This article was originally written for The Student Lawyer. You can find it here.
This July I was very fortunate to get center-court Wimbledon tickets. I was ecstatic. I had dreamed of attending Wimbledon my entire life. Upon getting there, I was in awe of the bustling grounds and beautiful mix of concrete, wooden boards, grass and purple and white flowers. The entire tournament was steeped in tradition. I had to wait in a queue to enter the court because a point was being played. When I entered Centre Court, there was mostly silence as the points were being played. Except for the frequent ‘Come on Novak’ or ‘Let’s go Andy.’ It was unlike any other sports event I had previously attended. The tradition that permeates Wimbledon is one of its unique selling points. However, there are elements of the business of tennis that make it less attractive. Most notably, despite the glamor of the Grand Slams, the fact that the majority of tennis players struggle to break-even. This article will look at what’s at fault (pun-intended) with the business of tennis and what can be done to amend it. What’s wrong with international tennis at the moment? Internationally, tennis has a complex governance structure. There are seven organisations responsible for managing the sport globally. The Women’s Tennis Association (WTA), The Association of Tennis Professionals (ATP), The International Tennis Federation (ITF), the US Open, the Australian Open, the French Open and Wimbledon. Seven organisations running one sport. Much of the $2 billion brought in revenues yearly by the sport is spent on overheads, as opposed to the core of the business – the players. This makes running tennis an excessively bureaucratic exercise. An executive from BNP Paribas, a sponsor for many tournaments most notably Indian Wells, known to some as the 5th Grand Slam, questioned the need for that level of bureaucracy in the sport. Andrea Gaudenzi, chairman of ATP agrees that the fractured governance of tennis is frustrating its progress and operations. Those who are most affected by this bureaucracy are the players. Not necessarily the top 20 in the world. Djokovic, Federer, the Williams’, Berretini, Swiatek, just to name a few, are able to do far better than break even considering the prize money they earn and the various endorsements and sponsorships they get. The majority of professional tennis players struggle to break even. According to Matthew Putterman, a sports journalist who has covered tennis and the business of the sport for decades, for the bottom 80 of the top 100 players, breaking even is a possibility and not definite. Although, to their credit during the pandemic the ATP, WTA and ITF set up a fund to support lower ranked players. Nonetheless, this was only temporary relief. It could be argued that this is just the nature of the sport that the lower ranked players aren’t able to earn much money. The nature of business in fact. It is a competitive industry and only the top players can earn lucrative amounts of money. Let’s compare tennis to golf. A good comparison because in both sports the players are legally independent contractors/self-employed. The 50th best golf player in the world, Taylor Moore, earned $4,062,261 in prize money. The 50th best ATP player as of 26th July 2023 , Emil Ruusuvuori, earned $2,987,885 in prize money. A notable difference between golf and tennis is their governance structure. Golf is ran by the Professional Golfers Association(PGA) , LIV, International Golf Federation. Noah Rubin, at No.125 in the world, having competed in two Grand Slams made about $225,000 in prize money. This would be about $600,000 less than a player in the PGA Tour in the same period. Yet after paying for his expenses, he only had $15,000 of his earnings. This seems absurd in an industry that brings in around $2.5 billion in revenue a year according to tennis executives. But much of this can be attributed to the structure of global tennis. Tennis players receive about 15-25% of the revenue of the sport – this is approximately half of what athletes in other sports receive. What can be done about it? Combine the tours A point of contention when it comes to combining the tours is how the revenue is to be distributed. Like most other sports, the men’s game brings in more revenue than the women’s game. In 2008, Larry Scott who was WTA President at the time proposed a potential revenue earning $1 billion merger to the ATP. However, the ATP players disagreed. Some of the players viewed the merger as only benefitting the women and taking resources from them, despite them bringing in more views and hence more revenue. ATP revenues account for a quarter of the revenues brought in by tennis overall. Andy Murray mentioned that when speaking to some tennis players about equal sharing, they said that they would rather have no raise in their salary than earn the same amount as the women. It is evident, from the statistic above that tennis players only receive around 15%-25% of the revenues from the sport, that some change in how the organisation distributes its revenues would be beneficial to all players. Combining the tours would attract a greater number of spectators for the sport. According to an ATP report, tennis has 1.3% of global media sports rights. This means that tennis is highly reliant on ticket sales for revenue. By combining the tours, a larger amount of fans would be attracted to the games. After all, the Grand Slams are the most popular events to watch. While their popularity can be largely attributed to the fact that they are Grand Slams, it is also significant that they have both male and female players. The more matches happening attract a wider group of fans. There is high value in the media rights of combined tours. The United States Tennis Association (USTA) is being paid$770 million by ESPN over an 11- year period from 2015-2026 to broadcast the U.S Open. Recently the WTA and ATP agreed to merge their marketing departments. Professional Tennis Players Association Novak Djokovic and Vasek Pospisil started the Professional Tennis Players Association (PTPA) to ‘reform and grow the business of tennis.’ Ons Jabeur and Paula Badosa as well are part of the executive committee of the PTPA, among others. Among their principles are shared success, employment opportunities, equitable compensation and new opportunities amongst others. A video elucidating the equitable compensation principle highlighted that the out of pocket expenses and the low share of revenue received by the players means that only the top players can be supported. The PTPA is affiliated to the Winners’ Alliance, a for-profit organisation that generates off-court commercial opportunities for tennis players and their agents. They recently partnered with Zoomph, a digital intelligence platform, to analyse the value of player’s digital brands and social media presence. It is hoped that this will provide players with helpful insights on how they can better commercialize their brands. The PTPA has as well gotten the support of investor Bill Ackman. While investing much in tennis, Ackman has criticised how the sport is run. He said in an interview with the New York Times “tennis is an oligopoly, and oligopolies are not innovative, and nonprofit ones are even less innovative.” Private equity An alternative to generate more revenue for tennis is private equity. CVC recently struck a deal with the WTA whereby CVC would invest $150 million in a new commercial venture to boost the profile of WTA players. It is alleged that the ATP has as well been in talks with the Saudi Public Investment Fund about investment into the game and various events. It seems like private equity is playing a bigger role in world sport. One has to look no further than the recent creation of the LIV Golf tournament by the Saudi PIF and the subsequent merger with the PGA, the ownership of Manchester City, Newcastle in the Premier League, the recent sale of a majority stake in McLaren to the Bahrain Sovereign Fund. Private equity could be a solution to the majority of tennis players woes about breaking even. There is much interest in investing in tennis as well. Bill Ackman said that “this is definitely the time to go long on tennis, 100 percent.” Employ players and create teams – like F1 An even more radical option could be to change the structure of tennis as a game to generate more views. Instead of having individual players, there could be tennis teams that compete collectively against each other. Not only would it be easier for fans to keep up to date with the leaderboards and make the sport more competitive, but also as part of a team these players could receive a salary as opposed to relying on prize money won individually. Some have also been considering shortening the game so the risk of 4-hour matches is less. Although, those are nice to watch once in a while, and inevitable if Djokovic is in a Grand Slam final it seems. Conclusion Tennis is an incredible sport that is known and respected worldwide. Despite the fractures in its’ governance, or differently phrased the nuances and division in its leadership, those organisations have contributed to building the sport into a $2.5 billion business. Organisations like the PTPA are fundamental to advocating for better remuneration and treatment of tennis players. Nonetheless, leaders across the sport agree that there needs to be greater unity between the different organisations running tennis. By making some of the suggested amendments to the business model of tennis, not only will the sport bring in more revenue and be more enjoyable for fans but also, crucially, professional tennis players beyond the top 20 are likely to gain an advantage.
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