Daily Mail publisher invests in fast-growing sport of padel

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The venture capital business of Daily Mail publisher DMGT has made its first foray into the fast-growing world of padel by buying a stake in Hexagon Cup, a new competition involving celebrity-owned teams.

DMG Ventures has previously invested more than £200mn in various start-ups, including online car retailer Cazoo, home valuation website Zoopla and Papier, which makes personalised stationery.

The company has now added a £1mn investment in Hexagon Cup, a Madrid-based padel competition due to launch early next year. Its founders include several executives behind Formula E, the electric motorsport circuit.

“We’ve conducted a broad analysis of the padel space, delving deeply into the driving factors behind the sport’s growing popularity and exploring which areas of padel are the most attractive for venture investment,” wrote Manuel Lopo de Carvalho, chief executive of DMG Ventures in a blog post explaining the decision. “The outcome was our investment in Hexagon Cup.”

Padel has been growing rapidly outside its traditional markets in Spain and Latin America since the start of the pandemic. A recent report by Deloitte estimated that the size of the padel sector is currently about €2bn, but set to treble over the next three years. The International Padel Federation claims there are now more than 25mn players worldwide.

Investors have been putting money into opening clubs in new markets such as the UK, the US and Germany, hoping to tap into the demand for new, convenient forms of group exercise.

The number of courts globally is forecast by Deloitte to more than double to around 80,000 in 2026. The US Padel Association believes the number of courts in America could soar to 30,000 by the end of the decade, from just 180 last year.

Padel, which is typically played in doubles in a court enclosed in glass, has been marketing itself as a low-cost and easy-to-play alternative to golf and tennis, particularly for white-collar workers in big cities. Padel courts are roughly a third the size of tennis courts, making it an appealing option for traditional racquet sports clubs wanting to diversify and entrepreneurs looking to maximise returns from limited physical space.

Lopo de Carvalho said that DMG Ventures had explored investing in clubs but was put off by the low barriers to entry and slow payback period.

Instead the company opted to pursue an investment in the professional game. He said that the Hexagon Cup, which will involve six franchise teams “owned by world-famous celebrities” competing against one another, would make a loss in year one, reach profit in year two and was expected to produce margins above 40 per cent “in the long run”.

The Hexagon Cup founders have previously used celebrity team owners to help gain attention for E1 Series, an electric powerboat racing competition also launching early next year. Big-name backers include former NFL star Tom Brady, Indian cricketer Virat Kohli, Spanish tennis player Rafael Nadal and Steve Aoki, the American electronic dance music producer.

DMG Ventures joins other investors making moves in professional padel. State-backed Qatar Sports Investments recently agreed a deal to combine its Premier Padel competition with the World Padel Tour, while the parent company of the New York Yankees baseball team acquired a stake in US-based rival circuit A1 Padel earlier this year.