- Kosmos founder says he convinced a reluctant Djokovic to participate in revamped tournament
- Tokyo being considered as potential host city in 2021 after initial two-year stint in Madrid
- New format has led to ‘nice increase’ in media-rights values, says ITF president Haggerty
The first incarnation of the revamped Davis Cup finals is just two months away and Gerard Piqué, the president and founder of sports and media investment group Kosmos Holding, remains bullish that his plans to revive the historic men’s team tennis tournament will prove a huge success.
Kosmos Holding was founded by FC Barcelona defender Piqué while its principal financial backer is Hiroshi Mikitani, the chairman and chief executive of Japanese e-commerce giant Rakuten. Additional investment has come from American billionaire Larry Ellison – the owner-operator of the Indian Wells Tennis Garden facility in California and annual Indian Wells Masters tennis tournament – and CMC Sequoia, the sports investment fund set up in 2017 by China Media Capital and Sequoia Capital China.
In August 2018, a vote of the 210 International Tennis Federation member nations approved a 25-year partnership with subsidiary Kosmos Tennis, under which the two entities will jointly operate the 119-year-old Davis Cup while Kosmos will manage its commercial rights.
Despite its long history, the Davis Cup’s commercial revenue has lagged behind the grand slams due to its staggered format and the regular absence of top players. The ITF reportedly generated just over $14m in sponsorship income for the event in 2017, a far cry from the estimated equivalent earnings of the US Open ($86m) and Wimbledon ($45m) in the same year.
At the heart of Kosmos’s plan for the Davis Cup is a reimagined finals format aimed at making the tournament a more impactful event. Under the old format, the 16-nation World Group was contested over four weekends throughout the year, culminating in a November final.
From this year, after a round of qualifiers in February, 18 nations will compete in a week-long “World Cup” of tennis each November. Matches have been shortened from a best-of-five format to best of three, with two singles and one doubles, to ensure finals matches can be completed in a single day. The first two finals under the new format – 2019 and 2020 – will both take place in Madrid at the Caja Mágica, which has hosted the Madrid Open since 2009.
Kosmos will also spend $80m (€70m) on the competition every year from 2019: a new $20m prize money pot, $16m to cover marketing and staging costs, and $44m as a licensing fee to the ITF for all commercial rights surrounding the competition.
Kosmos will, in return, gain the rights covering all ticketing and corporate hospitality revenue, which was previously controlled by the national federations that hosted ties. It will also take on responsibility for media and sponsorship rights sales – not including existing deals which will mostly run to completion – and retain all income from these sales up to a certain level, after which there is a revenue share.
It is a calculated gamble that is not guaranteed to pay off. Some leading players – notably Roger Federer, Novak Djokovic and Alexander Zverev – have expressed reservations about the project. Meanwhile, a rival competition – the ATP World Team Cup – will be launched in January 2020, just six weeks after the first of the revamped Davis Cup finals.
There has already been significant commercial progress in the past year, however. Rakuten has signed as the new title partner in a two-year deal – it will officially be known as the “Davis Cup by Rakuten” – with an an option of a further two-year extension. Additional corporate partnerships include Japanese automotive manufacturer Lexus, Spanish soccer league LaLiga, and French fashion brand Louis Vuitton, while Swiss watchmaker Rolex extended a pre-existing deal.
Kosmos will not be able to take over the sale Davis Cup media rights until 2021 because these are currently held by beIN Media Group, under a seven-year deal with the ITF that began in 2015. However, the company has been free to seek additional deals or deals in territories where beIN has not sublicensed the rights, with the media group’s permission.
As such, Kosmos has managed to secure media-rights deals with French commercial broadcaster TF1 and Spanish telco Telefónica, which will show the tournament on its Movistar #Vamos channel. Talks are reportedly ongoing with OTT platform Amazon Prime Video for UK screening rights and the Tennis Channel in the United States.
Around 200,000 fans are expected travel to Madrid in November and in order to capitalise on this expected influx of supporters, Kosmos will look to put on a series of events alongside the tennis in order to create a festival atmosphere and gain further revenues. To help facilitate this, last week Kosmos signed a deal with Sony Music Latin Iberia to work together on Super Bowl halftime show-style performances to bookend the Davis Cup finals, plus other music-and-sports content.
