We might run the only government-underwritten tennis grand slam but it is still a pretty good event for Melbourne – even if you can’t get a press pass or a corporate freebie to see the action.
Crikey has been following the Australian Open this past week and reflecting back on glory days gone by. Let’s start with those glorious freebies that came with being a mainstream business hack working as business editor of the Murdoch’s Herald Sun.
American aluminium giant Alcoa took me and colleague Lisa Jamieson to the women’s final one year – they wanted positive coverage in the dispute with the Kennett government about massively subsidised power deals for their smelters at Portland and Point Henry.
Foster’s shouted us a couple of times but never to a final like Lion Nathan did back in 1993 when (I think) Todd Martin took on Jim Courier.
Others to shout free tickets include Coles Myer, German chemical giant Hoechst and another company (can’t recall name) which contained several millionaires who were part of the management team that picked up the Melbourne Water outsourcing contract from the Kirner government. They didn’t want any criticism of their sweetheart deal.
When working for Kennett the freebies tended to dry up with the exception of tobacco giant Philip Morris which lavished largesse on the Premier’s staff. In 1994 I managed two excellent free tickets to the men’s and women’s finals courtesy of the world’s biggest consumer products company. Ironically, this was about the same time Kennett was fighting then Federal Health minister Graham Richardson’s plan for tougher labelling laws.
It is worth briefly reflecting on the status of Melbourne Park because the Australian Open is the only grand slam under-written by a government.
Crikey went to Wimbledon and the French Open in 1999 both of which are played at private clubs at the end of the train line. Tickets are either impossible to get or ridiculously expensive. I scalped a ticket to day three of the French for $150 and at Wimbledon we queued up for about two hours just to get a $40 ground pass. We’re very lucky in Australia and maybe that’s got something to do with the ownership structure of the Open.
Yet the yanks call us a socialist country because of things like the Aussie Open and the government-underwritten Grand Prix races in Victoria. Melbourne would have lost the Australian Open if John Cain had not committed to build Melbourne Park in the mid-80s. The press release Cain put out in 1985 promised it would cost $52 million and had Frank McGuire, Eddie’s older brother and best man, as the press secretary to contact. Unfortunately, union problems saw the cost blowout to $93 million and then the debt blew out against to about $130 million because Cain debt-funded the venue and made it capitalise the interest. The Kennett injection allowed the building of the big function centre and some extra courts and then he added Pommie Phone Company Arena a few years later, although like Cain’s first effort, this suffered major time and dollars blowouts. All the other Grand Slam venues have had major upgrades in recent years so it was important we kept up although the profits from each year’s Open of about $10 million aren’t that flash when you consider the investment. New venues like Crown have left the venue side of the business seriously stranded so it struggles to make any money for the rest of the year.
Can’t help but to name drop as we stroll down memory lane
As a formerly qualified tennis coach, keen pennant player and former pennant tennis correspondent for the Sun News Pictorial and a string of Leader newspapers, the 1994 Australian Open was very exciting for two reasons.
Firstly, I got to put out the press release for Stockdale when it was announced the government was bailing out the centre with a $60 million injection. Hardly any journos turned up for the press conference as they only cared about the on-court action. The other exciting thing about that year’s Open was getting Kennett to go along and watch a young Greek kid Mark Philippoussis play his first ever match in a major tournament.
Crikey told Kennett, who was Ethnic Affairs Minister, that if he wanted to woo the Greek vote he should jump on this particular bandwagon very early so he could say he was backing Philippoussis before he became a star.
Sadly, the Scud got thumped 6-2 6-2 6-2 by Grant Stafford from South Africa and Kennett was at first cursing me for putting him onto a dud, but later struck up a close relationship with the Scud after they exchanged several letters. He also liked the back page picture in the Greek paper Neos Cosmos. A few tennis experts were cursing me for putting extra pressure on the Scud by dragging the Premier along, but you may as well throw these teens in the deep end.
