how much of the pie to tennis players deserve

The folowing is a guest post, written by Percy Pienaar.

Male tennis players are once again considering strike action during the first Grand Slam of the season – the Australian Open.  The ATP player council considered similar action ahead of this year’s Australian Open, in protest of the level of prize money as a percentage of overall revenue generated by tennis tournaments.  Strikes in sport are not uncommon; most readers will remember the NBA player ‘lockout’ (a term used when industrial action is initiated by employers rather than employees) of 2011 – which was only resolved late last year.  The history of professional sport is checkered by player strikes; probably none more dramatic than the legendary NHL lockout in 2004; when an entire season of the sport was lost.  Most major professional US sports (including NFL, NHL, NBA and baseball) have incurred multiple player strikes since the mid-twentieth century.

Strike action taken by sportspeople can simplistically be grouped into two main categories:

–        Category A: when players seek to expand the payment pool available to them – or increase the size of the ‘pie’.  Last year’s NBA lockout is a prime example of this; players were pursuing a guaranteed salary pool of 55% of all basketball related income (a larger pie than what NBA owners/administrators were offering).

–        Category B: when players seek to change how the payment pool is distributed – or seek to change the way the pie is sliced up.  A good example of this was the New Zealand Cricket Players’ Association strike of 2002, which focused on improving conditions for lower ranked players (increasing their share of the pie).  This often occurs in conjunction with category A strike action, simply because it is easier to share pie when you already have plenty yourself.

The threatened strike action from ATP players incorporates elements of both categories.  While the players are seeking a greater share of the revenue generated by major tennis tournaments (a larger pie), the communicated objective of doing so is to improve prize money for lower ranked players (altering how it is sliced).

Two major questions are raised by this.  What percentage of overall revenue are players entitled to?  How should this then be distributed?

It’s hard out there for an above average tennis player

How much of overall revenue generated by their sport are players entitled to?

In my previous ramblings as a guest writer for this website I touched on the concept of how much players are worth, and how much of the revenue they generate it is fair for them to receive  Collectively, tennis players are estimated to receive less than 20% of the revenue generated by Grand Slams – significantly less than most other sports.  To provide some context for this, in last year’s NBA lockout players were negotiating to keep salaries at 55% of overall revenue (down from 57% – administrators and owners were arguing for a lower figure).  The NFL’s revenue agreement gives an upper limit of 48% for players.  The NHL commenced its lockout in 2004 because players had received an enormous 76% of gross revenues during the previous season.  Andy Roddick, who is used to championing the cause of tennis players, has often pointed out the vast differences between the earnings of tennis players and other sportsmen – both as gross figures and as a percentage of overall revenue.  Roddick has previously highlighted the powerlessness of professional tennis players by comparing them to music group The U2.  “The U2 doesn’t ask permission to go on tour.  We ask permission to do a lot of things”.  True, and you only earn approximately 20% of total revenue.

Obviously the percentage of revenue directed into prize money needs to be reasonable and affordable.  Although it is the players that create the ‘product’, they would not be in a position to do so without the business risks taken by team owners and event sponsors.  So if owners/administrators/sponsors cannot be adequately recompensed for their risk, the sustainability of the sport is threatened, and owners are likely to turn around and take industrial action of their own by locking players out (as in recent NBA and NHL examples).  For this reason, there is a growing global trend in sport towards a ‘middle ground’ whereby players’ salaries are linked to a carefully defined overall revenue generation.  This has occurred recently in NHL, NBA, and most recently by the Australian Cricket Players Association.  It is recognised as a fair and affordable way to slice up the revenue pie; while aligning incentives to perform and splitting risk evenly among players and owners/administrators.  There is no reason this model could not be adopted in individual sports such as tennis.  Overall prize money could simply be linked (on a per event basis) to the overall revenue generated by that event.

How should the prize money be distributed?

In most team sports the distribution of the player payments (the slicing up of the pie) is simplified by the effective presence of a market for players’ services.  Sometimes guided by a salary cap, player markets enable salaries to be decided by coaches/owners’ perceptions of a player’s worth.  Conversely in tennis (and many other individual sports), prize money is distributed according to standardised percentage matrixes.  The event winner might receive 18% of the total prize money; with 12% for the runner up, and so on down to first round losers/last place.  The table below (in Australian dollars) displays the prize money, and percentage of total prize money, earned by exit stage at the 2012 Australian Open.

