Investment Opportunity in A Badminton Club Why Badminton Court? 1. Simple: A badminton court is easy to set up. Simply a building (eg. warehouse) with high ceiling and a large area would be suitable. 2. Little maintenance: A badminton court has little or no maintenance, except sweeping and mopping the floor. 3. Little labor: One staff on each shift (two shifts a day) is required on duty to supervisor the court and performs general cleaning. 4. High Demand: In Vancouver areas, badminton courts are fully booked in advance of 1-2 weeks. 5. Little Competition: Basically, people can only play badminton in (a) community centers (b) school gyms and (c) private clubs. Secondly, people can only play badminton indoor (because of wind) 6. Stable Income: People play badminton on a regular basis, usually once a week to 3 – 4 times a week. 7. Non-Seasonal: People play badminton all year round, and even more during winter time. 8. Suitable for All Ages: People can play badminton from age 5 to age 70+. It can be recreational or competitive depends on level of skills. It’s fun to play, and is also an excellent cardiovascular exercise. 9. Warehouse Availability: Due to decline in economy and industry in BC in the fast few years, there are abundant of vacant warehouses suitable for the use as badminton court (subject to City approval). How Big Is The Building? 1. A single badminton court is measured as 44’ x 20’ or 880 sq.ft. It is recommended to add at least 2’ on the sides and 3’ at the front and back of the court. Therefore 1,200 sq.ft. is required for a single court. 2. An ideal badminton club should have at least 6-10 courts: 3. If too few courts (under 6 courts): a. Court brings rental income. More courts = more income b. Overhead costs (eg. staff, utilities) would be too high c. The ratio of open area vs court area would be too high (more than 15%) d. Frustrated players if they cannot book their ideal time to play, and would drive them to go elsewhere 4. If too many courts (over 10 courts): 5. May not achieve high occupancy, especially during non-prime hours 6. Higher commitment in rental = High risk to investor 7. Therefore, an ideal building area should be 10,000 s.f. to 15,000 s.f., including areas for office/reception, changerooms, waiting area/lounge. Investment Opportunity in A Badminton Club.doc Page 1 1/18/2005 What are The Costs and Incomes? Rent: Typical warehouse rent from $5.5 to $7 (per s.f. per year) + $2 to $3 (operating costs and taxes) = $ 7.5 to $10 (per s.f. per year) A single court requires 1200 s.f. x $10 = $12,000 rent per year. Court Rental: Typical badminton court rent from $12 to $15/hour. Therefore, to cover the rent: $12,000/$12 => 1000 hrs (a year) / (360 days) => 2.8 hrs per day $12,000/$15 => 800 hrs (a year) / (360 days) => 2.2 hrs per day. Typically, badminton courts are open from 8am to 11pm (15 hours a day). A single court can generate a max. income of $15 x 15 hrs = $225 a day x 360 days = $81,000 (a year) With 50% occupancy ratio: $81,000 x 50% = $41,000. It is still able to cover the basic rent and other fixed overheads nicely. How To Invest? I am going to raise C$200,000 as initial capital for this badminton club project. This amount would cover the initial set up, renovation, equipments and first six month rental. Capital to be Raised: Investment Units: C$200,000 $10,000/unit x 20 units Return on Investment: 4% annually guaranteed My goal: 20-30% annually (after deduction of rental, operational expenses, salaries and performance bonus, income tax and operational reserves) Return on Principal: 100% principal returned after 5 years (This investment opportunity is only open for family and close friends only.) Estimated Return on Investment? According to the budgets: Scenario 1: Survival Test, Prime Time Only (Evenings, Sat and Sun) Return on investment: 8% Scenario 2: Full Time, 50% Occupancy Return on investment: 6% Scenario 3: Full Time, 70% Occupancy Return on investment: 47% Investment Opportunity in A Badminton Club.doc Page 2 1/18/2005 Competition Analysis: Currently, people can play badminton in Greater Vancouver in the following ways: 1. Community Centres 2. School Gyms 3. Private Clubs Advantage Disadvantage Community Centres Easy Access Low cost: $12/hr (rental) $3-4/session (drop-in) School Gyms Low costs Private Clubs Ref: Open year round and 7 days a week Competitive players Professional coaches available Hard to book: 1-2 weeks in advance. Cannot book continuously for several weeks or months Not available to individual players. Must book for whole season by a group of people (about 20-30) to share 3-4 courts. Only available in weekday evenings High membership fee, approx $10,000 - $30,000 entrance fee. High monthly fee, approx $150/month Please visit www.badmintonbc.com > Where to Play Marketing and Advertising: 1. Chinese Newspapers: Ming Pao (Weekend Magazine) and Sing Tao. 2. Local Community Flyers in the surrounding areas of the club. 3. Friends and Acquaintance: Invite friends and acquaintance to play badminton in the club through myself and other investors. 