding losses for a while, thinking and hoping that when it comes out on the other side. There's baseball teams in America that lose money, and there's soccer teams all over the world that lose money. Coming into professional sports as a moneymaking endeavor is often not the point. Certainly from a year over year PNL standpoint. Again, I don't personally know enough about padel to know globally where it stands. Roger, you're way better positioned to answer that question for me. I can say from the U S, it's not really on My radar at all. And I get pitches on every sport at this point, right. I'm certainly aware of padel and some of the things that you mentioned there, Alex, particularly stuff in the middle East, I am aware of. But I am getting, I think an email a week, probably more, about a new league that's popping up in the U S. And that might be cricket, it might be ping pong. It might be pickleball. It might be mini golf. It might be a one on one basketball tournament. Whatever it is, there's so much competition here right now for professional sports. And this to me, as we shift to talk about padel professionally and particularly from the U S: this is the biggest challenge for me is that everything has been democratized from a media standpoint and distribution standpoint. But what that means is that everybody and their mother is launching sports leagues in the U S right now. And that's a really hard thing to break through on. And if I think about tier one in America being the big boys, the NBA, is the NFL,is baseball. If tier two is things like the G league and premier lacrosse league and things like that, I would say that padel is in the third or fourth tier, whatever it is below tier two at this point, at least in the U S.

Roger Mitchell 25:53

Alex, let me try and answer it. And that was great from Eben. You said that their media exposure is YouTube TV and Red Bull TV. So no money. Let's be honest, no money. so that's fine because normally the strategy there is that that's where you get your exposure, your awareness, the top of the funnel. You get people interested, targeted marketing. But then the question is there enough of a niche passionate, audience for them to pay for a subscription Deep Media Hub? That's the classic sports business play now. So that would be a question I would put back to you. Do you think that the padel audience are such that they would subscribe to their own dedicated padel TV streaming service for a subscription fee. I have increasingly got more skepticism about all of these models going forward. So if you don't have major media revenues, you're a sponsorship model. You're a sponsorship model. So, the two sponsors that you're talking about are what they would call in soccer these days, associated parties. There's Red Bull and there's Qatar Airways. I would see as a real flagpole milestone moment when you got a non associated party sponsor getting behind padel and saying this is absolutely perfect for my brand values and my audience. I can't see that's happened today yet. I can't see that's happened today yet. So, okay, when you say they're making significant prize money. I can't comment unless you put a number on that, Alex, because I don't know what that means. I get the fact that there may be as an appearance market. It's like I said before, it seems a little bit of a celebrity kind of like cool kids, you know, California white Lotus party type sport just now. You need to define it a little bit, but I'm not saying to you, Alex, but I'm saying in the hardcore world of sports business that Eben and I live in, I don't see a plan. I don't see a plan. Because you haven't got a media revenue. I can't see any major sponsors. And I'm not sure that the community is so passionate like it is for other sports that they will subscribe to your little niche hub if you ever get to putting that on. Is that fair, Alex? Or is that harsh?

Heroes & Influencers

Alex Inglot 28:13

Um, so there is a padel TV platform which doesn't have the rights to the key events. Mainly it seems to broadcast national events. Maybe they're starting from the bottom up and hoping that with enough center of gravity and enough subscriber numbers, they'll be able to then pitch credibly for top tier events. But at the moment, they've got carriers like BeIn. But again, BeIn is what you would call an associated party. So in the U S for example, you can watch premier padel on YouTube, but you can also watch it on BeIN. So that's helping out through the Qatari connections, to get things out on a more recognizable media platforms than YouTube. In terms of sponsorship, you've got car companies like Cupra and Alpine who have come in. And you've got Certina, the watch company who is getting involved. Alpine and Cupra are big sponsorship deals. Certina, Lamborghini did some padel rackets with Babalat. Prada is creating bags for padel. So, there is these kinds of testing of the water, non endemic sponsorships, but they're not big.

Roger Mitchell 29:21

Alex, you know what you need to do. Now I'm picking this up a little bit. You need to find some YouTube influencers that are good at padel because every sport needs a hero. Tennis in Sweden came after Bjorn Borg. Golf in Germany came after Bernard Langer. You need a hero. and these days, whichever way you cut it, they are most likely going to be influencers on social media. You've already got a deal with YouTube. I would try and find out who is good there, who's interested in padel, and the sport, whoever is running the sport, get right behind them and make them some kind of like hero to attract a new audience. That's the playbook now. You can see that from things like the Kings League, you can see it from Sidemen, you can see it from even the lacrosse boys in the States. You have got to get on social media with an active plan to hit those new audiences, and you need personalities. It's just, you know, the very good player that was nearly made it at tennis and is number one in padel. That's not going to hack it, Alex. Not in today's market for entertainment, sports content. It's completely changed the way it was before. That would be my advice to whoever's running the sport: work out who plays padel and has got a significant audience on YouTube.