Finishing Position Prize Money % of total
First round loser $20,800 0.16%
Round of 64 $33,300 0.26%
Round of 32 $54,625 0.42%
Round of 16 $109,250 0.84%
Losing quarter-finalist $218,500 1.68%
Losing semi-finalist $437,000 3.36%
Runner-up $1,150,000 8.85%
Champion $2,300,000 17.69%
Total $4,323,475 100%

So while the world’s leading players are very well remunerated, “the guys ranked 90 to 100 to 1000 in the world aren’t making the big bucks”, as Andy Roddick puts it.  Since 1980, in real terms, prize money at Grand Slams has increased by 1095%, and prize money across the entire ATP programme has increased by 216%.  Yet prize money in Challenger and Futures level events (for lower ranked players) has decreased by 15%.  Making things harder for up and coming players, tournament structures generally ‘favour’ established players.  Tournament entry and seedings are decided by players’ rankings.  The higher the ranking, the greater chance of automatic entry to tournaments (without needing to qualify), and indeed being a seeded player in that tournament.  Generally the top 25% of players are seeded, with seeded players guaranteed not to play other seeded players in the first round of tournaments.  In this way the system could be argued to be self-perpetuating.  The more ranking points a player earns, the greater his opportunities are to earn more.  Certainly it is considered easier to keep a high ranking than to break through and gain one for the first time.

Changing the way tennis prize money is distributed would not be too difficult; the ATP player council could work with the ATP to change the standardised prize money percentages to be more bottom heavy.  However it is surprising that player council would want to.  The structure of elected ‘officials’ on the council does not lend itself to systemic change.  The player council is structured in favour of higher ranking players: four places are reserved for players ranked from 1-50, two positions from 51-100, while only two places are open to all ATP members.  High ranking players are likely to favour the somewhat self-perpetuating nature of the status quo, so why should they amend the system to give a leg up to lower ranked players?  The top ranked players hold all of the bargaining power: both on the player council, and in debate (given that they are the ones who generate the most revenue).  Depending on how seriously the players on the council take their electoral mandate there is every chance that the interests of lower ranked players could be ignored indefinitely.  It could equally be argued that it is in the ATP’s interest to retain the current system – in which it is easier to stay at the top than reach it, thus enabling established stars to continue increasing their marketability and market penetration.  Is it going a step too far to suspect the ATP and its player council of a conspiracy to stymie change? Was it Nasa that faked the moon landing, or could it have been the ATP?  Is the timing of Neil Armstrong’s death merely coincidental, or was he silenced?

Sam Groth, a lowly ranked Australian professional tennis player, recently wrote about the struggles of life at the lower end of the ATP tour.  All very sad, but does it mean the distribution of prize money should change?  Can’t afford to travel the world, live in the sun and play sport all day Mr Groth?  Neither can I, join the queue.  True; the world’s top players receive exponentially more than lower ranked counterparts, but is this unfair? Isn’t this the way most professions work?  The 99.99th percentile is able to command astronomical salaries while the rest of the world is remunerated far more modestly?  And if previous generations of players had to work hard to ‘make it’, why shouldn’t future players have to do the same?  This is probably not quite Mr Groth’s point.  However, he might legitimately question whether the Australian Open winner is 110 times better than a first round loser.  Or 150 times better than an entire tournament of 32 players (generally ranked between 300-1500) competing for a purse of $15,000 in a Futures tournament?

A contrary argument focussing on the best interests of the game would state that talented youngsters need to be able to see a viable financial future in a sport to pursue it.  If tennis wants to attract top talent, it needs to make itself as accessible as possible as a career.  This point was illustrated by Cameron Pilley (an Australian squash player ranked 20 in the world) on twitter in response to Sam Groth’s article: “Tennis want more money because 1st round losers in majors only get 20k?? Gimme a break you clowns”.  Squash is a similar sport to tennis (in fact it is often referred to as its poor cousin), played with racquets indoors.  Despite the sport’s bountiful innuendo possibilities (playing with balls in a hot, sweaty box), squash has never been able to match tennis for popularity or prize money.  The 2012 World Men’s Squash Championships will pay a total of US$325,000 in prize money.  With a very limited market to sell television rights in, squash probably occupies an unusual position in that the prize money received by players (although very modest) far exceeds the revenue generated by tournaments.  What is more fair: that tennis players receive a relatively large sum of prize money, but only a small fraction of revenue generated; or that squash players receive very little prize money, but a large amount relative to revenue generated?? Just who is the clown?!?

