Why a recent WTA Private Equity deal isn’t necessarily bad for women’s tennis

Jon Wertheim weighs in on the new deal, the Seb Korda situation and the return of the Hopman Cup.

Although I wish every tournament had the atmosphere of Indian Wells, I dive into your latest emails.

John,

Can you help me understand the WTA/CVC deal announced today. I know you’ve written about this before, but guess what? Good deal or bad deal?

Phil
London

Lost in the Novak Djokovic/vaccine chatter and another Andy Murray marathon win, Bob Bryan’s Davis Cup captaincy announcement and the game from Indian Wells, a tennis garden of earthly delights, the real news last week was official announcement of the WTA “strategic partnership”. with private equity firm CVC Capital Partners and the “creation of a new commercial subsidiary named WTA Ventures.” For background, Chris Clarey’s The New York Times wrote this comprehensive review.

It’s easy to call that a win. In dire financial straits, losing players like Serena Williams, Naomi Osaka and Ash Barty, facing increasing competition and no real home for the year-end finals, the WTA received $150 million. He did this by partnering with a trusted outfit that has a track record (no pun intended) in sports, most notably Formula 1.

The deal comes as the WTA tries to avoid a return to China, an honorable move but with a huge financial hit. The particular staff involved on the CVC side comes with rave reviews, both inside and outside of tennis. If handing over some power, board seats, and decision-making to savvy financial types with an outside perspective is a cost of doing business, that’s not necessarily a bad thing.

The concerns? Regardless of how it is presented and what new “trade affiliates” are created, the bottom line is the WTA He made once 20 percent of his store is divested. Healthier businesses can raise capital without giving up that kind of fairness and power. Women’s tennis is such a strong product, even though it doesn’t have money. It’s global, young, healthy, unscripted, mobile, etc., but the rewards have long gone to individual players, not necessarily the WTA. (Whose balance sheets look better: Osaka’s or the WTA’s?) Here’s another expression of this.

Also, the emphasis on using this investment to enhance prize money is confusing, both business-wise and philosophically. WTA president and CEO Steve Simon told the New York Times: “We hope this partnership will allow us to begin to address this gap between the commercial rights we can secure and the rights men can secure ». Simon added that he hopes the new CVC partnership will lead to a short-term increase in prize money at tour events.

The WTA Tour is expected to receive $150 million from a private equity firm.

Mark J. Terrill/AP

The big companies already pay equal prize money, as they should. So now you’re giving up 20 percent of the business, in part, so that the No. 25 or No. 50 or No. 75 player in the world can have the same wages as her male counterpart during the match . -mill tour events? This seems like an odd plan for long-term growth. For so long, the push for equal pay—and a cause that many of us have championed—was based on the assumption that there was systemic inequality at play (see: Denis Shapovalov).

But wait. This agreement suggests that those controlling the tennis purses are not sexist, nor are the events piling money at the expense of women being paid fairly. But rather that the WTA/ATP pay difference is just the market. And the way it can be bridged is not through social pressure or leverage or negotiation, but by engaging in external partnership.

More optimistically, the agreement’s emphasis on data, marketing and media is encouraging. As both tours lose their star power and tennis becomes even more global, it is important to expand the profile and footprint of the sport, the WTA product and emerging players. The media landscape has never been more volatile, but it has also never been more open to creative transactions and opportunities. (Aside: Could the WTA take, say, $2 million of the $150 million and make a more dynamic version of it Breakpoint?) We can save a discussion about gambling or “sports game”. whenever there’s a euphemism, you know right away it’s controversial — for another time. However, data and gaming partnerships are an obvious revenue stream, and the speculation is that CVC can help here.

One question I would ask is about China. Does this $150 million injection — and I’m told it’s coming in stages rather than as a fat check — mean the WTA now has some cushion to stick to its principled stance? Or maybe a new partnership with a private equity investor—who got into it not as an act of altruism, but to achieve a return on investment—put pressure on the WTA to reconnect with China, a growing market and (at least before the COVID-19 pandemic -19/Peng Shui) the source of so much of its revenue? I’m also curious if the PTPA and the clamor for an organized players union had any impact here.

