The Grueling Economics of Tennis

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1:49Matt Futterman:The Wimbledon Finals are this weekend, the pinnacle of the oldest and most revered tennis tournament in the world. Tennis has its established rituals, and Wimbledon is probably the most entrenched in those rituals. Hannah Miller covers media for Bloomberg, and she got to see the action up close. The grounds are amazing. There's flowers everywhere, there's high tea. People are allowed to bring champagne into the grounds.

2:16Hannah Miller:Thank you, ladies and gentlemen, if you could avoid opening bottles of champagne when the players are about to serve.

2:20Matt Futterman:Oh, come on. If someone actually pops a champagne bottle and you hear the cork, like that's the noise interruption. It's not necessarily people screaming. Wimbledon brings in a lot of money. If you wanted to attend the tournament this year without waiting hours in the queue for cheap tickets, it could take you over$500 ,000 to secure a guaranteed seat on center court. That's almost double last year's price and triple the year before. Prize money for the marquee tournament is also on the rise. This year, the singles champs will each take home 3.6 million pounds, or nearly$5 million. But while players in other leagues have gained ground toward benefiting from their sports' overall profitability, the athletics tennis reporter Matt Futterman says tennis sits in a more complicated gray area, with athletes taking home less than 20 % of the revenue.

3:15Hannah Miller:Compare that to the NBA, the NFL, Major League Baseball, National Hockey League. All of those athletes are guaranteed by their collective bargaining agreements about 50%.

3:28Matt Futterman:Matt is the author of the forthcoming book, The Cruelest Game. He says the disjoined financial model of tennis creates a system that can sometimes encourage players to go hard with little payoff. off, unless they're at the very top.

3:42Hannah Miller:You're seeing a lot of star players break down. The season is too long. It's 11 months. There's no off season. There's no breaks. The incentive is to play all the time. And you can't play all the time, especially now, because the game has gotten so physical, so taxing. The matches are so much longer than they used to be. The planet's getting hotter. It's getting harder to do their job. So work conditions are difficult. And it's not just

4:08Matt Futterman:players. Tennis as a whole is at a crossroads. And some key figures in the multi-billion dollar sport are pushing for change to try to bring the business of tennis into the 21st century.

4:20Hannah Miller:Tennis is sort of the last frontier in terms of change and modernization. And it is decades behind where other sports are.

4:33Matt Futterman:I'm David Gurra, and this is The Big Take from Bloomberg News. Today on the show, unpacking the complicated business of tennis. From media deals to player compensation, can an old-school sport stay up-to-date in a modern economy?

4:55Matt Futterman:Between the World Cup and the Knicks' historic win in the NBA Finals, it has been a big summer for sports. But when it comes to the way sports are structured, one exists on an island of its own.

5:06Hannah Miller:Tennis is the ultimate oddball sport. It is so fractured. It's basically the United Nations. No real authority or actually seven or eight different authorities and governing bodies. They all kind of hate each other.

5:22Matt Futterman:The Athletics' Matt Futterman says tennis as an organized sport has been slow to grow up. It became professionalized in the late 1960s.

5:30Hannah Miller:But the Grand Slam tournaments, the Australian Open, the French Open, Wimbledon, and the U.S. Open, which were functioning independently. They didn't want to give up their independence. Eventually, you had these two things created called the ATP Tour and the WTA Tour, which were the men's tour and the women's tour. And then on top of all that, you have the International Tennis Federation, which is the world governing body, which is the sort of FIFA of tennis. And so you have this seven-headed beast, all of these people who are running these things with different agendas, fancy jobs, big salaries.

6:11Hannah Miller:And while it would make a lot of sense for them to come together, I've really never known a sports executive who negotiated himself or herself out of a fancy job and a big salary.

6:24Matt Futterman:That fractured landscape means it's hard for the sport to make deals in the way most other sports do. Grand Slams make a ton of money from media deals, but smaller tournaments, the scores of games on the ATP or the WTA tours don't come close.

6:39Hannah Miller:They've done an absolutely horrendous job of pooling their media rights. So they really devalue themselves. They compete with each other for both media deals, for advertising, and that drives the price down.

6:54Matt Futterman:What does it mean for a corporate sponsor interested in backing tennis, having the kind of fractured landscape that you describe?

7:02Hannah Miller:It is so hard for a corporate sponsor to get the value out of tennis that it gets from another sport. You take a company, I might just pick one out of the air that has had a big deal with Major League Baseball at the time, Bank of America. I think they have deals or they've had a deal, you know, with the league and then a presence with just about every other team. And that's basically sort of one-stop shopping. There's no way to do that in tennis. I was having a conversation with one of the top executives at BNP Paribas, which is probably the biggest sponsor of tennis in the world. And one of their top executives is I have something like 65 or 67 different contracts that I have to sign with different entities in tennis.