Wondering along for day three this year
Naturally, Kennett could demand as many freebies as he wanted but as a hard-up internet publisher, we didn’t directly pay for the two ground passes yesterday as you get them when you sign up each year for a $200 membership at Melbourne Park.
Designated partner Mr G slept in so I wondered down on my Pat Malone and the first person I recognised was a Crikey subscriber Ric, who was resplendent in a Crikey tee-shirt. The memories came flooding back as we watched Wayne Arthurs win a tough battle with a Swissy in five sets before he later crashed out in four sets the following round to Pommie Tim Henman.
A group of Camberwell Grammar boys were rooting for Arthurs, which means I can’t not mention the victory Crikey had over this fellow lanky lefty in April 1986. The venue was a school match at Camberwell Grammar and the score was 7-0 in about 10 minutes but Arthurs was only about 5 foot 4 at the time. We then played 18 months later at Caulfield Rec tennis club and Arthurs was over 6 foot, the top seed and twice the player. Crikey hung in the first set to get to 6-6 but was down a 6-5 in the tie-break with Big Wayne serving for the set. Like now, Arthurs had a big serve, so big that we broke a string when returning his serve on this crucial point. Arthurs followed the serve in then, as luck would have it, Crikey passed him with a broken string. Pure arse. I then won the next two points and Arthurs smashed his racquet and then tanked the second set 6-0 before storming off. It was this sort of behaviour that saw Arthurs take another eight years to get his head together before he finally broke through at Wimbledon in 1999 when he didn’t lose a serve right through the qualifying and main draw, finally succumbing to Agassi in four sets in the semis.
On the next court, Rumanian immigrant Andrew Ilie was whipping the crowd into a frenzy during an epic five set victory over ninth seeded Spaniard Juan Carlos Ferrero. Having watched Ilie play at the French Open, Wimbledon and the Olympics, I can tell you that when he’s on fire, there is no-one more entertaining. And I mean no-one. Big call, but he’s a corker to watch when he’s winning as his effort on Sunday against Agassi showed.
Crikey played him in a satellite tournament in Canberra back in 1993 when he was just 14. After leading 4-2 in the second set we squandered another break point and then lost 6-2 6-4. He was a nice quiet kid with huge ground strokes back then and now he’s a nice kid with ever bigger ground strokes. He ripped the shirt off after winning yesterday, just as he did in front of about 6 cheering Aussies at the French in ’99. It’s not just a home town thing for the press, this guy is so strong he may as well pretend he’s the Incredible Hulk. Ilie is one of those loyal kids who has stuck with his long time coach Craig Tizer, a nice bloke who we used to play pennant and summer comp against. Ilie is such a great contrast to Dokic and The Scud and should be given a much bigger run in the press from here on.
Once Crikey starts name dropping it is hard to stop. Apart from playing with and against Warnie in cricket and hitting Paul Reiffel one bounce over long on for four, I almost got on a court with both Rafter and The Scud.
In the case of The Scud, it was my turn out of the grade one pennant team in 1991 and we lost to his outfit in doubles in the fading light. The Scud’s dad Nick was then and still does hang around like a bad smell, grunting at the odd person and swearing under his breath. It is fair to say he put lots of pressure on the young kid and this might explain his inability to reach his full potential even to this day. There was no loyalty back then or today. The Scud traded coaches and clubs with gay abandon under the guidance of his dad during his junior tennis days. And then he’d be totally unreliable, coming up with excuses such as “I had to go to a Greek birthday party” when explaining why he would go missing in action for a couple of weeks during the pennant season. As the person behind Templestowe Park’s State Grade pennant teams in 91 and 92, I even tried to lure The Scud across to play, but did not have the dollars on offer to satisfy his dad so I couldn’t even get past the taxi-driver on the phone and speak to the rising star in question.
