RockSport Holdings, LLC

The sport of indoor rock climbing gained momentum nationally over the last 25 years and is already well established around the world.  Beginning as a fringe activity  the 1960’s in Yosemite, Rock Climbing in general has become an activity many experience as some time in their life, and indoor climbing has become a mainstream activity. We are thrilled about the prospect of building the premier modern, indoor climbing gym to fill an identified market gap. Along with the “climbing community”, the data shows Americans, especially younger americans, value experiences and lifestyle over stuff. People who are health conscious, but weary of another treadmill or stair climbing session, will find that rock climbing provides this alternative fitness experience. 

 The assumptions and estimates utilized in our business model were gathered from several sources including various wall manufactures, industry groups, websites, and conversations with climbing gym owners. While we expect some of the figures to change during the process of refining our concept, the goal of our envisioned facility remains the same. The focus of our design will provide a climbing experience that will stimulate, attract and build a community of rock climbing enthusiasts. We envision the location becoming a prototype for expansion over 5-7 years.

Market

Indoor Rock Climbing grew at an incredible rate in the United States until the COVID Pandemic. The portrayal of rock climbing in media, such as the documentary Free Solo, coupled with its addition to the Olympic Games in 2016, have contributed to indoor wall climbing's mounting popularity. Despite strong growth occurring over the majority of the period, COVID-19 significantly harmed revenue, offsetting prior growth as gym attendance plummeted following mandated gym closures. Even with the slowdown revenues grew from $381 million in 2016 to an estimated $600 million in 2023 and from 314 gyms to 468 according to IBISWorld. States and Canada. Over 5 million people participated in either sport climbing, bouldering or indoor climbing last year, ranking climbing seventieth on the list of the top 111 activities in America — just beating out gymnastics, track & field and a number of other traditional sports.

 Mission

RockSport’s mission is to provide the highest quality indoor rock climbing facility in HML, providing residents and visitors with a place to pursue adventure, seek new challenges, grow personally, socialize with other active people, and exercise while having fun. 

 

Our gym will offer patrons affordable access to high-quality rock-climbing walls as well as supporting programs and amenities, including climbing lessons, youth programs, special group programs, outings, competitions, fitness classes, weight training equipment, locker room facilities and a pro retail shop to purchase climbing gear and other merchandise for the outdoor enthusiast. 

 

These services will help introduce new climbers to the sport, while also providing new and challenging opportunities for returning climbers to enjoy our facility. This will ensure that all our clients will have a fun and memorable experience, returning often to become part of the ROCKSPORT Climbing community, and bringing new climbers along with them. 

·       Reputation: All of the below items will be in light of the fact that reputation is the most important ingredient to long term success. Patrons must have an enjoyable experience and everything we do will be mindful of this Key  factor.

 

·       Facility: 

·       Location: The proposed location meets several strategic goals: 

·          Located near synergies.  

·          Proximity to major highways for regional access. Approximately 650,000 people within a 30 mile radius. 

·          Zoning: Assembly zoning classification is the most liberal in the City and allows for everything we might want to incorporate. 

·          Open floorplan allows for optimal gym design and configuration

·          Parking is sufficient with lots in front and side of building.

·          Ceiling Height at least 40 feet clear allows for excellent lead and top rope routes.

·          Economics: Availability for exconomics that fit within financial goals. 

·       Safety – Throughout the country indoor climbing gyms have outstanding safety records, and ROCKSPORT Climbing will be no exception. 

·       Community - Build and support the Hickory- Morganton-Lenoir climbing and general community by providing a safe and non-intimidating environment for all. The facility will be designed to promote socializing comfortable gathering and observation areas.  The number one attribute we will look for in hiring staff is an outgoing friendly nature to create an inclusive environment that welcomes everyone, regardless of age or experience level.  

·       Wall Design and Route Setting – Professional setters will be engaged to insure the highest quality and variety of routes and bouldering problems. 

 

·       Complimentary Amenities – ROCKSPORT will offer fitness programs and facilities including yoga and pilates (currently no certified instructor in the area), free weights, climbing specific training boards, and cardio machines.  

 

·       Environment – ROCKSPORT Climbing will be inclusive and accessible to all ages and fitness levels, from hardcore climbers to beginners. We plan to cater to the recreational climber and the elite level climber, while skillfully entertaining birthday parties, youth groups, and our corporate audience.  The layout of the facility will be pleasant, bright and open with as much natural light as possible.  

Spearheading the project, Jeffrey K. Mullis .  He holds an MBA from UNC’s Kenan Flagler Business School and 20 years experience in commercial real estate and managing closely held business interests for institutions. Most importantly, he is passionate about climbing, having begun in the sport in the late 1990's. 

Money:
Climbing gyms have high start-up costs; however, once built, they enjoy extremely low cost of sales and extraordinary depreciation benefits as the bulk of the initial capital expenditures have a useful life of 7 years or less while actually able to be used for up to 20 years. These high margins will allow ROCKSPORT Climbing to generate strong profits during its first 12 months of operation.  The depreciation benefit protects the downside for an investor who can use the tax benefit.  Full detailed projections are available for accredited investors requesting subscription documents.

ROCKSPORT Climbing plans on achieving three financial objectives in the first two years while becoming the primary center for indoor climbing in the region and identifying future markets for expansion.

: 

Total Capitalization is approximately $2.8 million and will be funded by a combination of the amount of units sold along with debt that will be non recourse to  unit holders. Should minimal or no debt be required for construction, management will assess the capital structure at operational stability, and potentially return capital to investors should debt be placed at that time.  

The majority of revenues for a climbing gym come from memberships and day passes. We hired industry professionals who developed a membership model derived from existing rock gym membership counts. They utilized a  five mile demographic ring, and the results suggest a potential for 900 – 1200 members with 13,500 sf of climbing utilizing data from 2020. We believe the potential is greater today given the growth in the target demographic in the market, and the sport in general.

 

We anticipate a heavier weighting of revenues to come from day passes initially. To allow for a margin of error, we base our revenue model on a stabilized membership count of 675 with day passes and memberships together accounting for approximately 80% of revenues. 675 memberships represents capturing approximately 75% of the market size suggested by the professional analysis.  Note we exclude any ancillary revenue sources such as space leasing and events for a margin of safety.  

We expect to breakeven with the key metric of paid memberships being approximately 450. The sales metrics are consistent with ratios published for the industry by IBIS World. This breakeven point does not take into consideration all sources of revenue we envision adjacent to the core business such as sponsored outings, and food service leases. Our expected case is 625 members based on our own demographic segmentation analysis. Industry consultants demographic modeling and anecdotal research suggests the location can reasonably expect to generate a membership count of 900-1000 For our projections we assume 450 members by the end of year 1 growing to 700 in year 3 to be on the conservative end. Based on the assumptions resulting statements of Income and Cash Flow are within the range of industry benchmarks.

 

It is ROCKSPORT Climbing goal to provide a profitable return on investment for investors commensurate with the risk involved within the context of the mission. While no one can predict the future with certainty, based on our conservative projections and structure of the business , we believe a 30% + IRR will be achieved for the Series B holders based on a terminal year assumption of 7x EBITDA as the basis for estimating value. The investor profile is someone that can allow for their equity to be tied up for at least five years, can benefit from the unique depreciation aspects of the business to shelter current income, and has an interest in Climbing itself and/or being part of something positive for the community.