FEATURED STORY
The Business Behind Luxury Sports Clubs
There were 24,300,000 US pickleball players last year - which was up ~170% since 2022.
Despite this, this past week, the parent company of the largest chain of indoor pickleball clubs filed for Chapter 11 bankruptcy. The Picklr once raised at a $59M valuation, sold 500+ franchises, and grew to 70+ clubs. Now, a group led by one of its franchisees secured $4.5M to fund the restructuring.
This piece isn’t about the rise of pickleball or the downfall of The Picklr.
It’s about the business of luxury sports clubs.
For every private [enter sport] club that goes out of business, there’s a new concept being pitched in investors’ email inboxes.
Why? Just look at some of the standouts from 2026:
Poolhouse raised $55M in a round led by Bluestone Equity in July.
Life Time’s Q2 earnings report stated that the company hit $866M in revenue last quarter and plans to open 14 new clubs this year.
Two large club management software companies - Xplor & Clubessential - merged in March, and processed $47B in payments.
So, let’s talk about where the opportunity is within luxury sports clubs.
How They Make Money
The 7 main revenue streams of sports clubs are:
Membership dues & initiation fees
Pay to play (court, bay, lane, or table)
Food & beverage
Events & private bookings
Programming (leagues, lessons, training)
Retail & pro shops
Sponsorship
Below is an estimated breakdown of revenue streams from a mix of sports clubs.
Because sports clubs can consist of everything from premium gyms to entertainment-focused venues, the average revenue per member is a better metric to compare apples to apples.
The Costs of Operating
Some important data points to consider:
For Life Time, club operations and rent eat up ~63% of revenue.
Food & drink is a cost center. About 70% of private clubs lose money on it. Kitchen labor alone runs ~68% of food-and-drink revenue.
Franchise fees come off the top. Royalties are taken from revenue, not profit, so a franchisee pays 10%+ even in a loss-making year.
⬆️ Competition + ⬇️ Differentiation = Opportunities
This Bloomberg article perfectly sums up a phenomenon that’s brewing in the UK. Hundreds of padel courts & clubs are popping up as money is flowing in from mom-and pop angel investors, big corporates, family offices, and even celebrities.
“In total, investors have poured at least $300M into UK padel companies in recent years.”
As this is taking place, we see it creating two unique opportunities for investors to capitalize on:
Sophisticated investors will come in to swoop small & distressed clubs.
The rise of competition has led to many different club operators trying to outbid each other for the same 20K-40K sq ft boxes. And without much differentiation, a lot of these founding teams are becoming insolvent. We foresee a future where distressed investment shops will find alpha here by buying cheap & streamlining operations.
Technology & IP Licensing
The Joliffe brothers mastered this as they’re the masterminds behind Topgolf, Puttshack, and Poolhouse. They brought in-house technologies like Toptracer (golf-ball gamified tracking technology) and BillyQ (the equivalent for pool) that they then licensed to other operators.
Topgolf & Poolhouse own the respective technologies (cameras, tracking, software, games) and install it in someone else’s venues. The operator pays a recurring fee. The technology companies never pay rent, stay asset-light, and collect scalable revenue.
The Sports Club Software Play
To capitalize on the recent boom in luxury sports clubs, many sports-specific club software startups hit the market.
But there’s only one 800-pound gorilla: Clubessential-Xplor.
When the deal closed in March 2026, their combined company had:
130K+ businesses in 72 countries
$47B+ in annual payments
$900M in annual revenue
Much of that scale comes from fitness, rec and payments. But in clubs, they’re the dominant player, with one platform that runs everything from member management and billing to tournaments and member apps.
Interestingly, both sides were private-equity backed: Advent owned Xplor, and Battery Ventures and Silver Lake owned Clubessential.
Makes sense. These are quintessential PE assets:
Locked-in, recurring revenue: Because this software runs pretty much everything for a club, it’s extremely sticky. Switching costs make it so customers rarely churn.
Strong pricing power: Wealthy members are constantly absorbing greater prices. As membership dues skyrocket, so do the software bills.
Very high margins: Just look at Clubessential’s numbers in 2024. It was doing $255M in revenue while generating $135M in EBITDA. 53% margins is pretty damn good…
Now the luxury club space is getting crowded. Startups are incubating in the fastest-growing club markets – padel and pickleball – starting with point solutions and growing into platforms for their niche or expanding into the broader market.
The pitch: “Incumbent technology is outdated or generic, so use us instead.”
A venture outcome will likely be tough for many of the early-stage startups here raising capital: given the crowding, little product differentiation, entrenched incumbents and sticky customers.
But crowding creates a mass consolidation opportunity, and there are now a few sharks in the water. The growth playbook here is the roll-up: Xplor and Clubessential made 30+ deals between them, and Playtomic has made ~14 since 2020. That gives today’s startups a clear exit path.
Our Take: there’s a HUGE opportunity on the software side of the business rather than venture into its capital-intensive end markets.
There are clear incumbents that provide real exit liquidity.
And operators really don’t need that much upfront capital to scale: CourtReserve grew to 2,000+ clubs without outside funding. After nine years, it finally raised $54M from Mainsail Partners, a firm specialized in backing bootstrapped B2B software companies…