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Ben Cronin | CVC offer validates Gaudenzi’s vision, but WTA/ATP merger complicated

One of the most active private equity companies in sport believes the carrot of $600m can bring together the warring factions in tennis, but Ben Cronin wonders if the task might be more challenging than it proved with the Six Nations rugby tournament.

In an interview with SportBusiness last June, the ATP Tour’s new chairman Andrea Gaudenzi called on the numerous stakeholders in tennis to park their self-interests and adopt a more collective mindset. Drawing on his background in the music industry, the Italian suggested the success of companies like Spotify showed tournament organisers would make far more money if they pooled their media and data rights.

At the time, it appeared Gaudenzi’s immediate focus was on dealing with the fragmentation in the men’s game. Asked if he would like to see the ATP consummate a long-rumoured merger with the women’s WTA Tour, he said pre-existing commercial contracts made this complicated. He added that a better short-term position would be for the two organisations to consider micro aggregations in areas such as social media while he committed to explore more ambitious, tennis-wide cooperation in the longer term by convening a bi-weekly ‘T7 working group’ that would include the ATP, WTA, the four Grand Slams and global governing body the International Tennis Federation.

The news, then, that one of the most active private equity companies in sport, CVC Capital Partners, has tabled a $600m (€506m) bid to pool the commercial aspects of the men’s and women’s tennis tours, will test exactly how fast and how far Gaudenzi – and the sport more widely – want to take his reformist agenda.

The CVC bid has all the opportunistic hallmarks of its £365m deal to acquire a 14.33-per-cent minority stake in a company managing the commercial rights to the Six Nations rugby tournament. In that deal, the PE firm saw the Covid-related financial struggles of the home rugby unions and used the carrot of a cash injection to overcome their famous intransigence. Although tennis has suffered significant financial problems of its own during the pandemic, achieving consensus among its disparate factions would likely be an even greater challenge.

Firstly, there would be questions about the size of each tour’s shareholdings in any merged entity. The ATP generates nearly three times the revenue of the WTA, so it’s hard to conceive of it agreeing to a 50-50 joint venture. In the same way, it’s difficult to imagine the WTA’s stakeholders voting through a minority stake in a joint venture that would crystallise its status as a smaller undertaking.

This also raises the thorny issue of prize money. Equality demands female players should be paid the same as their male counterparts but if the WTA were contributing a smaller proportion of overall revenues for a combined tour, would the ATP be expected to make up the shortfall, or would male players be expected to take a pay cut to achieve pay parity?

As Gaudenzi suggested, there is also the small matter of both tour’s pre-existing commercial agreements. IMG markets the global rights for ATP Masters and ATP 500 tournaments, the ATP Cup, and many ATP 250 events, while the WTA has a 10-year joint venture with the DAZN Group that expires in 2026. In November last year, DAZN’s former stablemate Stats Perform finalised a six-year deal for the women’s tour data rights. In an early indication of the difficulties in getting the two tours to collaborate more closely, sources within the men’s tour say the ATP proposed bundling its data rights with the WTA before the latter decided to go it alone and strike the Stats Perform deal.

Although subsuming the existing contracts into the new entity would not be an insurmountable task, some think Gaudenzi has enough of a challenge getting the ATP’s own stakeholders to agree before attempting anything more ambitious. His job as ATP chairman is to outline his vision before getting the tour’s board of directors to vote on any change. With three player representatives and three tournament representatives, there is a delicate political balance that needs to be struck. As his predecessor Chris Kermode discovered, if either group thinks one has been favoured ahead of the other, he is likely to pay with his job.

Since taking on the role, Gaudenzi is understood to have outlined a four-point plan designed to appeal to both parties. His long-term vision is to grow the tour to a level of commercial maturity from which it will be able to split tournament profits 50-50 with the players. One of the steps to achieving this will be to aggregate more tournament media rights within ATP Media, the ATP Tour’s international media rights sales and broadcast production arm, and to develop a more equitable model for the smaller events to share its spoils. To placate some of the more powerful tournament organisers, he proposes building the larger competitions into two-week events and granting them 30-year sanction protection, provided they agree to be financially audited to allow for the player profit share.

Where Gaudenzi’s strategic vision proposes incremental collectivisation building toward closer alignment with the WTA and the Grand Slams in the future, CVC’s calculation is that a $600m cash injection will be enough to silence the warring factions and shortcut to the next stage. But when elements of the PE company’s offer are so similar to the plan already outlined by the Italian, some question the wisdom of involving a third party at all. As one insider put it: “We’ve had his vision validated by CVC, so it’s clearly not bad. Do we want to hand it over to a nanny because we can’t babysit ourselves?”

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