May 29, 2020

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No foolin’ – Wimbledon is cancelled, and the financial effects are now being felt

It’s April Fool’s Day, but the announcement is anything but a prank.

For the first time since World War II, Wimbledon will not be held.

It’s more than that, of course.

The announcement also means that the entire grass-court season is cancelled.

It also means that three Davis Cup and four Fed Cup regional group events scheduled for the week of June 8 are postponed.

And it also means that 46 men’s ITF events, 45 women’s events, 81 junior events and 79 seniors’ ITF tournaments from the beginning of June through the Wimbledon period – on grass, hard courts and clay courts – are also cancelled.

Wimbledon is the first Grand Slam tournament to be officially cancelled because of the COVID-19 virus. Roland Garros still hopes to have its 2020 tournament take place in late September and early October.

But it is also one of the few – perhaps even the only – tournament that has some type of pandemic insurance that will allow it to at least partially weather the financial storm.

According to the Times of London, that insurance could reap the club nearly $125 million.

Little insurance to weather storm

According to a good piece in the New York Times from Christopher Clarey, many WTA and ATP events have foregone very expensive ($200,000 – $700,000) full cancellation insurance.

“We have insurance against an earthquake or an act of terrorism and stuff like that, but no tournament I know of has insurance against this specific virus, so the insurance is gone,” Edwin Weindorfer told Clarey. His company, E|Motion, has invested significantly in new grass-court tournaments in Mallorca and Berlin this season. Those events, along with the company’s other holding in Stuttgart, were officially cancelled today.

The All-England Club’s tentacles reach far beyond just the main event and down to the lead-up tournaments. The club is working with a numbers of partners from the tournaments all the way to the installation and maintenance of the grass – a level that was stepped up significantly this year outside the U.K. as it attempted to exert a sort of lordship over the entire grass-court season.

As well, the revenue from the tournament that is turned over to the British Lawn Tennis Association helps prop up the smaller events in the U.K. that form the bulk of the grass-court season.

For the rest of the tennis world, what now will stretch to more than four months of shutdown (and no one realistically expects the tennis universe to start up again in July 13), it’s probably time to talk about … money.

New tournaments can’t debut

There has been an unusually large number of changes in the ATP and WTA Tour calendars in 2020. And now, despite all the up-front investment, those new entries will not be able to recoup those large initial investments with tournament revenue. Not only that, all the efforts they have undertaken to create buzz and generate ticket sales will have gone for naught.

A significant amount of work is being done on the Steffi Graf Stadion in Berlin, and the surrounding area, to transform it into a grass-court venue. All of that is for naught now – likely until 2021. (Photo from the bett1open website).

Notably, on the WTA side, there had been two new women’s tournaments in Germany as the grass-court season developed a very different road map this season.

The “bett1open” was to be a Premier event with over a $1 million in prize money, to be held June 13-21 in Berlin. Significant work was being done to resurrect Steffi Graf Stadium and, under the direction of the All-England Club, to turn the site into a grass-court venue.

The bett1open has not completely given up, even if an outlier grass-court event that obviously is dependent on weather conditions seems unrealistic at this point.

No tennis in Bad Homburg

The Bad Homburg Open, which had been the now-defunct WTA Mallorca tournament (which was to be a men’s event in 2020), also will not be held.

The new tournament, with German Angelique Kerber as the ambassador (she was to play in both German grass events) and the All-England Club as the owner, has announced it will not attempt to reschedule in 2020 and will only (hopefully) premiere in 2021.

The tournament’s press release stated that the tickets for the final, put on sale last December, sold out in a week. By the begining of March, it reported, four out of the seven tournament days were sold out.

The early interest from German fans was so good, they had begun discussions about expanding capacity at the International level tournament. All of that momentum is cut off at the pass.

ATP Mallorca not to be

The Mallorca grass-court tournament, which planned to make an ambitious switch from a WTA Tour event to an ATP event in 2020, won’t debut (Photo: Mallorca Championships website).

Another new tournament this season, on the men’s side, was to be a new grass-court event in Mallorca.

For the last few years, there had been a women’s tournament there – with the extra added attraction of local hero Rafael Nadal doing his pre-Wimbledon preparation on site.

But in the big grass shakeup that occurred last fall and into 2020, the Mallorca grass-court event is now an ATP event. Notably, though, it doesn’t yet have a title sponsor.

As in Berlin, the tournament has not yet officially pulled the plug on 2020. And with that, it’s asking those who have bought tickets to … be patient.

“In the upcoming days and weeks and in close cooperation with the ATP Tour and our tournament partners, we will analyze all possible scenarios for the first edition of the Mallorca Championships, including the possibility of postponement of the tournament to a later date of 2020”, explained Edwin Weindorfer, CEO of e|motion Group,  the promoter of the event.

There is nearly $1 million at stake (900,000 Euros) at that event alone.

No income for at least four months

Even in the best-case scenario, the extension of the shutdown means that tennis players will not be able to earn any on-court income for at least four months.

For all but the top-50 players, and those ranked a little below that who have been preternaturally smart with their money, it is a full-blown crisis.

And beyond the fact that the players cannot earn, it also extends to everyone around them – coaches, physical trainers, physios.

It also extends to all of the people who work at the tournaments, and vast majority of the media that covers them. The chair umpires and many of the travelling line umpires are affected. The short-term tournament staff hirings won’t happen. The suppliers to the events will lose big contracts.

It affects everyone.

Broadcast revenue not forthcoming

DAZN, the streaming service that pays significant rights fees to various sports leagues, has reportedly announced that it won’t be paying them for content it’s not getting. It also is furloughing employees.

But DAZN, as a company, has its tentacles far beyond that. Its parent company is heavily involved in tennis, both on the rights revenue side for the smaller, more needy events and the production side. And that brings us to the WTA Tour.

Wimbledon

WTA Tour with small margins

In 2017, the last year for which the WTA Tour’s public filings are available, the revenue from broadcast rights stood at approximately $40 million – about 40 per cent of its revenues for the year. By 2019, we’re told broadcast and data revenue forecast to be about $45 million (countered by expenses of about $28 million), with another $11 million in revenue from the year-end Tour Finals.

The proposed WTA budget for 2020, according to a document obtained by Tennis.Life, was estimated to run at a deficit of about $2 million after running a $5 million deficit in 2018 and a slight surplus ($1.3 million) in 2019. So the business itself is hardly on the firmest of footings. Certainly it is far from impervious to losing half, or even most, of a season.

If, worst-case scenario, it has to forego its foundational Asian swing – and the World Tour Finals, relocated to Shenzhen, China last year – things could get pretty grim.

ATP seemingly in better shape

The ATP Tour, a larger and more successful business overall, has more of a buffer. But it is hardly immune.

We’re told revenues from sponsorships, the ATP Tour Finals, and tournament member fees already were lower than forecast in 2019 because of unexpectedly weak rates for the Euro and the British pound.

Given that data and streaming revenues, as well as broadcast rights revenue from 500 and 250-level events make up about half of all ATP revenues, the loss of what easily could be half the season or more will hurt. As it was, it was estimated that the ATP would use some $11 million of its reserve funds in 2019.

But at the 250 level, the margins are especially thin.

“The average 250 is one medium-sized sponsor from being in the red,” Bill Oakes, who chairs the group representing the 250-level tournaments, told the NY Times. The 250 tournaments make up about two-thirds of all the events. Oakes also said that in 2018, 13 250-level tournaments (about a third of the total) lost money.

It seems fairly evident that it’s not being alarmist to think that when tennis does return, it might well be reduced in scope. Some of the individual tournaments just aren’t likely to survive it.