Saudis make billion dollar offer to merge ATP and WTA tours, add January Masters tournament

Aussie Darcy

Bionic Poster
Channel 9 paid $500 million for the rights to broadcast tennis until 2029 and that's in Australia alone. How on earth could the Saudi's offer just $1 billion for the entirety of the ATP and WTA when you hear a figure of half a billion dollars in just Australia for broadcast rights?

Also, this offer by the Saudi's looks to extremely screw over Australia by adding in a Masters tournament in the middle of our Australian swing. Truly awful. I hope the ATP/WTA spit on this offer and shut them down for good.
 

Tshooter

G.O.A.T.
I mean this stuff is like a key stroke away. He doesn't have to be an investigative reporter here.
I don’t think you should read a BCR post like a regular post. It’s more like art. His posts IMO are a kind of poetry — they’re about creating an emotional response in the reader not boring the reader with a dry recitation of facts to support any kind of reasoned argument. Facts are besides the point and he certainly isn’t going to research them. :rolleyes:
 
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Bartelby

Bionic Poster
KSA is paying one billion to each of the ATP and WTA so two billion for one Master's - men and women - which is probably only slightly over the odds.

I value Indian Wells at three billion plus given the AO is worth ten billion plus.

So they are not paying two billion for the whole of the ATP and WTA. The both of them are worth far more, but the Saudis are getting their foot in the door.

The beginning of the Australian swing gets a downgrade, but so what? It reverts to the status quo ante, that's all.

Channel 9 paid $500 million for the rights to broadcast tennis until 2029 and that's in Australia alone. How on earth could the Saudi's offer just $1 billion for the entirety of the ATP and WTA when you hear a figure of half a billion dollars in just Australia for broadcast rights?

Also, this offer by the Saudi's looks to extremely screw over Australia by adding in a Masters tournament in the middle of our Australian swing. Truly awful. I hope the ATP/WTA spit on this offer and shut them down for good.
 

TennisBro

Hall of Fame
Saudis really know how corrupt the western world is. My wish is that they stay away from sports in which female players wear outfits that go against their moral standards. I know there are other countries with similar concerns to Saudis but at least those other nations in case may have a bit more of a tolerance level than the Ryiadh Royals.
 

Bartelby

Bionic Poster
Even though they are very different, the Saudis are the Western world. We put their rulers in their positions, and they support us in return.

Saudis really know how corrupt the western world is. My wish is that they stay away from sports in which female players wear outfits that go against their moral standards. I know there are other countries with similar concerns to Saudis but at least those other nations in case may have a bit more of a tolerance level than the Ryiadh Royals.
 

Krish872007

Talk Tennis Guru
I'm now seeing $2 billion in some disclosures / news outlets. Would be interesting to see exactly what is contained in the offer docs and what the justification is, particularly on value.

Few things to consider:
- Revenues for any given tennis tournament stem predominantly from 3 channels. 1) Direct ticket sales - B2C (i.e. to ordinary spectators like us) or B2B package deals (another way of saying corporate / "wholesale"). 2) Broadcasting rights (such as the $500m paid by Channel 9). 3) Sponsorship deals, of which there are several. Can vary by tournament. Note - broadcast and sponsorship deals are somewhat stable, but ticket sales (and prices) can fluctuate wildly. Wouldn't surprise me if some of the events are loss-making...
- Worth noting that PIF itself has a 5-year sponsorship agreement with the ATP, including a takeover of the rankings system. They contribute their own money under contract, and that obviously changes the economics somewhat. The cash flow, return proposition and therefore value to PIF specifically would be lower than, say, a third party bidder having no existing tie-ups with either tour conducting an outside-in valuation.
- Operating Costs - costs associated with the day-to-day running of each event. Capital costs - regular maintenance during "off-season", one-time revamps / upgrades / facility installations. There are ongoing expansions and modifications all over the place
- Obviously the key expense that is publicised is prize money distributed to players (effectively the "wages"). This continues to rise.
- In 2022-23 the ATP introduced a 50-50 profit sharing mechanism, whereby half of the profits generated by ATP level tournaments are distributed back to the players. The WTA is not yet in the right financial position to offer this sort of sharing mechanism.

I don't know what the tax situation is with the ATP & WTA as overarching corporate bodies, but that aside the free cash flow stream will be lower than one might think. There is reasonable transparency in media coverage of the various revenue components (headline-grabbing stuff i know), but the true scale of cost and capital outlays are left to the imagination. Much more opaque, aside from the whole prize money element, and a reason for why this doesn't seem like a particularly high offer. It actually may not be entirely unreasonable.