7:53Hannah Miller:And that's different media companies, different tournaments, different tours, different organizations. And so when you are a big sponsor and you're looking about how to spend your money, you know, you want to capture a big audience and you want to do it as easily as possible. Tennis is a hugely desirable audience, but they make it really, really, really hard for the people that are interested in tennis to connect with it and to partner with it.

8:23Matt Futterman:If you're streaming Wimbledon in the U.S. right now, you're likely watching on ESPN, which has exclusive streaming rights to the tournament through 2035. Bloomberg media reporter Hannah Miller says grand slams like Wimbledon are hot commodities for the companies vying for a media deal. Tennis is set apart from other sports in that there are these must-watch events. And you see that with the slam tournaments. For tennis fans, those are going to be must-see TV for them. So that does make it an easy sell. Viewership has been on the rise, and so has participation. The number of Americans who play tennis has grown almost 60 percent since 2019.

9:03Matt Futterman:COVID has actually helped increase people's interest in the sport, whether watching at home or even trying it for themselves. It's an easy sport to understand. You know, when you have one person winning over the other, there aren't any ties. It's just two people grinding it out. And despite this fractured tennis landscape, Matt Futterman says a rising tide in the sport does lift some ships. Even though Serena Williams was eliminated in the first round this year, her match set an ESPN record for Day 2 audience. Another great match in this weekend's finals could help drive interest in the sport's smaller tournaments or get more people playing.

9:40Hannah Miller:People are still talking about the five set, five and a half hour battle that Carlos Alcaraz and Yannick Sinner had last year at the French Open. The same way people still talk about the Roger Federer, Rafael Nadal, Wimbledon 2008 match. These sort of epic matches have a way of just capturing attention and grabbing people. They produce stars. They've put tennis sort of in the consciousness. I don't think there's any question that tennis is having a moment. And, you know, that's down to people like Coco Gauff and Alcaraz and Sinner and Iga Sviantec and also Zendaya, who, you know, starred in Challengers.

10:27Matt Futterman:But for players, good news at the top doesn't always trickle down to everyone else. That's coming up.

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12:37Matt Futterman:Making money as a professional tennis player is uniquely hard compared to other sports. It's very interesting, the contrast between the highest-end athletes and the lowest-end. I think in other sports, if you're on an NFL team, you're doing very well, even if you're on the bench and not a starter. Bloomberg's Hannah Miller explains that's because in the NFL, you're on a team which provides for some of your needs as an athlete. Tennis players, on the other hand? It's very individualistic. Everything is on you or, you know, you and your partner if you're playing doubles. You have a lot of overhead.

13:09Matt Futterman:That's The Athletic's tennis reporter, Matt Futterman again.

13:11Hannah Miller:Your agent is taking something on the order of 20 percent of all your endorsement deals. You've got to pay a coach. You probably have to pay a physiotherapist. And remember, you earn money in pre-tax dollars. You pay out salaries in post-tax dollars. You've got a lot of travel expenses. You've got to find a place to train. It's the polar opposite about being a member of a team, where the team takes care of all those expenses. In tennis, you're an independent contractor, and it's all on you. That makes the sport extremely top-heavy. I mean, if you're Carlos Alcaraz or Yannick Sinner, you're probably making in the neighborhood of$100 million a year.

13:51Hannah Miller:But the bulk of that is going to be with endorsement deals and appearance fees and all sorts of things like that. So they are really in another stratosphere. The women, I think Coco Gauff is the highest paid player and she's up in the 30s in terms of millions of dollars. The rest of the top 10, you're still doing quite well. You should be in the eight figures. But then you have a pretty good fall off where you're getting into single digit millions. I'm not playing any violins for any of these people. You get outside the top 50, you start to get worried about falling outside of the top 80 in it.

14:29Because once you're outside the top 80, you're probably around breaking even.

14:35Matt Futterman:Start to move outside the top 100 and you're likely losing money on the game itself. But unlike some other sports, Hannah Miller says, one big tournament win can really make a difference for a lower-ranked athlete. There's a great example of this with Arthur Ferry, who is, it's a Cinderella story. He's a Brit who had an amazing quarterfinal win over a top-ranked player. He has gone overnight from being a no-name to one of the biggest names in the U.K. right now. He will make at least£900 ,000 just from getting to this point in the tournament. If you look at his winnings prior, that dwarfs what he's gotten before.

15:17Matt Futterman:And he's also now a great target for sponsors, and that'll be another great source of income as he goes along. It's that point, the sponsorship deals that are never guaranteed but a possibility after a match or after retirement, that creates a model that keeps players in the game.

15:35Hannah Miller:The model for this is Arnold Palmer in the 1960s. And, you know, what Mark McCormick, who was the founder of IMG, which is sort of the first great sports and entertainment conglomerate and really the guy who made the sports business. And I think, you know, what McCormick and Palmer understood was that he could really be sort of the first great sports brand. He became, you know, something bigger in retirement than really he ever was during his playing career, especially from a financial point of view. And that has really been the model. Roger Federer is making far more money now than he ever did as a tennis player.