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This weekend is the highlight of the US Open, as Ons Jabeur and Iga Swiatek face off in the women’s final today and Casper Ruud takes on Carlos Alcaraz for the men’s title tomorrow.
It’s also Wall Street spectators’ favorite sporting event: a place to see and be seen.
The booths in Flushing Meadows, Queens, are filled with Wall Street titans and top executives of American companies. Chairing the event is Jamie Dimon, chief executive of JPMorgan Chase, the Open’s primary sponsor, which welcomes clients from Silicon Valley, Miami and virtually everywhere in between. Long-time tennis fan Bill Gates regularly attends. Virtually every major Wall Street bank has a private suite or courtside seating for entertaining. Hedge fund moguls are also there, led by Bill Ackman, who is such a tennis fan that he built a court on the roof of his office and has personally sponsored players. And then there are the power players in attendance like Michelle Obama and Jon Bon Jovi who were sitting courtside Friday night.
And yet, the tennis business – judged by Wall Street standards – looks more and more like a bankrupt company.
If this were a corporation, activist shareholders would have already descended, calling for restructuring. In fact, some do – raising the prospect of a turnaround effort or else the risk that a competitor will emerge to steal tennis players in the same way LIV Golf sought to upend the PGA Tour.
As the Open final approaches, DealBook spoke to some of the top agents, financiers and insiders to take stock of professional tennis, an industry that has historically been opaque and unequal. We started by getting an idea of the terrain Matthew Futtermana veteran sports journalist who covers tennis and the business behind it for The New York Times.
“A crazy situation”
What is going on with tennis as an industry?
It really depends on who you are. If you are a big star, in the top 20 or 30, you have a pretty good life: you have sponsors, you can afford to have a good team around you, coaches, physiotherapists, hitting partners .
When you go below this level, it becomes much more difficult and you start to worry, especially once you drop below the top 60 or so. “Can I make enough money to pay all my overheads?” » If you’re outside the top 80 and certainly the top 100, you might break even, but chances are you won’t.
How does this compare to other sports?
It’s a bit of a crazy situation given the popularity of tennis. In many countries, it is the second most popular sport and boasts megastars who are among the highest paid athletes in the world.
Tennis is a $2 billion business. But the industry can only support around 100 players. If you’re the 50th or 60th best player in basketball, you’re probably making at least $12 million a year, assuming you’ve been in the league for a few years.
So what’s going on?
There is a bureaucracy in this sport that does not exist anywhere else. It is managed by seven organizations: the four Grand Slam tournaments; the WTA tour for women; ATP for men; and the International Tennis Federation, the world governing body, which oversees the Davis Cup and the Olympics and is involved to some extent in the Grand Slams.
Each of these organizations has its own CEO, its own management levels, and its own public relations staff, and there is a lot of overlap and overhead. You support many ways of life there. From a gamer perspective, people pay money to see them. But the money these players produce will pay many senior vice presidents. They often wonder: are these organizations designed to serve players or to serve themselves?
I was speaking with an executive from BNP Paribas, probably the largest tennis sponsor in the world. He said: I’m a banker, so I’m used to dealing with a lot of bureaucracy. But it’s a bit like running a bank in the United States: you have to deal with the Fed, the SEC, the FDIC and this whole alphabet soup of organizations. You can kind of justify it in banking, but in sports, do you really need all that bureaucracy?
What are the chances of a disruption like we’ve seen in golf, with a rival league funded by the Saudis?
It’s certainly possible, but it would be more difficult.
It may take a lot of players saying they no longer care about playing the four biggest tournaments. Or, the 10 best players decide to play only with each other.
As soon as you stop playing high-level tournaments, your ranking drops. This affects your seed and who you face in the first round. It would be possible to organize some events, but I don’t know if it is possible to select enough top players each year and create a rival tennis circuit.
Is there a better way?
The industry remains heavily dependent on ticket sales, with the US Open bringing in about 85 percent of the United States Tennis Association’s revenue last year. (Ticket resale prices climbed above $9,000 for a seat this year.) The sport brings in just 1.3 percent of total global sports media rights, even though the The value of televised sports is boomingaccording to a report written by the Association of Tennis Professionals.
“The players do their part, but the sport itself doesn’t help,” said Stuart Duguid, who started the management company Evolve with Japanese tennis star Naomi Osaka, his longtime client. “He hasn’t really innovated as much as he needs to to keep the next generation engaged.”
Critics say certain quirks of tennis discourage the younger generation – for example the US Open’s irregular tee times or five-set men’s matches that can stretch until the early morning.
“It’s difficult to determine whether we’re actually growing the sport in terms of adding new fans,” Mr. Duguid said. “And I think the fan base needs to get younger – and I think we need to find better ways to share content.” (He says he hopes for docuseries Netflix is working on following tennis stars will increase interest; his client Nick Kyrgios is featured in the series.)
Other supporters of the change include Mr. Ackman, the billionaire investor, who threw his support behind the project. Professional Tennis Players Associationwho would negotiate on behalf of the players on money, scheduling and other issues.
“Why should players be forced to play until 3 a.m., let alone in an individual sport? Mr. Ackman wrote on Twitter Thursday after the US Open match between Mr. Alcaraz and Jannik Sinner lasted more than five hours. “Imagine if boxers had 5-hour fights, then had a day off before having to box again. This is why we need @ptpaplayers. (Our Andrew Ross Sorkin interviewed Mr. Ackman on CNBC this week.)
Like other sports, such as WNBA basketball, the women’s tennis circuit has faced its own financial challenges. Despite equality in major championships, equal pay remains a fight. WTA suspends tournaments in China after the death of Chinese tennis star Peng Shuai. He is reportedly in talks for an investment from the private equity firm CVC Capital Partnersits first external capital.
“Raising a lot of money to distribute equal rewards should be applauded, but it also needs to be supported,” Duguid said. “We need to invest more in the development of the game. We need to invest more in the promotion of these young stars.
Balancing success on and off the field
Unlike players in other major sports like basketball and baseball, tennis players do not have multi-year contracts and their salaries are not guaranteed. (A study by the ITF, the governing body, found that 14,000 players who participated in professional tournaments around the world in 2013 won less than $1 doing it.) A tennis player’s salary comes from endorsement and sponsorship contracts. Roger Federer, who is recovering from an injury and has not played competitively for over a year, is still the highest-paid tennis player in 2022, according to Forbes, bringing in $90 million off the field. In second place is Ms. Osaka, with $55 million in non-court earnings. (Mr Federer has sponsorship deals with Uniqlo, Credit Suisse and Rolex, and Ms Osaka has offers with brands like Sweet Green, Louis Vuitton and Nike.)
With so many branding opportunities, Tony Godsick, Mr. Federer’s longtime agent, said he had seen players accept any deal offered to them because “you never know if you will return to the winner’s circle. .”
“But if you chase every dollar and every opportunity, you’ll have a short career that probably won’t turn out as good and successful as you’d like,” he said.
Mr. Godsick, who spent 20 years at IMG before leaving in 2012 to start boutique agency Team8 with Mr. Federer, believes the days of big agencies representing big-name players are coming to an end, singling out Ms. Osaka and Rafael Nadal like other tennis stars who have their own agency.
“People are looking for stock deals, and they’re looking to do unique deals, and maybe they’re one of only ones rather than one of many,” he said. At larger agencies, he said, “it’s just constant transactional goals.”
“If tennis were a stock, I would go long in it.”
Adam Pasick contributed to today’s DealBook.
What do you think? How can tennis repair itself? Let us know: [email protected].