The most interesting thing is how the annual revenue and cost profiles disclosed by the ATP and WTA sync up with whatever i said above. Their combined annual revenues are US$400 million or thereabouts...

Incidentally: I know the headlines say take-it-or-leave-it, but PIF has been known to lowball offers and can occasionally be "persuaded up" by the order of 15-25%. If I had to guess, a "fair value" may be in the $3bn range, very unlikely to be much more than that...
 
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Bartelby

Bionic Poster
If you are saying three billion is the right price to buy the combined ATP/WTA, then I simply can't agree.
 

Krish872007

Talk Tennis Guru
If you are saying three billion is the right price to buy the combined ATP/WTA, then I simply can't agree.

I guess that's the muddy territory - what is the exact transaction we are defining?

1) A full buyout of the ATP and WTA tours, including their operating subsidiaries (i.e. the 9 Masters tournaments)?
2) The commercial arms of the the ATP and WTA? In effect holding companies that sit above the tournaments and manage the various income streams. CVC invested into WTA Ventures at an effective $750 million headline valuation last year
3) The option value to merge the tours and the right to move around a couple of Masters events?

The most interesting thing is the annual revenue figures quoted in the article in the OP (from 2022): £238 million for the ATP and £90 million for the WTA. That's pretty staggering - and obviously doesn't sync with the revenue model for each individual Masters tournament...
And this (slightly more dated) one which underscores the losses made by the WTA over 2019-2021. Assume they are back in positive territory post-COVID but it can't be more than £50 million p.a. surely. https://www.theguardian.com/sport/2023/oct/30/finals-venue-chaos-is-symbolic-of-the-wtas-failings

These are the sorts of figures that make me think $2-3bn is an ok zone to be in, but we could easily be missing something.
 

Bartelby

Bionic Poster
My thinking is that two billion buys you an over-priced Master's tournament, and a seat at the decision-making table, and not anymore.

A 350 million pound/dollar revenue for the ATP/WTA would indicate a price for both at 10 billion-plus, but I think that revenue estimate may be very low.

According to one estimate I read, the AO would generate that much revenue.
 
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vokazu

Legend
I don't want to travel to a place where the policemen are harassing people who don't wear religiously approved clothings.


 
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TennisBro

Hall of Fame
I don't want to travel to a place where the policemen are harassing people who don't wear religiously approved clothings.


That's just one out of a few issues; the control of local media there is one of the most concerning troubles ATP/WTA should consider before anything. It's bloody 2 billion if heads are chopped off for it.
 

vokazu

Legend
That's just one out of a few issues; the control of local media there is one of the most concerning troubles ATP/WTA should consider before anything
Yeah, like you can be sentenced to death for tweeting something that opposes the government's view.
 

Bartelby

Bionic Poster
There is no Saudi takeover. And the tours themselves want to merge.

The Saudis are paying over the top for a Master's and some minor roles.

This is one of those times where it's inadvisable to look a gift horse in the mouth.

Turn down the offer. Keep the tours separate. The goals of the takeover are quite suspicious.
 

Indigo

Professional
Existing tennis records will become void if new Masters and GS are added. Tennis will lose it's competitor charm. Seriously, I won't care anymore. For example, Nadal's record at RG will never be eclipsed, but if you add another clay GS anything is possible.
 

Rosstour

G.O.A.T.
1 billion for both tours is too low
a single nba team is worth 500 million

Just like with the Premium Tour plans, there are no details on what this will actually mean for tournaments and fans. Is $1B going to buy them a Masters hosting role and a sportswashing headline that they helped to integrate the WTA with the ATP or does it mean other wholesale changes for the sport?

I just think this is much ado about not much.

It's not clear what this rather paltry $2 billion figure does buy as a unified tour would have to re-write the structure of the tour. It leaves Gaudenzi on top, clearly.

But does the PIF take half the tour that used to belong to the bosses, and the players remain with their "lesser half"? Or does PIF just join with the other bosses?

KSA is buying a seat at the table for $2 billion, plus a male and female Master's, not the whole box and dice.

Yikes. I didn’t think this would happen so fast. Hopefully, the KSA offer will get rejected. I hate what they’ve done with professional golf.

Here's my take. This isn't a serious offer; it's a threat. "Take this $ now or you get what the PGA got"

If the ATP refuses then the Saudis get hostile.
 

sureshs

Bionic Poster
There is no Saudi takeover. And the tours themselves want to merge.

