“Right now I am in a good relationship with Andrea Gaudenzi and Massimo (Calvelli). I’ve known them for a long time. They are trying to do their best. Obviously Andrea has a good project in mind. I hope he’s going to accomplish that. This association is not intending to hinder the process of a realization of his project.” – Novak Djokovic
As Djokovic and Vasek Pospisil take the first steps towards the founding of
a players’ association, new ATP chairman Andrea Gaudenzi has been focused on building a blueprint for the future.
Open Court has seen the new, confidential 92-page strategic plan, billed as “a new mission and vision that focuses on putting the fans first and delivering sustainable long-term growth for our entire sport.”
At first glance, the key to its success relies on centralization, the digital revolution, and grabbing a bigger piece of the media/betting/streaming/data rights pie.
But above all, it requires every stakeholder – extremely wealthy top players, wealthy Masters 1000 tournaments, and everyone else – to potentially sacrifice some at the front end for a big (but hardly guaranteed) payoff on the back end.
As Gaudenzi put it in the 92-page document, it “requires a mindset adjustment, putting individual interests to one side in order to raise the bar for the entire sport.”
That’s a big ask.
Two phases: the ATP – and beyond
Both phases of the proposed plan are challenging.
The first involves the ATP getting all its ducks in a row from top to bottom. And in the context of the players, led by Djokovic and Pospisil, mobilizing to increase their own power and earning potential within the structure, it doesn’t seem the interests are currently aligning.
Now, the strong pushback from Gaudenzi and the ATP executives (with the support of Roger Federer and Rafael Nadal, among others) of the so-called “player revolt” makes a little more sense.
Phase 1 – a 50-50 profit-sharing model
The ATP wants to “generate transparency and trust between players and tournaments through a 50- 50 profit sharing model, for a fair and sustainable long-term growth formula.”
This involves the tournaments (for the moment, in the very short term, the highly profitable Masters 1000s), to undergo a comprehensive, independent financial audit and share that information with the Tour and players.
That’s something the players have been asking for, for a long time. They feel that the true revenues of the tournaments have been hidden from them, thwarting them in their quest to get what they consider a fair share of the pie.
Unfortunately, this doesn’t apply to the Grand Slams. And, as previously mentioned, the Slams generate 58% of the revenue. And it’s that piece of the pie that’s rightfully most coveted by the ATP Tour players. At the moment, according to reporting, the men and women share only about 15 per cent of that pie.
The 50-50 split kicks in once the tournaments have covered all of their expenses, including a base prize-money formula that will increase by 2.5 per cent a year.
Transparency key for Masters 1000 tournaments
If the tournaments don’t cover those expenses, there is no profit to share. If they operate at loss, that base prize-money amount could be renegotiated downward. The players would have to have complete trust in the figures released by the tournaments to buy into this. So far, that has not been the case.
The Masters 1000 tournaments will be the first to implement this. But not
individually; as a collective. Using a model of a two-year average of net income before taxes, that net income would be split 50-50. The proposed split will be based on historic data; for example, the 2022 split would be based on the financials for 2018 and 2019.
Any profit sharing would only go to the players who actually took part in those events – i.e., the top 50. Down the line, the “intention is to further broaden the scope of the bonus pool” to include more players.
The trouble with Phase 2
For the plan to work in a “one sport, same fans” approach, all of the stakeholders have to work together.
The challenge in that is that the Grand Slams generate 58 per cent of the total tennis revenue. And within that category, the four individual events are uniquely focused on driving up their own profits.
The first phase, with a shorter timeline, has the ATP aligning the interests of its own tournaments and players.
The second phase will require total collaboration among the seven entities of world tennis – including aggregating the media rights of all the various stakeholders. A working group has been put together to delve into this – the urgency only magnified by the current pandemic. But there is no guarantee of this – and no time frame to make it happen.
The concept of better distributing revenues through the “tennis ecosystem”, so that the lower-ranked and ITF players have a better opportunity to at least make a living playing the sport, is only the third and final element of Phase 2.
Which is to say, it remains fairly low on the totem pole no matter how much lip service is paid to it.