Both, I say.  Less popular sports like squash and ultimate Frisbee (and the Futures tour in tennis) survive by the grace of generous sponsors and patrons.  In what other avenue of life do generous sponsors throw small tidbits of money in the direction of the least talented?  Shouldn’t players like Sam Groth consider themselves lucky to get what they do?  There are approximately 2000 world ranked tennis players.  The top 1% earn extraordinary amounts of money.  The top 5% live very comfortably indeed.  So far, pretty consistent with the rest of society.  But players from 250 down (the bottom 87.5%) are in struggle street, unable to make ends meet.  At this point tennis stops being analogous to the rest of life.  Does this mean we should feel sorry for them?  In most professions, whether it be plumbers, economists, bus drivers or seal tank cleaners, average performers around the 50th percentile are very able to eke out a living (let alone those in the 87th percentile!).  How would I feel if the bottom 87.5% of guest sports philosophy columnists were living below the poverty line!?  Well quite simply I would not pursue it as a career.  In tennis, as with every other profession, a clearly defined market for services exists.  For example in a market over-saturated by builders, it may be of questionable logic to select building as a career path.  In the case of tennis, it can quite easily be seen that there is a market for the top 150 or so male players to make a decent living (thanks to gender equality there is a market for the top 150 or so female players too!).  Therefore anybody considering tennis as a career should presumably be aware of the probability of success and financial reward.  I would argue that none of this is a secret.  Yet players like Sam Groth, very aware of the conditions of a career in professional tennis, have their hands out for assistance from the top players.  Do short, skinny white guys who don’t make it as basketball players expect handouts from Kobe Bryant?  Do people who fail the entrance exams to Medical School expect a stipend from qualified Doctors?  For those who fail in life, a job at McDonald’s will always wait.  Why should tennis players be any different?

So what on earth am I saying?

Further inane rambling aside, the players indubitably deserve a larger percentage of tournament revenue in prize money.  To receive only 20% of generated revenue is a slap in the face of players, on whose sweaty backs plenty of fat cats are no doubt riding the gravy train straight to cliché-ville.  The percentage of overall revenue derived from tournaments that is put back into prize money should be raised to be more in line with other sports.  An easy way to administer the system would be to set the prize money for the following year’s event as a specified percentage of the (audited) previous year’s revenue.  In this way incentives to maximise revenue are well aligned, risk is shared between administrators/promoters/sponsors and players, and changes in profitability are shared by all of the game’s stakeholders.

While this would work well (and simplistically) for the larger events on the ATP calendar; it will not (and should not) help the plight of the lower ranked players plying their trade on the Challenger/Futures circuits.    Linking the prize money at such tournaments to the revenue generated the previous year would see prize money fall even further!  A portion of the incredible amounts of revenue generated by Grand Slams could be used to subsidise these events, but why should it?  Why do the top tier of tennis players owe a service to the lower ranks?  Why should not tomorrow’s lower ranked players face the same hurdles to reach the top as today/yesterday’s?  Is there even any point passing on the extra pie slices to the lower ranked players?  Whilst players ranked 100-150 in the world (and their real estate agents and sports car dealers) might appreciate a boost in prize money; even a ten-fold increase to prize money at Futures level would not come close to covering players’ travel and accommodation costs (let alone the costs of coaching, medical care, racquet stringing and food).  These tournaments exist by the grace of generous sponsors, and will continue to.  The ATP could increase the minimum prize money for such tournaments, but in doing so may risk turning away previous sponsors.  And for what?  A drop in the bucket?  Not worth it.  I am surprised that the ATP player council is even talking about changing the way the pie is sliced up, and suspect this is being used principally as a communications ploy to make their demands for a larger share of tennis revenue more socially/politically acceptable.  At the end of the day, tennis players (like everyone else in life) must live with the consequences of their career choices.  The conditions and economics of the market for tennis players is not a secret.  The potential rewards may be high, but so are the risks for the majority of players.


3 thoughts on “how much of the pie to tennis players deserve

  1. I haven’t read the article but I have to disagree with Mr Shambly, women’s tennis isn’t as good and so women just don’t deserve to earn the same amount of money as men do it’s as simple as that

  2. Just because the revenue structure was wrong from the start but successful players still had to go through it doesn’t mean they shouldn’t correct it to ensure the current and future generations experience it as well.

    There is corporate corruption in all industries but one suffering more doesn’t mean that others have no right to try and fix the situation their own situation.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s