The Saudis are paying over the top for a Master's and some minor roles.

This is one of those times where it's inadvisable to look a gift horse in the mouth.
The real point is what happens if the offer is not accepted. The Saudis will split the sport like they did for golf. This is not a gift horse. This is a horse which will turn into a lion if the gift is not accepted.
 

Rosstour

G.O.A.T.
Correct. They will try to lure players and create their own tour, like they did for golf.

Djoko is a big figure in this.

Imagine a breakaway tour with him as the headliner, and the AO as its crown jewel. More money than ATP/ITF and a chance for him to win far more hardware. Could be a way for him to stay on top longer.
 

Bartelby

Bionic Poster
This is an offer that will not be refused. The only part that might have fallen over is WTA involvement. And they've just announced their finals are moving there.

The real point is what happens if the offer is not accepted. The Saudis will split the sport like they did for golf. This is not a gift horse. This is a horse which will turn into a lion if the gift is not accepted.
 

a10best

Legend
No takeover will happen. Thank god. WTA and ATP already play 11 months of the year which is already too much.
- There is simply no calendar space.
- Saudi Arabia trying to be a control king. LOL
The huge majority will oppose and reject the offer. They'd have to 20x their offer for it to be considered.
 

Bartelby

Bionic Poster
Tennis is not taking on KSA so it will keep its labour monopoly. What I've already argued about tennis is also true of golf:

The Wall Street Journal revealed in July that the DOJ had launched an investigation into the PGA’s suspension of LIV players, and some PGA bylaws preventing golfers from participating in other tournaments. This isn’t the first time the PGA has come under investigation for allegedly monopolistic practices
 

Better_Call_Raul

Hall of Fame
Tennis is not taking on KSA so it will keep its labour monopoly. What I've already argued about tennis is also true of golf:

The Wall Street Journal revealed in July that the DOJ had launched an investigation into the PGA’s suspension of LIV players, and some PGA bylaws preventing golfers from participating in other tournaments. This isn’t the first time the PGA has come under investigation for allegedly monopolistic practices

PGA players had been wooed into playing in the Saudi LIV league. FInes were issued by PGA.
Things have settled down in golfing world. The similar scenario could play out with ATP. With a much different ending.
There is absolutely no assurance that ATP will keep its labour monopoly.
:unsure:

Saudi LIV Golf League did compete with the PGA Tour, but the situation has changed:
  • Previously (Before June 2023):LIV Golf was considered a direct competitor to the PGA Tour. Here's why:
    • Attracting Players: LIV offered significant financial incentives, causing some prominent golfers to leave the PGA Tour for LIV events.
    • Different Format: LIV's format with shorter tournaments, team play, and guaranteed payouts contrasted with the PGA Tour's traditional structure.
    • Legal Disputes: This competition led to lawsuits and tensions between the two entities.
  • Currently (As of March 2024): LIV Golf and the PGA Tour merged in June 2023. This unexpected development resulted in:
    • Combined Operations: The commercial aspects and rights of both entities are now under a single, for-profit corporation.
    • Reduced Competition: The merger eliminates direct competition between the two leagues.
Therefore, while LIV Golf initially aimed to compete with the PGA Tour, the recent merger has transformed the landscape.
They now operate under a unified structure, aiming to potentially reshape professional golf.
 

Crocodile

G.O.A.T.
So when will we know what’s going to happen, who will benefit and who will lose and for what reason would it be that the Saudi’s get their deal accepted ?
Obviously Craig at TA would not be all that enamoured with the idea.
 

The Guru

Legend
I think the slams proposal of the premium tour makes a lot of sense for the players and would be good for the fans too. It's just a question if they can put up enough money. The premium tour could also offer the 10th masters slot to the Saudis to keep the from trying to pull a LIV.
 

Bartelby

Bionic Poster
The deal has a 90-day expiration date. It will be accepted because it's a good deal for the ATP and only a minor set-back for Tiley and the Slams.

So when will we know what’s going to happen, who will benefit and who will lose and for what reason would it be that the Saudi’s get their deal accepted ?
Obviously Craig at TA would not be all that enamoured with the idea.
 

nolefam_2024

Bionic Poster
I think Saudi Arabia getting a masters is 100% guaranteed.

What are the numbers that are thrown around, AO getting 10 billion net worth? Where are these figures coming from?

Is this including the real estate and because the stadiums can be used for some other venue or something?

