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Your Serve: Follow the Money

A veteran tennis journalist says while money from Grand Slam tournaments are ‘reinvested in the game,’ the current prize money arrangement is flawed.

By L. Jon Wertheim

Tennis’s Grand Slam championships are the four tent poles of the sport, the highest peaks on the landscape. Though the four business models are slightly different, each Major operates as a non-profit. The proceeds from the events we’re told (and told and told) are “reinvested in the game.”

At first blush, anyway, this model is principled. Noble, even. At the pinnacle of the sport there is an appreciation for the grassroots effort and underpinnings that make it all possible. This model is socially responsible. This model makes us more comfortable with the vast streams of revenue coursing briskly and conspicuously through Wimbledon and the Australian, French and US Opens.

This model is also absurd.

Today more than ever, the best players are international celebrities, able to command vast sums of money for one-night-only exhibitions, chosen by corporations to endorse products and serve as “brand ambassadors.” There’s little debate that players are paid less than market value at the Majors. But, we are quickly reminded, the Majors reinvest profits, so purse increases would come at the expense of the little people.

Yet where else does this occur? Where do we distort the labor market and suppress wages in the name of philanthropy? The fees paid to Hollywood stars aren’t stifled so that the movie profits can be reinvested in the local playhouse. Authors’ book contracts aren’t kept artificially low, so that part of the savings can go to school literacy programs. We don’t ask NFL players to take less than fair market value in order to fund Pop Warner leagues and pay for the coaching of talented prospects.

For decades, players accepted this — what should we call it? — quirk. Sure, the Majors devoted much less of their gross revenues to prize money than other tournaments; but even so the payout was much more. For the top players, their endorsements deals often contained bonuses based on their results at the Big Four; so that provided an economic incentive. Yes, the profits were going to the federations of only four countries; but those were also the countries that furnished most of the top players. So there was an element of noblesse oblige.

But lately, players have been less willing to accept the status quo. One envisions, say, Rafael Nadal, taking stock of the US Open prize money and saying: “So let me get this straight: you’re paying less than market rate so you can resurface courts in Topeka or subsidize Sloane Stephens’ travel? None of it even goes to my federation? Huh?” Or one imagines the 95 percent of the non-native players at the Australian Open scratching heads and wondering: “The profits I’m helping to generate are going toward racquets in Sydney and flights juniors take from Perth to Brisbane? What?”

The players read about the terms of the Majors’ TV deals. They see the revenue generated by suites and hospitality tents and merchandising. They catch wind of lavish salaries being paid to executives. Catalyzed by their tours, they have complained and even thrown around the dreaded B-word, boycott. They want a bigger slice of the pie, non-profit be damned.

When the Majors’ make concessions to the players and increase prize money — as each did in 2013 and will likely continue to do — it has consequences. Funding gets reduced. The federations may have to cut staff. Fat must be trimmed. Sure, there is something distasteful about cutting funding so that millionaire pro tennis players can make still more millions. But how much less distasteful is it to ask athletes to take a pay cut so the host federation — not even the players’ own federation in most cases — can fill its coffers?

What happens now? Likely a cordial game of chicken. The players will continue to gripe and threaten work stoppage. The tournaments will make incremental increases, hope to keep the barbarians at the gate, but operate on the assumption that as long as they still offer the highest purses on the circuit, players aren’t likely to unify.

One would like to think — quixotically, perhaps — that there’s a creative solution. Perhaps the proceeds can be distributed to federations in addition to those in Australia, France, the U.K. and the U.S. Maybe lavish federation salaries are reconsidered and capped. And maybe both sides devise a formula, so a certain percent of revenues are devoted to the purses and both sides have incentive to “grow the pie.”

Whatever, the current arrangement is flawed. Ask the NCAA. You distort the market and you ask for trouble.

L. Jon Wertheim is a senior writer for Sports Illustrated

We welcome your opinions. Please email comments to info@tennisindustrymag.com.

From the April 2013 issue
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