Net losses? Tennis events facing battle for survival
The moment Bob Moran received word that the professional tennis tournament he runs in Charleston, South Carolina, was being called off because of the coronavirus pandemic, he halted construction on the grandstands being erected just outside his office.
“They had put the first layer in place, and then that same day they were taking it right back down again,” said Moran, the tournament director for the Volvo Car Open, a women’s clay-court event that was scheduled to begin April 4. “Everything counts.”
With professional tennis on hold until at least June — and perhaps much longer — the sport’s administrators and players are scrambling to cut their losses as tournaments are postponed or canceled en masse.
Looming over those adjustments, there’s a threat — that some events, particularly those on the lower rungs of the men’s and women’s tours, will not survive.
“This is real,” said Steve Simon, the chief executive of the WTA. “The events are taking significant hits by not operating.”
The size of the hit for each tournament depends on numerous factors, including the timing of a postponement, the operating budget, sponsorship agreements and the agreement with the venue.
Insurance largely will not help. Wimbledon, which is considering cancellation, is one of the only tournaments that has some coverage for a pandemic. The vast majority of tour events have none. In fact, many WTA and ATP events have skipped full cancellation insurance altogether, with annual fees that can range from $200,000 to $700,000, depending on a tournament’s revenue.
“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,” said Edwin Weindorfer, whose company operates grass-court events in the German cities of Berlin and Stuttgart as well as Mallorca, Spain.
All three events are at risk of being canceled in June.
Without insurance relief, tournaments will have to absorb losses on their own unless the tours or national tennis federations choose to offer financial assistance.
“The tournaments are taking tremendous hits, and obviously the players will take a tremendous hit because they are not having the opportunity to compete for multiple weeks,” Simon said. “I think that’s one of the challenges everyone is working on. How do we balance the significant losses all members are taking as well as the losses the tour is going to take?”
Gerard Tsobanian, the chief executive and president of the Madrid Open, a men’s and women’s clay-court event scheduled for May, does not believe the tours can provide broad relief.
“I don’t think they have enough funds to help players and tournaments together,” he said. “No chance.”
The losses will depend on how long the sport is widely shut down. The professional game has halted all play until June 8, when the traditional grass-court season is scheduled. But with Britain on lockdown, Wimbledon leaders are meeting this week to make a decision about the tournament scheduled for June 29 to July 12.
“If Wimbledon would cancel, I think we will follow very fast with canceling our grass-court tournaments,” Weindorfer said.
Because of the particularities of the playing surface, grass-court tournaments are less likely than others to be rescheduled later in the season, if and when the tour resumes regular play.
The men’s and women’s tours have made broader contingency plans to play their seasons later in the year, packing their schedules and continuing into late December while skipping what would have been their offseasons.
“The players will have to create their own spacing in the calendar, but for the tournaments’ and players’ sake you have got to utilize all the weeks in the calendar that are available,” said Jim Courier, a former top-ranked men’s player.
The French Open, the Grand Slam tournament that precedes Wimbledon, already announced that it would push its dates back to Sept. 20 to Oct. 4 from its scheduled May 24 start. The move has generated widespread anger in the sport because the French Open leaders announced their plans publicly without discussing them with others.
The backlash could lead to more shifts for the French Open to account for other scheduled tournaments, compensatory payments to tournaments that would be disadvantaged or even to a punitive reduction in ranking points allotted to the French Open by the tours.
The uproar is the latest demonstration of the deep divisions in tennis, a sport with multiple governing bodies and agendas.
“This was a golden opportunity at a difficult time to show our small tennis community is not that fragmented and that the leaders can make decision together and cooperate. And we ended up showing a very selfish image of who we are,” said Tsobanian, whose Madrid event was postponed with no guarantee of finding another date in 2020.
Some in the game view the extreme situation presented by the coronavirus pandemic as an opportunity for the tours to streamline a cluttered calendar by finding ways to buy out dates from small, struggling events and focusing more on larger events that are more likely to attract top players and television viewers.
“Maybe we have to come to chaos so a new order comes about,” Tsobanian said of the tennis calendar. “But for now, everybody is afraid.”
The profit margins for the lowest-level men’s tour events are often slim, even during more normal socioeconomic times. The tournaments, known as ATP 250 events because of the 250 rankings points awarded to the singles champion, make up a majority of the tour — 38 of 68 events. The higher ATP tournament categories are ATP 500 and ATP Masters 1000.
Bill Oakes, a former tournament director of the Winston-Salem Open and the chairman of the group representing the ATP 250 tournaments, said the average net profit was “about $125,000” for such events, with average operating budgets at about $4 million.
The margins are similar at that level on the women’s tour, said Moran, who runs the women’s tournament in South Carolina.
Oakes said profits averaged about $1.1 million for ATP 500s and $6 million for Masters 1000s.
“The average 250 is one medium-sized sponsor from being in the red,” Oakes said. “I think every tournament needs to be very concerned about what is going to happen.”
Any tournaments facing financial ruin could be forced to sell their ability to host an event sanctioned by the tours — tennis’s version of a franchise fee — in order to salvage some value. The sanctions, as they are called in the sport, vary widely in value depending on the week on the calendar and geography, but can be worth anywhere from about $1 million to more than $10 million for ATP 250 events.
“They can make quite a bit of money when they sell their sanction to other cities, that’s kind of where the value comes as opposed to year over year cash flow,” Courier said. “They are scarce in the way real estate is scarce.”
Timing is a major factor for all tournaments, including the BNP Paribas Open, the prestigious men’s and women’s event in Indian Wells, California. It was called off on the eve of qualifying at great cost with its infrastructure and most of its staff already in place. The tournament’s leadership, which includes billionaire owner Larry Ellison, declined to comment on the economic impact, but there is still hope it can be rescheduled in 2020.
“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.”
— Edwin Weindorfer, whose company operates events in Germany and Spain