Pad Thai Padel · Internal · Confidential
S Quarter Service Agreement
Contract Review
Draft from Sansiri (Owner) to Golden Rulo Co., Ltd. (Operator). Two padel + four pickleball courts, Krungthep Kreetha. Target opening 1 Jan 2027.
Reviewed 5 October 2026 · Economics tested against PTP's own September 2026 revenue model · Not legal advice; Thai counsel should confirm the flagged points
Verdict: the legal drafting is fair to good for us. The money is not.
Structurally this is the best shape we could ask for: Sansiri builds, staffs, maintains, insures and powers the venue, and we keep the brand, the data, the pricing and the customers. Term, renewal options, IP and data clauses are all in our favour. The problem is Article 5. A fixed ฿450,000 a month plus a revenue share that climbs permanently to 30% of gross means Sansiri takes two-thirds to three-quarters of every baht at the revenue levels we ourselves projected. On our base case we work for roughly zero margin and carry a ฿16.2M fixed commitment over three years with no exit for underperformance.
Recommendation: do not sign on these numbers. Keep the structure, renegotiate the fee (lower floor, annual reset of the share bands, 20% cap, underperformance exit) and fix the tax characterisation and the six commercial blanks before anything else.
1. The economics
Sansiri's own illustration assumes ฿15.7M gross in Year 1. Our September proposal projected ฿6.2M to ฿7.9M for the two padel courts in Year 1, exiting at a run rate of ฿8.8M to ฿12.2M. The four pickleball courts are new and unmodelled. The table applies the contract's exact formula (Art. 5.1, 5.2, Sch. 2) to each case.
| Case | Gross revenue | Base fee | GP Share | Sansiri take | % of gross |
|---|
| Year 1, PTP base case (ramp-up applied) | 7,210,000 | 4,725,000 | 721,000 | 5,446,000 | 76% |
| Year 2, PTP base-case run rate | 10,890,000 | 5,400,000 | 1,899,000 | 7,299,000 | 67% |
| Year 1, Sansiri illustration | 15,685,200 | 4,725,000 | 2,137,040 | 6,862,040 | 44% |
| Year 2, Sansiri illustration flat | 15,685,200 | 5,400,000 | 3,137,040 | 8,537,040 | 54% |
| Year 5+, Sansiri illustration flat (cumulative past ฿70M, 30% band) | 15,685,200 | 5,670,000 | 4,705,560 | 10,375,560 | 66% |
| Year 5+, strong case | 20,000,000 | 5,670,000 | 6,000,000 | 11,670,000 | 58% |
THB. GP Share uses marginal bands on Cumulative Gross Revenue: 10% to ฿10M, 20% to ฿70M, 30% above. The bands never reset, so the Owner's percentage take rises every year even at flat revenue.
฿16.2M
Fixed base fee committed over the 3-year Initial Term (฿15.5M after ramp-up relief). No exit for convenience or underperformance.
~฿11M
Annual gross we need just to break even in the 20% band (rough: coaches 60% of academy, marketing 5%, platform 3%, team ฿1.2M).
~฿13.7M
Break-even once cumulative passes ฿70M and the 30% band applies for the rest of the term and all renewals.
30%
Share taken on coaching revenue too, although coaches are our cost. Effective take on academy money is far above 30%.
This contract inverts Model 2 from our proposal. We offered a lower floor in exchange for a share of gross operating profit above a hurdle. The draft gives Sansiri a high floor plus a share of gross revenue from the first baht, with no hurdle and no cost deduction. The name "GP Share" is misleading: Art. 5.2(b) says explicitly it is on gross revenue with no deductions.
2. Concerns, ranked
1
Fee level and the cumulative ratchet
Art. 5.1, 5.2, 8.2(b), Schedule 2
฿450k/month fixed plus 10/20/30% of gross. Bands are cumulative over the life of the deal including renewals, so after roughly year five every baht pays 30% on top of the base. Our renewal options (which are otherwise valuable) lock us into the worst band.
Ask: base fee ≤ ฿250k/month (or pure revenue share) with a 6-month ramp-up; bands reset each Operating Year; cap at 20%; coaching revenue shared at a lower rate or excluded. Alternative: keep ฿450k but drop the share to a single 10% above a ฿10M annual hurdle.
2
Three-year lock with no underperformance exit
Art. 9.3, 8.1
Neither party may terminate for convenience. If S Quarter fills slowly (new residential project, unproven catchment, pickleball unproven) we owe ฿5.4M a year regardless. Our only exits are Owner breach, prolonged court unavailability, permits or insolvency.
Ask: if Gross Revenue is below an agreed floor for six consecutive months after month 12, Operator may terminate on 90 days' notice without penalty, or the base fee converts to percentage-only until revenue recovers. Also tie the ramp-up to Project occupancy, not a fixed three months.
3
Loss-of-profit exclusion guts our remedies against the Owner
Art. 19.4(a)–(c), 9.5(b), 2.4(d)
Liability is capped at six months' base fee (฿2.7M) and loss of profit is excluded for both sides. Nearly every way Sansiri can hurt us (late handover, poor maintenance, selling the project, breaching exclusivity) shows up as lost profit. Our only recovery is documented marketing spend up to a blank cap.
Ask: carve Owner failure to hand over, breach of exclusivity (18.1) and wrongful termination out of the loss-of-profit exclusion, or agree a liquidated-damages schedule. Set 2.4(d) and 9.5(b) at not less than ฿1.5M and ฿3M.
4
Counterparty is an unnamed SPV
Parties, Recital A, 22.7(b)
The Owner is "[S Quarter Owning Entity] Co., Ltd." and may assign to any successor owner of the Project without our consent. Construction, handover, reimbursements and indemnities all rest on a project vehicle, not on Sansiri PCL.