Is this a good deal? If you’ve been on earnings calls, you know that even the most brutal losses are billed as wins, even the most troubling news is presented as “Braving the Headwinds of a Challenging Market.” And last week’s announcement was no different. Lots of champagne and slaps and Proskauer fees. But, objectively, this could be a very good thing for the WTA and, by extension, the sport. Like a tennis match, we’ll have to see how it goes. At some level, the scoreboard will say it all.


John,

It’s been almost six years since then The discovery of Denis Shapovalov as an 18-year-old in the Rogers Cup and five years since made it into the top 25however he never made it into the #10 rankings, with a 5-5 record this year as well early exit at Indian Wellswill go to the next tournament of no higher than 30thlowest since 2019. Shapovalov stock: buy or sell?

Rob

Yes. I’m thinking of holding, depending on your strike price. Not sure I’d buy, even if we’re in a dive. It turns 24 next month and I wonder if, like water, it hasn’t settled to its natural level. He’s a flashy, fun player with a big delta, capable of beating players in the Top 10 and losing to players outside the Top 100. He’s not consistent enough to be a real threat to win a Slam. Too talented to write off.


Hi John,

Where is Sebi Korda? Does he still have a wrist problem? Any timeline?

Michelle

From Camp Korda: “Yes, we are very careful with his wrist [injury], which was maintained during the average fight in AO. The plan is to go back to Miami and if not then to Estoril. We will take it day by day and we want him to be 100 per cent ready to play rather than risking something more given that he is only 22 years old. We use the time to do extra exercise, which is the silver lining of this cloud. We will see a stronger, faster Sebi when he plays again.”


John,

How do unranked singles players even get into Indian Wells doubles (too many for WC)? I guess Larry E is paying them well to play, but aren’t the double ranked players going crazy?

spin4srv

Aside: Is there a less sexy phrase than “it’s a combination of factors” or “it’s a perfect storm” or “it’s a happy/harmonious convergence”? Oh, the seduction of unique causes and quick explanation. We want simple explanations, dammit!

Where we were?

Correctly. The popularity of doubles in Indian Wells. It’s due to… a combination of factors. Some of it is scheduled — an event lasting more than a week, with the uncertainty of Miami (also more than a week) looming. Some of this is due to the mild conditions. You’re not going to suffer heatstroke (or wait through lots of rain delays) playing in the desert in March. Some of this is due to tradition. I’d like to think some of that is due to a gratitude to Larry Ellison and the players’ desire to support the event.

Remember, players can enter doubles draws based on their singles ranking. I guess some doubles players are upset since so many singles players are entering. But most doubles players enjoy playing against singles stars — and the crowds they bring with them.

Overall, this is an endearing feature of Indian Wells and not a trendsetter. But how awesome would it be if every event had a pairing like this (Tiafoe/Wawrinka? Ruud/Thiem; Shelton/Rune?) and this (Badosa/Rybakina? Andreescu/Putinseva?)


John,

I’ve been reading about LIV Golf and how it challenges the PGA Tour (or doesn’t). Could something like this work in tennis?

Kith
Philly

I’d like to save a discussion of LIV Golf (or LIV Tennis) for next month. I have some thoughts and I’ve spoken to some players, including Nick Kyrgios, about it. A preliminary point that is purely logistical: you can host golf events at thousands of courses around the world. You can hold individual exhibitions in countless stadiums around the world. But there are an (extremely) finite number of facilities that can host a full tennis tournament – say, a 64-draw event with space for a TV band, comfortable player dining room, corporate suites, hospitality, on-site training facilities, etc. . I’ve had this conversation with agents and financial guys, and the first response often isn’t about ethics or economics, it’s just, “Where are you going to do the tournaments?”


John,

I remember seeing that the Hopman Cup was being relaunched, but I haven’t heard much about it since then. Do you know what the situation is?

Nat
Montreal

Funny, I was talking to Alize Cornet last week (she says, face to face) and this came up. As she winds down her career, she is thrilled that the Hopman Cup has a) been revived and b) will be held at a home club in Nice.

Yes, the Hopman Cup is back in 2023. It’s a bit ‘soft’. Instead of attracting the best players to the treacherously cool city of Perth ahead of the Aussie Open, the new Hopman Cup will be played on clay – after Wimbledon and before the US hard courts in the south of France. This year there will be six teams, i.e. players from six countries. Dedicated players include Carlos Alcaraz and Andy Murray. (The French team, by the way, will have Cornet and Gasquet.) Iva Majoli is the tournament director. Here are more details.

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