So close to a game with Rafter
There could not be a bigger contrast with Pat Rafter. Back in 1993 I lost 6-4 7-5 to a guy called Paul Aitken in the second round of the Dendy Park satellite tournament. I bumped into Paul three months ago and he mentioned that he played Rafter in the next round and lost 6-1 6-2 when he was ranked about 700 at the time. Damn, that should have been Crikey as Aitken was beatable if the fitness and form were just a couple of notches better. Aitken said that Rafter was a thoroughly decent chap to play against and said at the time that he planned to give tennis a couple of years and then try something else if it didn’t work out. Thankfully, it did work out.
Fromberg leaves Tassie and flattens Crikey
The other big name that Crikey has played is Richard Fromberg. Unfortunately, we have to wind the clock all the way back to about 1981 for this one, when Frommie ventured across Bass Strait for his first ever tournament on the mainland. I was the second seed in this particular under 12s tournament at Ringwood and got clobbered 8-2 by this guy that none of us had ever heard of. Frommie and I hung around together for the rest of the week but he was then and remains today a very shy guy who has probably made the most of his game given that there are others out there with more raw talent.
Shambles at Vohdahphone Arena
When visiting Melbourne Park last week, we tried twice to get into Pommie Phone Company Arena but the queues were just too long. Where was that media pass or corporate invitiation when you most needed it. The French and Wimbledon only sell tickets to their second string show court, so it is good that punters with ground passes are allowed in but why would you then give them passouts so they can monopolise a particular seat for the day. Once you’re out, you should be out as this would give more people a chance to see more of the action. At least we’ll be able to see the stadium when we go to the Coles Myer AGM next year as they only get about 1000 of their shareholders showing up and it seats 10,000.
We bumped into a fully accredited Herald Sun scribe at the tennis who was very satisfied after a big freebie lunch in the corporate area. “You know what it’s like,” he said with a big smile. Ahhh, journalism. Great access, lots of people sucking up to you and plenty of freebies. Who’d do this web crusading thing from home?
Lastly, we also bumped into another old tournament colleague who is now coaching Andrew Florent and Josh Eagle who are a couple of Aussies ranked seven in the world in doubles. Crikey lost in three sets to Florent in the mid 1980s on the plexipave out at Waverley. When chatting to Florent’s current coach, Crikey stuck his foot in it when this chap asked what old man Dokic had been reported saying the press. I said that he’d gone on 6PR in Perth and called John Newcombe a drunk, to which he recoiled in horror. What’s wrong I asked: “That woman next to me is John Newcombe’s daughter,” he whispered. “She goes out with Trammachi (Aussie doubles player we were watching.)
This chap raved about the time he’s been having travelling with the boys but said it is a shame the ATP and the players are in talks that could squeeze out the doubles experts and encourage more of the name singles players to hit the doubles courts.
That’s all for now, but do check out this excellent article by Mike Yuille in Eurobusiness magazine which explains the challenges tennis is facing going forward and just how commercial it has become.
Eurobusiness Unveils All On Tennis Inc
By Mike Yuille
The commercial future of the tennis industry is in the hands of two men – Daniel Beauvois and Larry Scott.
Tennis was one of the first big money sports alongside golf and both were made rich by the work of promoter Mark McCormack. But commercially tennis has not moved on in the last 15 years, unlike sports such as Formula One and soccer, which have made major advancements. Although sport earns millions – and tennis players even more – it has become disorganized and fragmented. This has caused erosion against other sports and meant tennis has lost audience share.
It’s surprising because until recently the structure of tennis has actually been very simple. As well as a host of international tournaments, there were four Grand Slam events – the British, French, US and Australian Opens. The Grand Slams were organized by individual country tennis organizations. The rest were organized by the Association of Tennis Professionals (ATP), the industry’s main governing body, and managed by individual country promoters. Everyone made money but Grand Slam events creamed fortunes whilst other tournaments picked up the crumbs. To this day no one knows how profitable the Wimbledon, Flushing Meadows, Melbourne and Paris opens are except that they are very profitable. The rest of the tournaments are worth far less but are still notable events, especially the top 10. Although the ATP organized the vast majority of tournaments, it did not control the commercial rights. Most tournaments were sold to television separately – and every organizer did a different deal with sponsors. Whilst the big events did well, the smaller ones were being squeezed. It was a fragmented situation that no one was happy with.