4. Badminton Coaches: Invite badminton coaches to teach in the club, therefore, assuring court rental and increase exposures to players. It also reduces the vacancy during non-prime hours. 5. Attend drop-in sessions in community centres: Get to know more players and invite them over to play in the club. Investment Opportunity in A Badminton Club.doc Page 3 1/18/2005 Risk Reduction The biggest risk of a badminton court is the rental. A typical club requires an area over 10,000 sq.ft., and at a rental of $10 (incl. op. cost and tax) = $100,000 a year. In addition, the lease runs from 3-5 year term. The second biggest risk is the initial setup costs including: flooring, air conditioning, and interior renovation. These costs could easily totaled another $100,000. However: It only requires 3.7 hours a day rental to cover the rent and initial setup costs: $200,000 / 10 courts / 360 days / $15/hr = 3.7 hrs a day Risk = Opportunity Although badminton players understand there is a shortage of badminton courts, the high initial costs and commitment of a long term lease have been a deterring factor for an average player/investor to setup a club. With the spread of investment risk and the sharing of operational profit, I am bringing this project to investor for as little as $10,000 investment for this badminton club. And most importantly, with a number of investors (20), there is a spread of words and free advertising (if each investor invited 10 people = 200 players) – an essential support to make the club a success. What Are The Risks As An Investor? As an investor, your risk is limited to your investment principal only. There will be no exposure of other financial risks and operational liabilities. Where Is The Club Located? Ideally, the club will be located in the Vancouver, near Richmond or Burnaby area. The exact location has to be searched after the initial investment funds secured. Major considerations would be: 1. Size and Rent 2. Location – easy access from Vancouver and Richmond or Burnaby 3. City Approval 4. Parking 5. Costs of Renovation/Modification Needed Investment Opportunity in A Badminton Club.doc Page 4 1/18/2005 What Make Our Court Different? 1. Open 7 Days a Week, 15 Hours a Day (8am to 11pm): Most community centers do not provide whole day for badminton. Facilities have to be shared with other sport activities: basketball, volleyball etc. Continuous Booking: Most community centers do not allow continuous booking so that other players have a chance to book. We would allow (and encourage) people to book a fixed time for a long period, eg. Every Tue 7-9 pm at Court 1 for 3 months. (Buy 10 get 1 Free) Internet Booking: Currently, 95% bookings have to be done in person or by phone. It is not convenient to schedule a time to play with friends, because of the unknown of court availability. Internet booking will allow registered players to book online 24-hour a day with credit card payment. Waiting Area: Lounge with sofa will be provided for the parents while their children learning badminton. They can watch their children playing badminton, reading the daily newspaper or surfing the internet through our wireless internet connection. Tot Playing Area: If area and fund permitted, a small area would be designated as children playing area, so that young parents can play badminton while their kids can play inside the area with their own supervision. This will attracts parents with young children (2-6 years) to exercise and keep fit. Events: Special events, like Singles Nights (for single, non-married players only), Family Nights (where family with young kids play together for fun) 2. 3. 4. 5. 6. Are There Enough Players in Weekday Daytime? While there are not as many people as evenings and weekends, badminton courts are filled with people in daytime as well for the following reasons: 1. Non-working middle class & business immigrants (HK, China) & seniors 55+ 2. Mothers - while their children attending school. 3. Students who learn/improve/practice badminton skills. Junior & Youth: usually after school (3pm). Some adults learn at daytime as well. What If The Occupancy Was Too Low? Contingence Plan: Area Sub-division: Sub-divide part of the area into small rooms to rent out for ballroom dance, line dance, and Tai Chi classes etc. These activities are very popular as well. Important Notes: 1. 2. 3. 4. Projections are estimation only and are not guaranteed, unless stated otherwise. While efforts have been put in to ensure the details and accuracy of the plan, errors and omissions may be expected. If a proper and suitable club premise cannot be located for the use of badminton club within 1 year, all investment funds will be returned to investors without interest. More detailed projections can be provided once a proper location is identified. Investment Opportunity in A Badminton Club.doc Page 5 1/18/2005
