Shortcuts / 23 January 2024

The business of tennis

It’s January, and the Australian Open is in full flight – and organisers are talking about what more the tennis tournament and the sport could be. So in this Squiz Shortcut we’ll scope out how big the top tour is now and have a look at the proposals for growth.

This is timely because January means tennis…
For so many Aussies, that’s right. The summer of tennis kicks into gear in Early January with tournaments around the country, culminating with the Australian Open in Melbourne.

How did the Aussie Open start?
It was first played in Melbourne in 1905 as the Australasian Championships – and it was also held in Sydney, Adelaide, Brisbane, Perth, as well as in New Zealand – we guess that’s the regional bit in ‘Australasian’…

When did it settle in Melbourne?
In 1972 in Kooyong, and then in 1988 it moved to Flinders Park where it remains today.

And it’s one of the big tournaments on the world circuit, right?
Yep – it’s the first of 4 Grand Slam tournaments played across the year. The others are the French Open from late May to early June, Wimbledon from late June to early July, and the US Open from late August to early September.

Were they always the big 4 tournaments?
There’s a whole history behind how the modern tennis tour came about… We’re currently in what’s called the ‘Open Era’ – and that’s because since 1968, all players – amateur and professional – are allowed to compete at the four Grand Slam events.

So that’s what the ‘Open’ bit of the Australian Open means…
You got it – it’s not that it’s played on an outdoor court.

What was before making them ‘open’ tournaments?
Before 1968, only amateur players were allowed to compete in those big tournaments. There was a strong professional circuit, but this change brought things together and made these tournaments the pinnacle of the tennis calendar.

And did it bring together the men’s and women’s circuits?
They play at the same tournaments, but the thing to know is that they are run by different organisations – the ATP for the men and the WTA for the women.

But they follow the same tour, basically…
They do. Across the year there are about 60 tournaments in 30 countries, and if you’re a player, your access to those tournaments is dictated by your ranking. And your ranking is dictated by how you go at those tournaments,

Talk about Catch-22…
It is a bit… But not all tournaments are equal. Take the men’s ATP tour as an example – it includes ATP 250, ATP 500 and ATP Masters 1,000 events – those categories denote the number of ranking points awarded to the champion. Grand Slams award 2,000 points to the winner.

And I’m guessing how your ranking and access to tournaments dictates your ability to earn money?
That’s right. Now, in terms of the revenue situation – tennis is roughly a US$2 billion business. But the industry can only support 100 or so players in each of the men’s and women’s comps.

Where does the money come from?
About 75% of the revenue in elite tennis comes from the big 4 grand slam events through sponsorship deals, media and broadcast rights, and ticket and merchandise sales.

How much do the players get?
About 25% of the revenue generated from the tour goes to the players. Of course, the very top players also do lucrative sponsorship deals, but they are the cream of the crop.

I can see why many say it’s a sport ripe for disruption…
This brings us to Craig Tiley – the CEO of Tennis Australia. If you’re a news junkie or a tennis tragic, you’ve probably heard of him… Tiley joined Tennis Australia in 2005 as director of tennis, became the Melbourne Grand Slam’s tournament director a year later, and has also been the national body’s chief executive since 2013.

And why is he in the news at the moment?
He’s been out and about articulating a new vision for the Australian Open and he’s said to be behind talks to revamp the tennis tour more broadly.

Let’s start with the Australian Open…
It’s a $500 million tournament, and organisers hope it will be played before a record crowd of 900,000 people this year. In terms of attendance, it’s already the biggest grand slam tournament, so hitting that 900,000 mark would be quite an achievement.

What’s his vision for Australian tennis?
To turn it into a $1 billion business – so doubling its revenue… He wants to offer players more than $100 million in prize money – up from $86 million. He says investing millions of dollars in digital transformation is needed for a better spectator experience, and they’re already onto that. He says he wants to create better experiences for those attending the Australian Open. And they’re already a bit down that road with lots of restaurants, places to watch tennis and more fun at Flinders Park.

Does he have an ambition?
He says “I want the Australian Open to be the biggest sporting event, not just in the southern hemisphere or in January, but the biggest sporting event in the world.”

Amazing… What about the tour more broadly?
Tiley’s all over that too – he’s driving a push that would see the 4 grand slams combine forces with about 10 other big global tournaments for a ‘Premier Tier’ circuit featuring the best male and female players.

How are they going to do that?
It’s going to take some money… Reports say that would be from private investment. But to make it work, it would also see tennis’s governing bodies – organisations like Tennis Australia – also having a financial stake in the circuit.

I’ve seen talk of investment from Saudi Arabia?
That’s been mentioned when it comes to funding this new venture. Keep in mind that the Saudi Government has form when it comes to disrupting sport… Through its Public Investment Fund, it’s made major investments in golf, soccer and mixed martial arts.

I remember something about golf….
Golf is a good example of where the Saudi-funded LIV tour has paid huge sums to lure top players including Australian Cameron Smith from established tours.

So they have done it before. 
And reports say Saudia Arabia wants to get into hosting big tennis tournaments – and has even proposed an event to be held in early January that would compete with, and probably hurt, Australia’s lead in tournaments.

Ah so that’s where Tiley’s coming from…
Well, maybe. Commentators say his thinking could be to get the Saudis in the tent, and offer them an opportunity to be part of this new thing, and everyone can benefit.

Hasn’t there been criticism of Saudi involvement in international sport?
Absolutely. Critics say this would be another opportunity for Saudi Arabia to engage in sportswashing –  that’s the accusation of using the fields of play to change their public image and wallpaper over their human rights record, for example.

But none of this is set in stone yet, right?
No. There’s a lot to shake out.

Squiz recommends

Reading – The interview Craig Tiley gave to the Financial Review, outlining much of this just before the start of the Australian Open, is worth reading if you’re into tennis.

ReadingThe Athletic from the New York Times first reported on the talks about a premium tour in November last year. It’s another good read if you want to know where things could be headed.

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