Then came along 35-year-old Larry Scott, a former tennis player, unused to playing by the rules. He was made chief operating officer and effective commercial head of the ATP. His brief was to reorganize the commercial affairs of tennis. And not before time. Scott was uniquely qualified. The tall, highly articulate Harvard graduate had represented players in a few confrontations with authority over the years.
He has ushered in a new era that has seen 70-plus organizers surrender the commercial rights of their events to the ATP in exchange for a cash sum according to the status of their event. Gone is the old fragmented country-by-country, rather amateurish approach of running the commercial side of tennis.
Scott’s entrepreneurial revamp has not stopped at money – he has also introduced a streamlined points and rules system, a new tournament structure, and a programme of international marketing.
To fund the payment to organizers Scott has signed a US$1.2 billion deal with sports marketing company ISL, owned by the Dassler family. ISL, run by Daniel Beauvois, guarantees that the ATP will have at least US$120 million a year to distribute to its tournaments. In reality it should be a lot more, as after that US$120 million is generated there is a 50/50 split between ISL and the ATP. The basic scheme guarantees the event organizers their previous income and anything ISL brings to the party is gravy. What it does is allow common sponsorship deals to be negotiated across tennis to obvious benefit.
Scott’s US$1.2 billion, 10 year deal has the whole of the tennis world gasping. It is unprecedented and a bonanza for organizers used to one-sided negotiations with TV companies and sponsors which have in the past picked up major events cheaply.
ISL, based in Lucerne, Switzerland, has the huge financial resources of the Dassler family behind it. The late Horst Dassler founded the company in 1982, and both ISL and the Dassler family fortunes are now run by his son Horst Junior. ISL is one of the market leaders in sports management and works mainly for sports governing bodies. It works for FIFA in the World Cup and for the Olympic Games committee. It is also working with European soccer body, UEFA on the Euro 2000 championship.
The deal between Scott and Beauvois, signed in November 1999, gives ISL the exclusive marketing, broadcast and licensing rights to the ATP’s international tournaments across 30 countries. From 2000 onwards these will be rebranded as International Series, the Tennis Masters Series and the Tennis Masters Cup.
Most observers in the tennis world think that ISL has overpaid. It bid for the rights in competitive auctions and the next closest bidder was Octagon, which dropped out at US$1 million. Even Beauvois has admitted publicly that ISL could drop US$50 million on the deal this year alone.
But although it will be on the hook in the early years, the later years should generate substantial profits for ISL and the ATP. Scott believes the ATP has pitched the guarantee precisely right: “This is a true partnership. We were looking for an agency to help us. We wanted a strategic partner with the experience of a centralized approach to TV and marketing rights packages,” he says.
Beauvois has plenty of clout to make things happen. He has marketing people in 14 offices around the world, a personal contacts book second to none from selling soccer and athletics. Scott agrees: “with ISL we knew we were getting a partner that had been there, done that, and had the right TV and marketing knowhow.”
The deal has generated a huge amount of jealousy amongst rival sporting agencies. They dislike the instant clout it has given ISL. Beauvois has devised a package based around the nine-event Tennis Masters Series. Surprisingly the numbers appear to be in the public domain and , unlike others sports, not a closely guarded secret.
There are nine slots for title sponsors for the nine-event Tennis masters Series, who will pay US$8 million each. The series will also have four second-tier supplier sponsors who will pay US$4 million each. These sponsorship deals will be supplemented by a series of small deals. In all, sponsorship will generate around US$90 million providing it is all sold. Deals have already been signed – with top names such as Ericsson, champagne house Lansons, Newsweek magazine, Fila, Waterford Crystal, and Mercedes Benz.