Eben Novy-Williams 30:36

Padel kind of has this in some ways, right? There's soccer players and F1 drivers and things like that. I mean, I agree with Roger leaning on them: the biggest people that are famous outside of the sport that are investing in it and playing in it is a, is a really good way to drum up excitement.

Alex Inglot 30:50

And I think that's a really interesting point because I remember when about a year ago, I got really excited about the idea that Cristiano Ronaldo plays and he's building a center You've got Zlatan Ibrahimović building centers in Sweden You've got Jimmy Butler from the Miami Heat who's a big fan and is promoting the reserve cup event in Miami You've got the Formula One drivers who every week They seem to be more excited about their padel rivalry than their Formula One rivalry. So you've got all of these names. Then there's the hexagon cup, which is Quite interesting model because for me, it feels like an almost a recognition that our current stable of top players, most of them can't speak English because they're all from Spain and Argentina. So their English is really fairly weak. And even then they just don't cross over because you don't have the general layman's recognition of their qualities and athleticism. There's no reference point. People know that Alcoraz is a beast, but they don't know if Ale Galan is a beast. And so the hexagon cup decided to use franchises headed up by people like Eva Longoria, Andy Murray, Lewandowski, Sergio Aguero to try and create this bridge between the padel world and the outside non endemic world to go: oh, you may not know Alec Galan and Ari Sanchez, but you do know Eva Longoria and Andy Murray and they love these guys and they are the Owners of these teams and they play for them. And it's To your point. I think there are two issues with that, and maybe I'm being pessimistic. One, it may exacerbate the issue of this is a kind of the playboy sport, right? If the Formula One drivers are the ones behind it, it doesn't sound to me like the sport of the people. So you're almost leaning into, to the point you made Roger earlier, that you're leaning into the kind of the elite sports hero rather than the everyman working hero. And then, the other issue that you have is exactly to your point, the influences seem to be much more important. Modern sports influences, like a Christian Ronaldo with his own YouTube channel, great, but that seems much more inaccessible, much less"of the people" than your army of influences, whether that's Ibai in Spain, whether that's the side men in the UK, whether that's I show speed in America or face clan or whoever it may be. So my feeling is exactly what Roger was saying, which is: the sports heroes, great. That may give it something. But actually I think it's your modern day YouTube content creator army. The people who are behind Kings league teams they've got some footballers who are retired, semi retired, wonderful. But it's pure YouTube creators and for a lot of people my age, they don't know who those people are, but that doesn't matter. It's the people who are 18, 25, 30, who do know who Ibai, side men, Mr. Beast, all those people are. And that seems to really drag in a demographic that neither your existing heroes in padel, nor your footballers, nor your Formula One drivers, nor your tennis players, are going to maybe be able to rake in.

Roger Mitchell 33:54

Alex, I would say this and maybe more optimistic than you and strangely on this particular point. I don't mind whether it's coming from Ibrahimović. What you need to ask is, when you're running a sport is, let's assume, through Le Clerk or Sainz or Eva Longoria. I don't see that one, but I'll give it to you. Right? Let's say that you catch the interest of a 9-year-old girl or a boy. Then it comes back to your very first question, man. Let's say that girl or boy lives in Lake Cuomo here in Italy. Where do they go to get a fix of padel. Where is their court? Who's teaching them and everything like that? I see nothing here around that. So when you say there's courts everywhere, if they are all at that 200 or 50 an hour pop, You're going to get interest and it's just not going to be satisfied. Come back to the point, basketball and soccer, there is no financial barrier to entry if you get excited by seeing a Messi highlights clip on YouTube. You go out your back garden and you throw hoops or you kick the ball against the wall and you're away. In padel, you get excited, like I said before, what do you do? What do you actually do, Alex? If I was a parent actually asking you, My kid loves padel. What do I do? I'm based in Lake Como. What are you going to tell me?

Alex Inglot 35:17

I'll tell you that Italy's not too bad, they've got 12, 000 courts in Italy, but it's probably not going to be cheap. And 12, 000 courts is not the same as a park around every corner where you can play football.