A lot of money on the table, and an outdated focus
Tennis ranks fourth in popularity worldwide among all sports, after soccer, basketball and cricket, the report says. And yet, it generates only 1.3 per cent of the total global sports media rights (soccer, on its own, gets about 40 per cent of the total).
Meanwhile, tennis’s $2.2 billion revenue pie is almost equally split three ways between ticketing, sponsorship and media/data rights. The ticketing slice has the lowest upside; yet the sport’s investment, overall, is heavily skewed towards increasing that with infrastructure investment at the various events.
Of the major sports, it gets the biggest percentage of revenues from ticket
sales – and by far the lowest percentage from media/data rights.
One Sport, Same Fans
That’s the motto. And the plan recognizes that the business is changing in
terms of how the fans consume it.
Only 55 per cent of that consumption is live sport, per the report. Highlights now make up 30 per cent of it, and 12 percent is “off-field content”. It’s an amazing shift, when you think about it. And if nearly half of the way people watch tennis is basically unrelated to the matches themselves, digital takes on increasing importance.
The plan calls for the creation of ATP Studios, a centralized production unit specializing in short form and off-court content, in collaboration with the players. (In other words, the most in-demand players have to give more of their time, for free, to “grow the game”).
Serena, Fedal, Djokovic rule the social bandwidth
The urgency in implementing the broad chances laid out in the plan is understandable. At the same time, the tours have – at best – a few years before their most iconic athletes wind it up.
On the ATP side, the “Big 3” have the overwhelming share of followers across the various platforms. Even older, physically compromised players like Andy Murray and Juan Martin del Potro have far more significant followings than the generation coming up – including the four US Open semifinalists in action Friday.
On the WTA side, it’s even more skewed – there is Serena Williams, and the rest. The second most popular female tennis player with the most visibility in the digital sphere … Genie Bouchard.
Expanding the Masters 1000 tournaments
Generally, the Masters 1000 tournaments have 56-player draws (48 in the case of the Paris Indoors). The two “Sunshine Double” tournaments, Indian Wells and Miami, have 96-player draws and take place over 10 days – heavily skewed towards the back end of those periods.
For a while now, Masters 1000 tournaments like Shanghai and Rome have lobbied for bigger draws. And it appears they will get their wish.
The plan will expand many of the Masters 1000 tournaments to 11 or 12 days.
The benefits are many, including having some of the top players competing on the opening weekend – and having two weekends in play.
In return, there would be rest days during those events. As it stands now, some top-ranked players might not swing into action until the Wednesday of the week. And that can mean five matches in five days against top-flight competition.
Bigger draws will mean more playing opportunities at the top level of the ATP structure.
(They also will cause serious headaches for the WTA Tour, which shares the events in Madrid and Rome).
Rogers Cup affected
From the proposed 2022 schedule, it appears this will affect the Rogers Cup.
The Canadian event would begin the first week of August and run through the second week. The Cincinnati event would begin during the second week and fill the third week.
It would be a little like the Indian Wells-Miami double, except without any break in between.
Madrid and Rome would also be expanded – but without the overlapping week. Shanghai also would be expanded.
It would require a commitment from the top players to play an extra round at four additional Masters 1000s tournaments in a year.
More “second-week” 250s
Along with that expansion, will come increased opportunities in 250-level events during the second weeks of those expanded events. You can see it in action this week, with the Kitzbuhel tournament going on during the second week of the US Open.
In recent years, there have been Challenger-level tournaments during the “second week” of Indian Wells and Miami. But in the current structure, the Masters 1000 events have held onto some exclusive territory.
Those proposed 250-level events would be subsidized by the ATP.
The “second-week” ATP 250 events would go on during all of those expanded Masters 1000 events – except, obviously, the Rogers Cup as it butts right up to Cincinnati.
There is also talk in the report of potentially adding a 10th – but non-mandatory – Masters 1000 event on grass. How that affects the currently dueling – but seemingly successful duo of Queen’s Club and Halle remains to be seen.
Masters 1000s will pay more
The top-tier events would pay a fee, which would be used for expansion of the digital rights and the bonus pool, as well as including a contribution towards the more financially challenged 250s.