Ask: Sansiri Public Company Limited guarantee of Owner obligations, or at minimum a deed of adherence from any successor before assignment takes effect, with our consent right if the successor is not a Sansiri Affiliate.
5
Tax characterisation is internally inconsistent
Art. 5.4(b), 5.4(c), 21.2, 22.12
The base fee is to be treated as rent of immovable property, yet 5.4(c) charges VAT on the whole Facility Fee. In Thailand rent of immovable property is VAT-exempt with 5% withholding; services carry 7% VAT with 3% withholding. Mixed treatment invites a Revenue Department challenge on either side, and lease characterisation also brings lease stamp duty on the full three-year rent.
Ask: tax advisor to confirm. Either the whole fee is a service fee (VAT 7%, WHT 3%, no lease registration question) or the base is rent (no VAT, WHT 5%, lease rules apply). Not both.
6
Renewal options may not bind a new owner
Art. 8.2, 21.2, 22.7(b)
Terms are capped at three years specifically to avoid lease registration. Under Thai practice a renewal promise in an unregistered lease is generally a personal obligation of the original lessor and may not bind a purchaser of the land. Combined with free assignment to a successor owner, our two renewal terms are weaker than they look.
Ask: Thai counsel to confirm. If characterised as a lease, register it for the full nine years; otherwise require successor adherence (point 4) and keep the "service agreement, not lease" framing consistently.
7
Six commercial blanks will be filled against us if we don't fill them
2.4(d), 9.5(b), 7.4, 7.5, 15.2, 18.2
- Pre-opening reimbursement cap (2.4(d)) and unamortised-cost cap (9.5(b)): both blank.
- Owner's free-ish peak court hours (7.4): quantity blank. Propose ≤ 10 peak court hours/month, off-peak unlimited at standard less 10%.
- Service Level Credits (7.5): 5%/10% is ฿22k–45k, no real teeth. Propose 10%/20% and trigger at more than two failure days.
- Our insurance (15.2): ฿10M is fine; confirm current PTP policy covers coaching at third-party venues.
- Non-compete radius (18.2): 3 km from Krungthep Kreetha for up to nine years. "Brand" is an undefined term. Attach a schedule of PTP's existing and committed pipeline so nothing in the Bangna / Srinakarin / Pattanakarn corridor gets blocked by accident.
8
We are judged on service delivered by staff we don't employ
7.3, 7.6, 7.7, Schedule 4 §2
Court Staff are hired by the Owner without our approval. Schedule 4 makes Service Standards an Operator obligation "delivered with Court Staff", and 7.6 lets the Owner inspect us and demand remedies. 7.7 adds a vague "shall not carry on any activity that may damage the image of the Project", which could feed a Material Breach claim.
Ask: Operator approval (not to be unreasonably withheld) of the Front Desk Lead; Service Standards failures caused by Court Staff count against the Owner; replace the image clause with an objective standard tied to the Operating Standards.
9
Operating hours cut a peak hour
7.1, Schedule 1
07:00 to 22:00 is 15 hours. Our model and our other clubs run to 23:00, and the 22:00–23:00 slot is peak. That is roughly 6% of court capacity and a larger share of peak revenue.
Ask: 07:00 to 23:00, with Owner obliged to staff and light to close.
10
Exclusivity is one-directional
18.1, 18.2
We are barred from opening within 3 km of the Project. Sansiri is barred only from hosting padel inside the Project itself, while its affiliates own many developments in the same corridor.
Ask: mirror it. No Sansiri Affiliate project within 3 km hosts padel or pickleball other than through PTP during the Term, or we get first refusal.
3. What is good and should be protected
- Cost allocation (Art. 4, Sch. 3): Owner funds construction, capex, resurfacing, staff, utilities, insurance, taxes and common charges, with an explicit no-recharge clause and "anything not listed is an Owner cost".
- Brand IP and Customer Data (Art. 13): wholly ours, per-use approval for Owner's use of the brand, Owner gets aggregated dashboards only.
- Pricing (3.3): sole discretion, with resident discounts credited against the fee.
- Term (Art. 8): 3+3+3 at our option, Owner cannot refuse a valid renewal, non-renewal carries no liability.
- Abatements (4.5, 14.3): base fee abates for court unavailability and force majeure.
- Indemnities (11.4, 19.2): Owner indemnifies us for Court Staff claims and the condition of the facility.
- Owner marketing support (2.8): Sansiri resident channels for six months. Push for twelve.
4. Suggested counter, in one paragraph
Accept the structure and the legal boilerplate. Counter on the fee: base ฿250k/month with a six-month 50% ramp, revenue share 10% to ฿10M and 20% above, bands resetting each Operating Year, coaching revenue at 10% flat. Add an underperformance exit after month 18. Carve Owner delivery failures and exclusivity breaches out of the loss-of-profit exclusion. Require a Sansiri PCL guarantee or successor adherence. Fix tax treatment as a single characterisation. Extend hours to 23:00. Fill the six blanks as above. Attach our pipeline schedule to 18.2 and mirror the exclusivity.
5. Next steps
- Rebuild the September model for 2 padel + 4 pickleball and run the contract formula against conservative, base and aggressive cases to anchor the counter with our numbers, not theirs.
- Thai counsel: confirm the tax characterisation and the renewal-option enforceability against a successor owner.
- Send Sansiri a short issues list (fee, exit, guarantee, tax, blanks) before any redline, so the money conversation happens first.
Prepared by Paquito for Nestor. Figures computed from the draft agreement and PTP's September 2026 S Quarter proposal. Break-even figures depend on the stated cost assumptions and should be replaced with real club data.