Roger Mitchell 35:30

I think that's the challenge. You know, and it's the same for a lot of sports now in America as well. They've become, They've become, The pathways, let's use that phrase. The pathways have become very middle class. You need parents to drive you to the location. You need the parents to sign up for the private little club that is obviously got an annual fee. And you need them to buy you the equipment and, and. That's tough. Money is tightthese days. That's tough. So, I keep coming back to, what does padel think it is? Does it want to go for the mass market? Or does it want to be the kind of cool thing for the Playboy set? And that, maybe that's fine. I mean, there's plenty of sports doing that these days. There's that. But you need to work out, you need to work out what you want to be. Otherwise you'll be neither fish nor fowl. That, that would be what I would say.

Eben Novy-Williams 36:21

Yeah, I'm increasingly actually thinking that second thing might be the right approach. That it's not going to be a sport of the people for all the reasons I think that Roger said. There's just infrastructure costs and equipment costs and barriers to entry and popularity that are incredibly difficult to overcome. But yeah, if you have a subset of very wealthy people around the world, particularly in Europe and the Middle East that are playing the sport and that you have Cristiano Ronaldo is, NHL would kill to have Cristiano Ronaldo put on ice skates just once, just do it once, put it on his Instagram once, right? He himself is a media and influencer ecosystem. And if he is playing the sport and is investing in it, that is incredibly valuable. Actually, now, the more we're talking about it, increasingly feel that maybe that is the Avenue. And we haven'talked much about pickleball here in the U S. Pickleball has seen an insane participation growth we've never seen in modern times, a sport that has grown participation wise, like pickleball has. There's a lot of investment in the pro side. From what I understand, none of it is really materializing financially. You made a good point, Alex, about the infighting in pickleball in America that doesn't seem to be happening in padel. And that's really good for padel. Cause it really was a huge problem here. But the only semi professional or viewership pickleball events that do any numbers right now, are the ones where they have tennis players playing. If you can get John McEnroe and Andy Roddick, or you can get Coco Goff and Francis Tiafoe to play pickleball on television, that's People will watch it. But they're not going to watch the best players in the world. So yeah, I do think in some ways that maybe the business model is leaning into, give me Lewis Hamilton playing doubles with a few other F1 drivers playing padel. That seems great. Again, it's not for everybody. It might not lead to millions of people playing the sport, but it will lead to millions of people knowing what the sport is, and if there's aspirational aspects to that as well, there seems to be benefits there. Yeah, the more we talk about it, it does feel like in some ways the high end celebrity and exclusivity of the sport may be a benefit. It's not going to make it the next soccer, obviously, or even the next tennis. But there does seem to be some tentpole business opportunities there for sure.

Alex Inglot 38:37

Lets jump to the US for a second, since we've already mentioned it. So, the US, by the padel industry's own admission, is the holy grail, right? It's taken a good foothold in Miami. There's a significant number of courts and clubs in Miami at slightly different segmentations from super high end like Reserve, which is Wayne Boych's project, all through Ultra, all through WinWord, all through padel X. There's a whole range of different things for different people. None of them massively cheap, if I'm honest with you. But there is segmentation in some shape or form. Now you're seeing New York, you're seeing California, the Texas cities are starting to get a bit of activity. New Jersey. So you can see the map heating up in different pockets. Again, it's a high end thing. Every deck that I've ever seen around clubs is you've got a little cocktail bar and you've got your kind of lounging areas. Imagine you're in Tulum or the Maldives when you're sitting here enjoying the padel. And the price point obviously reflects that. Everyone's like: Oh, padel versus pickable, padel versus pickable. I think the issue is that padel costs a lot of money. Pickleball, in theory, you can have a lovely high end Pickleball center. But you could also grab a net and a couple of lines and go to your local car park or your local community basketball court and set up there. And so the barriers to entry that we've been discussing previously, as Roger mentioned with Como, that doesn't exist in Pickleball. If I want to go and play Pickleball with my kid tomorrow, I just need to find some concrete, some lines and a net, and I'm good to go. My experience of pickleball is as a participation sport, it is great. It keeps people moving who may have given up on moving. It's a good family activity and sport, easy to access. You can have, like I said, the elite kind of experience or the, let's call it super grassroots entry level experience. And you've got that thing which is always unquantifiable, which is the American exceptionalism, right? It's our sport, we created it, we will back it to the hilt, come whatever pretenders from overseas. So I think that's something that you need to put into the account somewhere. They put on an event called the Pro padel League, which is, again, it's a franchise based system similar to the Hexagon Cup. All the best players, or most of the best players were playing. 10 franchises with some slightly high profile ownership, like Tommy Haas, ex tennis player, Daddy Yankee, the famous musician, a few others. They took five weeks to the calendar this year, and they play two weeks in Miami, two weeks in California, and the playoff finals are gonna be in New York, I think, next month. Again, YouTube model in terms of broadcast. Sponsorship I didn't see much in terms of non endemic sponsorship and yeah, the viewership, they were done at clubs. So you had three, four, 500 people watching maybe, in venue. So America may become something big. Obviously it can accommodate a lot. Is it happy to have a new golf or a new squash come in and be the kind of talk of the town for a few years? Yes. Does that mean that it's going to be the participation racket sport of the U. S.? Question mark when pickleball is clearly a much better place to take that throne. And is it ready for pro? So the premier padel, they're putting one of their events in the U. S. Next year. They haven't announced where yet, but they've committed to it. If the rest of the world is starting to get accustomed to professional padel, but it's still a way off; then the U. S. is obviously a few cycles behind that. So perhaps premature.

