Strengths
Sports complexes are popular businesses given that they provide an outlet for athletic activity within their respective communities. Generally, these businesses face only a moderate amount of competition as they establish their operations given the substantial startup costs associated with this type of business. As it relates to startup costs, these entities can have a startup budget ranging anywhere from $250,000 all the way to $5,000,000. The most expensive part of developing a sports facility is the acquisition of the facility itself. In some instances, these locations are developed in industrial areas where a large warehouse can be acquired to render services on an indoor basis.
Another major aspect of why sports complexes are good businesses is that they typically will generate recurring streams of revenue from a membership-based program. There are numerous ways for these businesses to generate substantial revenues beyond membership including the ongoing hosting of tournaments and events, summer camps for kids, onsite training provided by professionals, as well as sales of apparel. Another aspect of revenue generation typically includes event hosting especially as it relates to birthday parties for children. These multiple high margin revenue streams substantially contribute to the ongoing stability of sports complex businesses.
Weaknesses
As it relates to weaknesses, these businesses have very high operating costs. Given the expansive facilities, utilities and rent (assuming that the business leases its location) cost can be extremely high. There are also significantly high costs related to insurance given that these businesses deal with people engaged in physical activity and injuries can occur. These risks can be reduced through the use of proper waivers that limits the liability associated with operating a sports complex.
Opportunities
There are numerous opportunities available for a sports complex to expand their operation. Foremost, these businesses can make ongoing reinvestment into their marketing infrastructure in order to expand the number of members that they have in any given month. These businesses can also expand their operations to include full league hosting for a number of sports depending on the size and scale of the facility. This is especially important given that many people, especially adults, that are engaged in league-based sports will continue to use the sports complex when engaging in a wide range of physical activity.
Another aspect of how a sports complex can expand their operations is by offering summer camps for children. Many parents often struggle to find appropriate care during summer months when kids are out of school. By providing a comprehensive summer camp, these businesses can further generate substantial revenues during the summer months. In many cases, the hosting of summer camps is a major profit center for sports complexes.
In addition to these methods of growth, sports complexes can simply grow by establishing an additional location. However, this is typically conducted after the fifth year of business given that there is a substantial expense involved with developing a new sports complex from scratch.
Threats
As it relates to threats, as noted above, competition is usually the primary issue that these businesses face as they develop and expand their operations. However, these businesses typically are able to have a much larger target radius especially if they are actively involved with the ongoing hosting of tournaments and events specific to a wide range of sports. As it relates to economic threats, these businesses can face downward revenue pressure during severe economic recessions. However, these businesses typically provide their services at a relatively low rate as compared to the in terms of their respective target markets. Additionally, many people find their participation in physical activity as an absolute necessity period this substantially reduces the economic risks associated with sports complex businesses.