But TV is the key and the revenues generated are still small. TV companies know they are essential to the events and can sometimes negotiate their own terms, which may or may not include payment. Centralised handling of television rights, could change that rapidly but certainly not immediately. Tennis does have something to sell and TV rights for the Grand Slams, especially Wimbledon, if put up for tender could be worth US$100 million a year each worldwide.
Scott says: “We are in the entertainment business. And tennis is one of the top three sports in Europe, and among the world’s top five. In recent years the presentation of the game has lagged behind the developments taking place in other sports such as Formula One racing. But when the biggest matches are on, tennis can do little wrong. When Brazilian star Gustavo Kuerten slugged it out against Pete Sampras in Miami back in march, the match got the second-biggest global satellite audience rating ever, only to be topped by the movie Titanic. The trouble is, when lesser-known players hit the screen, it’s as if the TV ratings hit an iceberg.”
That is the problem Scott and Beauvois must solve but at least they can now take a central view and control television across the whole sport. The changes have been a long time coming. Scott’s ATP is a unique body. It is both a player’s association and a governing body, and has presided over the game since it was set up in 1972. In the past it liased with tournaments but each event in every country was entirely independent, and run by different organizers who handled their own local television broadcast deals and marketing promotion. But this fragmented approach could not last forever. The first upheaval came in 1989 when the players protested against an out-of-date and badly-run system. Among the leaders were Scott and John McEnroe. Scott was a formidable player in his day, ranked among the world’s top 200 singles players during his brief three year career. When he stopped playing in 1989, he was elected vice-president of the ATP board by the players.
He came in on wave of unrest to effect change. As he remembers: “We as players felt we were getting the short end of the stick when it came to negotiating prize money, TV and sponsorship rights, so we walked out.” The players had a point. Very little was earned in prize money and they relied for income on outside sponsorship deals. The best players were earning US$10 million-plus a year, with Boris Becker topping the lot at some US$30 million. The other 190 of the top 200 were on relative peanuts. At the time the management and structure of the ATP was acutely uncommercial, largely failing to exploit the potential of the sport and its stars. Tennis, as typified in the publics eye by the four Grand Slam competitions such as Wimbledon, was increasingly thought of a elitist, with a seemingly narrowing audience appeal. Many players felt that while other sports such as motor racing and golf were growing, tennis was in danger of losing its audience share. And in 1989, there was no central package of TV rights, which was becoming so lucrative for Formula One and soccer.
Scott says: “We wanted a more modern business and marketing approach, so we set up our own circuits. We tendered out for tournaments, and all existing event organizers came to us. So, we established the ATP as a 50/50 partnership between the players and individual tournaments,”
Scott found sponsorship, organized by individual tournaments, in a state of disarray. There were some 212 sponsoring firms. While this included many prestigious names, very few actually sponsored more than one or two tournaments. There was no sense of community beyond geographic boundaries. But with Scott on board and the strong backing of its player members, the ATP began to restructure itself and bring a more centralized focus to the commercial side of the sport. “We realized that we couldn’t just depend on a country-by-country approach. So we brought in IBM as a global sponsor and began structuring TV packages,” says Scott. In 1996 he managed to bring in Mercedes-Benz, which sponsored all nine of the most important ATP tournaments. With these two big multinationals involved, the revamped ATP realized that globalisation was the way forward. The trouble was that its small, overstretched board still had to manage everything itself.
Something more radical was needed. So in 1997 the ATP invited the world’s leading marketing and sports strategists to take a close look at how the game could be improved. The universal message was that the game was indeed seen as elitist. It had to update its image to have more relevance in the modern sports world and to attract new, wider audiences. It also needed a simpler structure and fan-friendly points system to enhance its appeal to both the public and sponsors alike.
