The Business Love means nothing to you -- scorewise, that is. Neither does working your way up the corporate ladder, since you were born for a tennis court, not a conference room. So ace this serve: an eight-court tennis facility in suburban Atlanta. One hundred family members ante up $60 monthly (on top of a $200 initiation fee) to play year-round on this club's six clay and two hard courts. Other draws: a small pool, a log-cabin clubhouse, and 4.5 landscaped acres, with room for two additional courts. There's also a 16-year $178,000 assumable Small Business Administration loan. The owner, a nonplayer, wants out because he's failed to achieve the club's potential.

Financial Summary

1993 1994 1995
Gross revenues $126,507 $133,500 $141,936
Recast earnings before $91,176 $95,322 $97,973
depreciation, interest,
taxes, and owners' compensation

Price $345,000. (With $80,000 down, the owner will finance $87,000 over five years. Also, 4.5 adjacent acres are for sale at $100,000.)

Outlook There's plenty of potential, since the locals are tennis crazy, as evidenced by a nearly 50% increase in the Atlanta Lawn Tennis Association's membership -- currently around 76,000 -- since 1988. But competition is nearly as fierce as at the U.S. Open: since there are more than 1,100 facilities in the area, monthly club rates stay low. Ritzier facilities can get away with initiation fees as high as $5,000, but the way to boost revenues here is by signing up lots of new members and then giving them plenty of pricey lessons.

Price Rationale You might score best by looking at this business as a real estate play, with land worth about $150,000 and the courts another $160,000. But if you try to analyze it as a business deal, it's as chancy as a 6Ñ6 tiebreaker. Here's why: Valuation experts advise separating the real estate from ongoing business operations. To do so, first make a "fee simple" valuation of the club's real estate by calculating 10% of its value. That sum, $31,000, is its lease value; a successful business should earn a return on investment at least double that in order to justify its risk. But an income-based valuation (which looks at this club's historical, rather than potential, earnings) shows it netted only about $98,000 last year. That's scarcely enough to cover your target return on investment, the financing costs on the purchase and the SBA loan, and an owner's or manager's salary.

Pros Some real upside potential if you combine tennis skills with marketing and financial-management savvy.

Cons The tedium of all those beginners' clinics. If you can't handle the pace, all that love really will mean nothing. Ping-Pong, anyone?

-- Jill Andresky Fraser

Inc. has no stake in the sale of the business featured. The magazine cannot confirm the accuracy of financial or other information offered by the seller. Inquiries should be directed to Glen Coatney at 770-495-7558. n