In return, they would get category protection guarantee (30 years in the case of the Masters 1000s, 15 years for the 500-level events), along with the possibility of increased revenues if the plan is successful.
The Masters 1000s would also have to give up some of their equity in ATP Media, the separate media arm of the Tour which runs the pooled media rights for the Masters1000s – and also acts as an agent for some (not all) of the events at the 500 and 250 levels.
The plan attributes the increases in audience and revenues from the Masters 1000 tournaments to a “centralized model” – thus, the impetus to try to centralize the rights model for all of its events.
Talent, not centralized model is the key
The simpler truth, however, may be that those tournaments likely continue to do better because all of the top players usually play them – notably, in recent years, the “Big 3” That is not the case for the lower-level tournaments, no matter how centralized the rights are.
The “let’s all work together” concept means, in short, that the ATP wants
its highly profitable Masters 1000 tournaments (and it should be noted, within that alliance are 10 entirely separate, profit-making entities in a number of different countries and with notably different mandates) to suck it up, up front, for the long-term potential of making even more and for the betterment of tennis as a whole.
This is where the ATP’s proposal dives full-on into the betting industry.
It has always been the elephant in the room; the restrictions on individual
tournaments increasing revenue through sponsorship from betting concerns has been a sore spot between the Tour and the smaller tournaments for a long time.
But the plan wants to regain control of data rights. It wants them all under one roof, even as it reports that audience figures for the smaller events have increased 20 percent since 2017, broadcast hours 16 per cent – and net sponsorship 96 per cent under the current model.
An arm called “Tennis Data Innovations” is set to exploit “data rights in the betting and non-betting markets, and streaming rights in the betting markets.”
They will start with the ATP. They want to add the WTA and Grand Slams and ITF (which has its own $70 million, five-year data deal with Sportsradar).
In exchange for the tournaments opting in, the ATP believes a “centralized and professional structure will increase revenues, reduce duplication, drive efficiencies and, most importantly, provide an optimal experience for fans worldwide.”
Gaudenzi believes they can double data rights revenues in 3-5 years.
An advisory board that includes executives from Apple Music, Facebook, bWin and Amazon have signed off on the plan.
The lower-ranked will have to wait
The plan doesn’t address whether the $270 million in current annual prize
money should go more to the players who bring the most market value and deserve more, or should be spread out more evenly “for the good of the game”.
That remains an unanswerable question, in terms of getting everyone to buy in.
But Gaudenzi’s take on this is that they have to focus on growing the pie, before they address the question of how many people can get a varying-sized bite of it.
If there’s more for everyone, in other words, that means the lower-ranked players can get more, without the top players feeling they are somehow losing out.
He also believes that despite the current pandemic and the financial challenges it has created across the board, it’s actually a good time to accelerate the change he feels is necessary. The climate means all of the sport’s governing bodies are feeling the pinch and thus seeing the benefits of a collaboration.
The bulk of the increased initial investment comes from the Masters 1000 tournaments, and Gaudenzi believes “those events are well placed financially to step up.”
(Tennis Canada would like a word … )
Gaudenzi also wrote that the ATP is on solid footing financially, and helped by a new data deal with IMG that is more advantageous to the ATP.
Masters 1000s must open the books
The plan provides for the Masters 1000s to increase prize money and bonus pool money from the first year – obviously, the increase in the draw sizes makes that a given.
But the plan also posits that “generally speaking, the Masters 1000s’ average
net income before tax is fairly close to current prize money levels.” (i.e. –
there isn’t much that can be shared in that proposed 50/50 plan).
With the mandated independent audit of those tournaments (due by the end of this month), Gaudenzi hopes to ensure that all of the expenses accounted for by those events to get to that “break-even point” (i.e., nothing to split 50-50) are strictly related to the holding of the tournament itself, “not other areas of business or organization.”
In other words, they’re trying to get at the true profits of those events, to squeeze out a bigger share, and thus share it with the players. Let’s see if that happens.
Eventually, the 500s and 250s will also be run by that model. But for there to be appreciable revenues to share with the players, the new plan has to work – especially at the 250 level.
At the moment, the 500s will continue with the current revenue-based prize-money formula. The audit process to increase the transparency is expensive, and those tournaments can’t yet afford it.