Analysis of costs incurred in building a 5-a-side facility
In one of our previous articles we talked about new trends and investment opportunities for new entrants in the 5-a-side market. Now in this article we will address a more in-depth analysis, concerning costs to be taken into account for the creation of a 5-a-side facility.
Determining the initial cost of a 5-a-side facility is not a simple matter; many aspects have to be taken into account. Much depends on the country of reference, the cost of labor and land, the regulations in force, insurance policies, etc.
Finding the right geographic location is fundamental to the success of the business. Renting spaces in a city will certainly cost more than in the suburbs but by getting too far from the public you run the risk of losing customers unwilling to travel long distances, and your business model might change a bit as well.
The variables to consider for this business are notable so that a market research or making contact with a sports consulting firm is the best way to make sure that your location and your building meet the needs of your audience.
Once the area of reference has been identified, it is necessary to look for the presence of abandoned buildings if there are in order to find the owner and propose an agreement. You can also contact the local administration to see which buildings they have on offer that can be bought or rented.
An old building, a warehouse, a former tennis club or even an old school that has enough land for your business, all offer great potential. The presence of both private and public competitor structures must be studied in order to use it at your advantage.
The ideal structure should guarantee a certain scalability, that is to say a possibility of expansion for growth, in order to offer other sports in the future: paddle cages, gyms, or other spaces targeting leisure activities are examples of business that can have monthly registrations at variable prices.
Coming to the numbers, you have to consider construction-related costs and operation-related costs. We will limit our attention to the former, while the latter will be addressed in a future article.
Depending on the conditions of the building, and on the size of the facility, courts construction generally only account for 30%-40% of the total cost. We recommend installing five-a-side fields because are smaller and more easily manageable. In fact, among the various small soccer modes the five-a-side is definitely the one with which you can optimize the available space. The cost of the field will then vary in base of the technology it uses. As far as the turf is concerned, pitches which use 3rd generation features will cost on average $40-$50 per squared meter, which means that an actual field will cost around $25,000. To this cost you will then need to add another $25,000, which covers the borders (rebound walls) surrounding the field, the goals and the illumination system.
Another 30% of the construction cost is spent in repairing or adapting electric and water networks, masonry, doors and windows, and furnishing in general both for the function hall (café/bar, shop, ..) and for the lockers room. By definition, the more you want your club to be stunning, the more you will spend. But keep in mind, as a rule of thumb, to not spend, in total, more than what you think your turnover is at Y3.
To the main costs of the installation of the field, you will then need to add honoraries for the engineer and the architect, legal costs, marketing costs, insurance, rent-deposit, inventory for the soccer shop and the café/bar. set up, and a café/bar. That will account for another 30% of your budget.
The total start-up expenses to incur for the creation of an ad-hoc 5-a-side soccer facility are going to be around $150,000 per installed court (ex: a facility with 6 courts will cost around $900.000 to set-up).
Don’t be scared of this numbers, the revenue streams for the development of this activity are numerous and we will discuss them with you in the next article.
Remember, with WSBSPORT #you’llneverworkalone