Eben Novy-Williams 42:22

I'm thinking if I was an investor, an American investor who wanted to invest in padel, it seems very clear to me that high end facilities is the way to do it, at least right now and in the way that you are describing things, Alex. One thing that I do think is maybe interesting and maybe an opportunity. There's, and I don't know if this is even a thing in Europe, Roger, Cornhole, is that a thing on your radar at all?

Roger Mitchell 42:47

A little bit, a little bit, but

Eben Novy-Williams 42:48

bit. Yeah. So, so

Roger Mitchell 42:50

yeah,

Eben Novy-Williams 42:51

cornhole is. It became very popular in the past two decades at tailgates essentially

Roger Mitchell 42:56

yeah,

Eben Novy-Williams 42:57

then spun off into an attempt to make a professional sport and there's cornhole league and they have a distribution deal with ESPN and they have a medium sized following and I don't know all the financials. But one thing they did do that I thought was interesting is In addition to doing the sponsorship model and holding a league and they don't get paid much by ESPN, if anything, but they have distribution. They have a big licensing business. And you can buy ACL American Cornhole League branded boards and beanbags. They get paid for that. And they also have a secondary licensing business that is essentially, A certification that they will give out for other people's products. And Roger, if you're selling beanbags and boards and the ACL deems it, this is professional quality, we're going to give it the ACL professional stamp. And if it's just bad plastic and it really is terrible, we might give it the ACL recreational stamp

Roger Mitchell 43:52

yeah.

Eben Novy-Williams 43:53

pay the ACL just for that designation because it helps them. And it helps the consumers. For a while, I haven't checked in recently, but the licensing business was about a third of the ACL's business. This is a professional league. It's got the sponsorships. It's trying to do the TV thing. It's selling tickets to events and stuff. But a big part of its business was just certifying the

Roger Mitchell 44:13

Interesting.

Eben Novy-Williams 44:14

people buy. And that creates a direct, as we talk about this link between participation and professional ranks, this at least bridges a gap commercially. Where the professional entity, which is trying to do all the professional things, is also directly sharing in the growth of the sport itself. And I know that these two sports are very different. Cornhole has a tremendous user base and just not used to it in the U S being a professional thing. And padel obviously doesn't have a tremendous user base, at least not yet in the U S. So the bottom of the funnel looks different. But there are interesting ways I think that some of these newer sports are setting up their economic models so that they can cross benefit from both the professional world and the participation numbers as well.

The Olympics

Alex Inglot 44:59

Yeah the Hexagon cup, I think, has been exploring how, because it's a five day event in January, they're exploring how, exactly to your point Eben, how do we rake in or monetize the player base into that event. So I think they're trying to explore how they can create or incentivize a amateur league structure to feed into the hexagon cup. So that effectively, I'm sure it's going to be more complicated than this, but if you win the amateur national league, you will be eligible to be picked into the franchises or play alongside the heroes, so to speak. So understanding that if the real hay is being made in the amateur area, then you need to work harder to create and forge that link between the professional scene and the amateur scene. I wanted to ask you both, what do you think about the Olympics? So the president of the federation has made his major focus landing padel into the 2032 or 2036 Olympic program. He believes that's a game changer. Do you think it would make a significant dent or difference if padel became an Olympic sport to everything that we've talked about until this point?