AO generates huge revenue by selling media rights and tickets I do agree. But how big is that? Players are getting around 100 million or so. If AO is worth 10 billion just from tennis, then why is prize money at 100 million which is 1% of net worth of AO? Something is not right.

Do anyone know the business side of tennis? I have no idea but let us know.
 

Drob

Hall of Fame
The Saudis are a reality. But tennis officialdom damn sure better make sure Saudis never have a dominant role, much less "own" ATP tour. What a sign of world de-civilization that would be.


Let Saudis have ATP Finals for the next 10 years (indoors, medium-fast).

10th M 1000 on grass. Major country candidates include:

India
South Africa
Brazil
Mexico
Germany
Russia
South Korea
Japan

Logistics might be difficult between RG and Wimbledon at some of these potential countries. Of course most of these countries have no experience with grass courts. India and S.A. probably exceptions. Germany is the most obvious nation with major tennis pedigree that has no Elite tournament. I'd say Halle for an M 1000 grass tournament, but somehow that would end up making Federer another $300 million dollars or so. Of course, Russia is out of the question. But is current India government any better? And if Saudis in, practically anyone could be.
 
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insideguy

G.O.A.T.
The Saudis are a reality. But tennis officialdom damn sure better make sure Saudis never have a dominant role, much less "own" ATP tour. What a sign of world de-civilization that would be.


Let Saudis have ATP Finals for the next 10 years (indoors, medium-fast).

10th M 1000 on grass. Major country candidates include:

India
South Africa
Brazil
Mexico
Germany
Russia
South Korea
Japan

Logistics might be difficult between RG and Wimbledon at some of these potential countries. Of course most of these countries have no experience with grass courts. India and S.A. probably exceptions. Germany is the most obvious nation with major tennis pedigree that has no Elite tournament. I'd say Halle for an M 1000 grass tournament, but somehow that would end up making Federer another $300 million dollars or so. Of course, Russia is out of the question. But is current India government any better? And if Saudis in, practically anyone could be.
If they ever had a grass masters it should be in Germany and it should be in Hamburg. Its so obvious.
 

Tshooter

G.O.A.T.
Saudis should be banned from tennis, together with the Russians.

giphy.gif
 

Tshooter

G.O.A.T.
I'm now seeing $2 billion in some disclosures / news outlets…
$2 billion for what exactly. What is the general outline of the proposed deal? Nothing you wrote spells it out. You sometimes seem to conflate the two player-owner associations with the tournaments. Time will have to tell what PIF has in mind in terms of its role post deal. I’ve read from press accounts it wants to merge the tours and it wants a new sanctioned event and sponsor opportunities. Does it want board control of the post-merger association? Incidentally, can you explain what “including takeover of the ranking system” means?
 
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Tshooter

G.O.A.T.
I guess that's the muddy territory - what is the exact transaction we are defining?

1) A full buyout of the ATP and WTA tours, including their operating subsidiaries (i.e. the 9 Masters tournaments)?
The tournaments are not operating subsidies of the WTA or ATP.
2) The commercial arms of the the ATP and WTA? In effect holding companies that sit above the tournaments and manage the various income streams.
Neither entity are “in effect holding companies that sit above the tournaments and manage the various income streams [generated by the tournaments].”
CVC invested into WTA Ventures at an effective $750 million headline valuation last year
3) The option value to merge the tours and the right to move around a couple of Masters events?
Yeh, what’s the proposed deal. That’s a good question.
The most interesting thing is the annual revenue figures quoted in the article in the OP (from 2022): £238 million for the ATP and £90 million for the WTA. That's pretty staggering - and obviously doesn't sync with the revenue model for each individual Masters tournament...
You can look up the WTA and ATP revenue numbers. They are not-for-profit tax exempt entities and must file Form 990s with the IRS.
These are the sorts of figures that make me think $2-3bn is an ok zone to be in, but we could easily be missing something.
Missing the minor detail of what PIF would be getting for its investment. :giggle:
 
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Bartelby

Bionic Poster
Gaudenzi and the ATP want to merge the tours and are using the money provided by the limited Saudi buy-in to get the WTA to agree.

$2 billion for what exactly. What is the general outline of the proposed deal? Nothing you wrote spells it out. You sometimes seem to conflate the two player-owner associations with the tournaments. Time will have to tell what PIF has in mind in terms of its role post deal. I’ve read from press accounts it wants to merge the tours and it wants a new sanctioned event and sponsor opportunities. Does it want board control of the post-merger association? Incidentally, can you explain what “including takeover of the ranking system” means?
 
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