— Davis Cup by Rakuten Madrid Finals (@DavisCupFinals) September 6, 2019
Piqué and ITF president David Haggerty spoke to a select group of journalists, including SportBusiness, at the USTA Billie Jean King National Tennis Center in New York during the US Open to discuss the Davis Cup plans. This is an edited and condensed transcript of the interview.
The Davis Cup finals is close to starting. How ready are you?
Piqué: It has been a tough year but a very exciting year at the same time. There have been a lot of things to work on and [we have been] trying to convince everyone that this format is very important for the future of the competition. We are just where we wanted to be when we started. We’ve been talking to most of the players and all of them are very happy and available to play in November. We’ve been talking to the captains and they are very excited.
Roger Federer was critical of some of the things you are trying to do, adding that “the Davis Cup should not become the Piqué Cup.” What was your response to that?
P: This was a sentence that at the time was funny because there is no intention of doing that. I didn’t like that idea of using my name. I really understand that this competition is for tennis and for tennis players. All I wanted since the first moment I arrived in the tennis world, is to try to help this sport. Switzerland has not qualified for November so even if Roger wants to play in this event, he cannot, but we are talking with him and his agent to discuss the possibility to play in 2020.
How did you convince Novak Djokovic to take part for Serbia? He was initially very reluctant.
P: Sitting down with him a lot, talking with him a lot. I said to him, ‘I know you are an ATP player [Djokovic is president of the influential ATP player council] but at the same time you represent the federation of Serbia, which is part of the ITF which invests in young talent and the future of tennis. I think it makes total sense that you participate in both competitions [the Davis Cup and ATP World Team Cup] because it is a message that at the end of the day that you want [for the ATP and ITF] to work together.’ He realized that and said that he wanted to participate in the Davis Cup, which is of course great news for us.
Gerard, how are you able to dedicate enough time on this project considering you have another job playing for FC Barcelona?
P: I am working on this 24/7. It is the project of my life. When you have a dream, you have to push to make it happen and with this passion, you convince people. I work on this every day when I am in Barcelona on days I play and train and when I have some days off I try to fly to be places so you can be able to provoke and listen to the players and captains and try to understand what they need so the competition can be better. The effort is very big.
What is the latest situation with TV rights deals, have revenues grown with the new format?
Haggerty: What we’re seeing is that there is an increase in the value of the new format of the finals to the broadcasters so that when contracts are being renewed typically there is a nice increase that is being put in place as well because it is a different product. Having 18 teams in one location for the week is a different product than two teams that one of which [a broadcaster’s home market] may be in the finals or not. But it takes time because some of those contracts are still two, three years still to go.
How much interest has there been outside of Madrid to host the new Davis Cup finals – and where you would like to take the event?
P: We want to think very big, this is our mentality since we started. Our idea is that the Davis Cup is owned by all the federations all around the world and the idea is to bring this competition all around the world. The idea in the future is to try to go to another place after two years in Madrid, maybe we go to Asia, maybe we go to America. We want to keep changing the location as all the fans around the world deserve for this competition to go to their country at some point. Tokyo is a place that is very interesting for us, they will have the Olympic Games in 2020 and it makes total sense to maybe to there in 2021 for two, three years. But maybe we stay in Europe for a few years as the ATP Finals will go to Turin [from 2021 until 2025] after London so for the players it makes sense to stay in Europe. Let’s see.
How locked in are you with a November date for the finals?
H: We’ve had discussions with the ATP. There is leadership change coming [Chris Kermode will leave his position as ATP executive chairman and president at the end of 2019] and once that’s completed we will continue discussions to see what’s the best date. We need to have the first Davis Cup finals in November [on Nov. 18-24] and the ATP Cup will be in January and then we will have more facts and have a good discussion.
What are you doing to attract fans from outside of Madrid?
H: We’ve worked with all 18 of the federations that are going to be playing. They have all purchased tickets and they can sell them to their fans to be able to come. We’ve also opened it up to all the other 200 federations in addition so their fans will want to watch and come. So we feel we’ll have that good balance of good Spanish support but also the nations there watching their teams play.
There has been some talk of a Kosmos involvement in the Fed Cup. What is the latest with that?
H: Right now we’ve made some decisions on the Fed Cup [it will be staged at the Laszlo Papp Budapest Sports Arena in Budapest, Hungary, from 2020-22 in a new 20-team format] and we have talked about a Kosmos partnership as there are a lot of synergies. Mutually, we have decided at this time that the Davis Cup will be the focus now but that doesn’t mean we couldn’t collaborate in the future.