Roger Mitchell 46:11

I'll go quickly here, I know we're running short of time. Two words for you, breakdancing. Name me one sport that has kicked on from Olympics participation. Rugby sevens, golf. It's another one of the crazy things that the old school of sports governors and administrator's think is the silver bullet to get them out of their incomplete thinking around strategy. A complete red herring, Alec. Complete red herring.

Eben Novy-Williams 46:39

Yeah, I don't disagree. What is padels participation in Australia? Because I would say it has almost no shot to be in 2032. Then we'll see where 2036 is, if it's in Saudi Arabia and there's a big Middle Eastern investment, maybe it's possible. But I agree with Roger. People talk about this as a massive panacea of growth, three on three basketball has been in the Olympics now for three straight cycles, I

Roger Mitchell 47:01

point. Great point.

Eben Novy-Williams 47:03

Nobody in America, America is the basketball Mecca. It's not a thing on the radar really here at all yet. And maybe never will be.

Alex Inglot 47:12

The big three hasn't succeeded or thrived.

Eben Novy-Williams 47:14

No, I don't think thrived at all. Succeeded maybe depending on your metric. People want to get leBron James, those types of people playing in three on three basketball. It hasn't happened yet. Squash isgoing back to the Olympics, right? In LA. I'm not tremendously optimistic about squashes suddenly because it's going to have a two week showcase or a five day showcase in LA in 28. Um,I just don't think the Olympics is the platform and the money panacea that people make it out to be.

Alex Inglot 47:45

Okay, so I'm going to leave with one big question, which is a bit of a classic one. Which is, congratulations, both of you have become Commissioner of Global padel. What do you do to help this sport achieve growth, quote unquote, success, quote unquote? You may define that as you want to, but what do you do for the sport of padel over the next five to ten years? And how do you manage expectations if that's part of the conversation?

Eben Novy-Williams 48:12

Yeah, I think what I am doing, again, knowing about an hour's worth of padel knowledge, I'm leaning into the very famous global celebrities that play and like the sport and want to invest in it. I'm also leaning into the valuable demographic that we have. I am pitching investors on the idea of clubs as a real estatend development opportunity. And I'm also leaning into pickleball. If I care a lot about the U S, I am trying to position padel as, okay, you tried pickleball, you liked it, but you want to work up a sweat or you want to do something that's competitive and you want to have more, Fun and challenging with your friends, try this next. So I am I think leaning into a lot of the things that we've talked about that I think are beneficial. I think i'm being realistic and sanguine about what the sport Reach is going to be in the next 5 or 10 or 15 years. And I don't think i'm trying to make This the next basketball. But there's a lot of people here in the U S and in other places that have made a lot of money on the pickleball boom, just on the real estate and the facility standpoint. And we're not going to get padeld to be that level of participation immediately. But there's good businesses to be had there. So, yeah, that's maybe what I'm doing. I think I am trying to position this as a very elite and fun competitive sport that a lot of people with a lot of influence around the world use. I'm trying to get those people to appear on TV and one off ESPN matches for padel to see what Ronaldo and Lewis Hamilton and Lewandowski and Rafa Nadal-get the four of them on a court somewhere, televise it for an hour. Cause that's something that ESPN might pay for. They're not going to pay for the best players. But they'll pay for that. Um, And yeah, that's my strategy is to keep it relatively small and elite and then grow from there.

Alex Inglot 50:00

Roger. Okay.

Roger Mitchell 50:03

that this isn't the case with me, but I've got nothing to add to that. That is exactly what I would do. And don't forget Alex. This is the way the world is today for right or for wrong. A lot of people will pay for access to celebrity. Whether that's sponsors or high net worths, or whether it's 25 grand for a dinner table, uh, a fundraiser. If you can do that, what Edwin has just said and basically pitch the revenue model for padel is sponsorship where you get into rooms that you would otherwise never get into. That's, I think there's some legs in that.

Alex Inglot 50:41

All right. Well, that about wraps up our episode. Again, please like, share, and subscribe if the content was thought provoking. Please feel free to comment on LinkedIn or Twitter if you agree with anything that was discussed today or violently disagree. Maybe we can do a follow up episode on that as well. We obviously want to hear the views of those driving the next phase of this industry's future. So tell us what you want to hear about and who from. Thank you, Roger and Eben for joining us today. I really appreciate you having a go and trying to dive under the skin of padel. We will keep doing our best to cover all the angles of the business around padel, episode after episode. Till the next one.