- Alternate Universe
- Posts
- The meteoric rise of padel 🎾💪🏆
The meteoric rise of padel 🎾💪🏆
Owen
August 15, 2024
Welcome to Alternate Universe!
In today’s edition:
The meteoric rise of padel 🎾💪🏆
Job opportunities at recently funded European startups 👇
The Olympics are over but the memes are not 😂
The Crux 🔴
What 🤔
Padel is a racket sport that originated in Mexico in the late 1960s, created by businessman Enrique Corcuera in Acapulco.
Seeking a less physically demanding alternative to tennis, Corcuera combined elements of tennis and squash to develop a new game. Padel is played on a smaller court surrounded by glass and mesh walls, which players can use to bounce the ball, adding a unique dimension to the sport. Unlike tennis, the net is lower, and the court’s enclosed design encourages longer rallies and strategic play, making padel both dynamic and accessible.
Today, padel is one of the fastest-growing sports in the world and has attracted millions of players worldwide, as well as investment.
Google Trends data growing significantly YoY, with an estimated 25M players in 110 countries.
According to Deloitte data, over €200M were invested to build new padel courts in 2022 alone. The report estimates that the global padel ecosystem will surpass 4 billion euros by 2026.
Qatar Sports Investment, the owner of French football club, Paris Saint- Germain, acquired the World Padel Tour.
In the US, pickleball, a similar racket sport has also boomed in popularity over the last few years. Despite their similarities, pickleball is played on a smaller court and has a different scoring system and racket materials to padel.
What are the main reasons for the padel boom?
Tailwinds 💪
From a physical standpoint, padel is more accessible to the masses compared to other sports. While tennis and football demand higher levels of endurance, sports like golf are often expensive to take up and require precise coordination. Padel’s lower barrier to entry is a key factor driving its growing popularity.
On a social level, the involvement of renowned athletes such as Cristiano Ronaldo, Zlatan Ibrahimovic, Rafa Nadal, and Serena Williams has significantly elevated the sport’s profile.
Infrastructure investments have further fueled padel’s growth, particularly in countries like Spain and Sweden. Investment funds, such as Triton Partners, have supported the expansion of padel clubs and the development of booking software solutions.
In Europe, Playtomic is the leading app for booking tennis and padel courts. The company has enabled over 1 million players to arrange matches with strangers in multiple locations with just a few clicks. Unsurprisingly, this success has attracted investors, leading to a €56 million Series C funding round led by GP Bullhound. During the pandemic, Playtomic consolidated its market share through the acquisitions of AirCourts in Portugal and Sportclubby in Italy.
Challenges ⛔
Some investors are more cautious about the padel boom. Credit rating data reveals that around 90 padel-related companies filed for bankruptcy in Sweden alone in 2023.
The reason?
Investor FOMO led to an oversupply of padel clubs, forcing private equity firms to write down multiple facilities. As a result, some of these properties are now being repurposed as warehouses or grocery stores.
Furthermore, sports injuries may become a growing concern for healthcare providers. According to UBS analysis, the rapid rise of pickleball, particularly among older Americans, led to a corresponding increase in injuries, costing nearly $400 million in 2023.
Investment Implications 🤑
How can you take advantage of this trend?
The first segment to consider is padel equipment and apparel. A glance at the most popular racket brands reveals that the majority of these providers are private companies.
The only two publicly traded companies are Adidas and Amer Sports.
Adidas is a behemoth and in my opinion too diversified across multiple sports for padel to offer a considerable shift in stock price.
On the other hand, Amer Sports could be an option. The Finnish company, originally formed in the 1950s, owns multiple leading sports brands such as Wilson, Peak Performance, and Arc’teryx. It went public on the New York Stock Exchange in February 2024 and has a market cap of around $5.6 billion.
Racket sports are responsible for a third of Amer’s revenue. This segment includes Wilson, a highly respected tennis brand endorsed by top players like Aryna Sabalenka and Stefanos Tsitsipas. The company now aims to build a similar reputation in padel, recently securing a multi-year sponsorship deal with Premier Padel, where Wilson was named the official tournament ball. However, the company anticipates that its Technical Apparel segment will drive the most significant revenue growth in 2024.
The next segment ripe for investment opportunity is infrastructure. This includes padel club operators and court manufacturers. There are still opportunities for operators in European locations with an undersupply of courts - primarily in the UK and Germany. Booking fees vary widely globally, with Dubai courts charging up to 100€ per hour. Court manufacturers on the other hand typically charge between 23,000-25,000€ per court.
The final opportunity lies in software. Spanish giant Playtomic is out of reach for most retail investors. Similar solutions such as LeDap have attracted private equity interest. Judging by Playtomic’s interest in scooping up local players, I believe there might be scope for building or investing in a new booking solution for a specific upcoming geography.
Dig Deeper ⛏️
P.S. Liking this issue? Forward to a friend 🧑🤝🧑
Headhunted 🦅
Recently funded private companies need talent! Scout jobs at recently funded European startups, ahead of your competition. 💪
Clare&Me 🇩🇪 - AI therapy startup closes a €3.7m round. Recruiting interns across sales, business and psychology (link)
Riverlane 🇬🇧 - UK-based quantum computing startup has raised $75m in a Series C round. Hiring software engineers and a marketing manager. (link)
FRVR 🇵🇹 - Online game distributor has closed a $12.7m funding round. Hiring a data analyst & software engineer among other roles (link)
VoiceLine 🇩🇪 - The AI Operating System for field sales teams has raised a €4.2m seed round. Recruiting engineers and account executives (link)
Biomatter 🇱🇹 - The protein design company has raised a €6.5m round Hiring scientists (bioinformatics & R&D) and biz dev (link)
Interestingness📔
Putin Signs Law Legalizing Cryptocurrency Mining in Russia (link)
Social media keeps catching Wall Street off guard (link)
The Generalist has published a guide on spotting supertrends [paywall] (link)
CEO Swapping - Starbucks replaced Laxman Narasimhan with Brian Niccol, former Chipotle CEO. The move sent stock prices of both companies in opposite ways (link)
📚 New to investing? Grab a PDF copy of my ebook here.
As always, the financial disclaimer!
This is not investment advice. I am not a financial advisor. Make sure to conduct your thorough research before purchasing or selling financial products.