Charity, CIC, or Commercial Enterprise…

Which structure should you chose for your action sports business?

You’ve found the site, you’ve got the brand name, you’ve got some designs you are happy with and are looking for funding, but what structure will be the best for your business?

The three main structures to consider are charity, CIC or commercial operation.

The vast majority of skate parks in the UK are charities. This is because the traditional model of a skate park isn’t a particularly viable proposition and many have historically been run by hobbyists.

There are some fine examples of well-run skate parks which are charities out there, including Adrenaline Alley, Mount Hawke,and Flo.

And, of course, the ultimate charity-based skatepark is F51, which bills itself as the world’s first multi-level skate park and also includes climbing and a boxing centre. The iconic project cost a cool £17m and was funded by the philanthropic ex-Saga boss,Roger de Haan and is located in Folkestone.

Skate parks these days are combatting the viability challenges by adding other facilities, trampolines, climbing, inflatables, you name it, all in the hope of a better chance of survival. And as a result, a new wave of skate park operations have cropped up, including Graystone Action Sports and The Asylum,  which are all commercial enterprises, capitalising on the explosion in action sports as a result of the inclusion of skateboard and BMX in the Olympics and

In short, the options are as follows:

Charity

Established exclusively for public benefit, charities can’t make profits and any money raised has to go towards achieving their aims. A charity can’t have owners or shareholders who benefit from it.

Facilities will receive business rates relief, up to 80%. And there shouldn’t be any corporation tax to pay.

CIC (Community Interest Company)

CIC is a non-charitable limited company which exists primarily to benefit a community. There are limits to how much its shareholders can take and an ‘asset lock’ means that the company’s assets will only be used for its social objectives and therefore cannot be sold on, providing reassurance to investors and the wider public. The Loading Bay in Glasgow is a successful CIC.

Commercial Enterprise

This is the ‘for profit’ option. At the end of the day the profits are all yours, if there are any, but you will find very little assistance from the government and sourcing funding from national governing bodies, such as Skateboard GB and British Cycling, as well as grants from the National Lottery and Comic Relief is virtually impossible – see ‘Funding Your Action Sports Business’

Bouldering centres tend to be commercial enterprises, which have a strong visionary front man and are backed by a wealthy individual or private equity firm. The bouldering model is more akin to the traditional gym model (ie member subscriptions) and more stable future revenue streams and, therefore, potentially more investablefor traditional funding sources. Which is one reason the number of bouldering facilities in the UK has exploded in recent years, with over 300 centres now in the UK, with the main operators including Rockover, Parthian, The Climbing Hangar and The Depot.

For advice on which company structure is best for you, speak to us at Pier to Pier Action Sports Consulting today.