As a result, events are being rebranded as a series rather than stand-alone titles. Tournaments will no longer be referred to by sponsor’s names but rebranded at Tennis Masters Series-Rome, for example. Scott has also instigated a new rankings system, unashamedly based on Formula One, now called the ATP champions race. The ATP is also being stricter with players. Each must play the four Grand Slam events and Tennis Master Series. These 13 tournaments will be the core of the tennis year, which will build up to a climax when the top eight players come together for the end-of-season Tennis Masters Cup. “We have certainly learned some lessons from F1,” admits Scott.
He says the main thrust of the new structure is to streamline the professional game, making it more intelligible for fans. By ensuring the top players have to play in key tournaments around the world, the ATP hopes to rekindle the excitements generated by the clashes between the likes of McEnroe, Becker, Borg, Llendl and Edberg. Certainly the tennis fan that warmed to – and understood – that era has been lost.
The players have also had to be educated to the new reality – and made aware of the fact that if nothing was done to improve the situation, their sport would deteriorate.
The ATP’s own research found that while there was a hard core of tennis fans that watched everything they could on TV and attended matches where possible, there was also a far bigger number of floating fans. These people would watch the sport occasionally, particularly when certain major stars were playing.
This was particularly so with a national star. Boris Becker had a phenomenal effect on German TV ratings for instance. And of course the contrary was also true. When Becker retired, ratings slumped. In response, the ATP has created a Stars Programme, which requires players to become more actively involved in promotion – from signing autographs to participating in media interviews. “We advise them on how to reach out more to the public. We give players some basic training, and borrow analogies from other forms of entertainment, such as films and music,” says Scott.
He explains the basic rationale: “We want to grab more market share among the floating audience. There are more sports emerging both globally and in Europe. Some are from the US, such as world league American football, basketball and hockey. They are all raising their profile in Europe – and we have to do the same.”
The players are immediately benefiting from ISL’s new deal. The prize pot is now US$3 million per tournament, compared with last year’s US$2.5 million. The bonus pool has also doubles to US$10 million. If bigger TV audiences emerge so will sponsors’ endorsements.
Everything rests on the commercial skills of ISL managing director Daniel Beauvois. The 45-year-old former journalist spent many years in the computer industry, latterly with Compaq as head of marketing in Europe. He admits that ISL could lose a substantial amount of money if the deal goes wrong. But he says: “We’re about to embark on a series of radical changes, which we feel are absolutely the right direction for tennis.”
Gone is individual event marketing – all that matters to Beauvois is the series as a whole. He is convinced that the sponsorship deals only make sense globally, especially with the large sums now being discussed. Unlike Formula One and soccer, which sponsors perceive as good value, most now see tennis as expensive. Hence the need to upgrade the sport and get more committed TV viewers on a regular basis.
There are currently 200 sponsors participating and Beauvois wants that down to 15 contributing the same amount of money. Apart from the US$8 million per event put in by sponsors, as much again can be spent on support and corporate hospitality in the same way.
Belgian-born Beauvois has long realised that once a sponsor is signed, tennis benefits from the publicity that sponsor generates As he says, “We thought that by raising the bar and bringing global companies in to tennis, they would promote the sport right through the season from March to September. We’ve been developing marketing packages that we have been putting to the sponsor market since November last year. It’s not a quick sale. You have to identify the right companies and tailor these packages to their needs.”
He adds: “It’s a very difficult exercise. There are a lot of existing contracts that run into 2001, which preclude us from making exclusive deals at the money. But time will help us solve the problem.” The new sponsorship programme will not be completed until 2002.
Scott is looking to evict some of the long-term sponsors who don’t bring enough to the party. “We are looking to phase out the one-off sponsors. We have to go through a difficult transition period as we change over from a fragmented marketing approach to a centralized method,” he says.
Early adopters among the international sponsors are delighted with the new approach. DaimlerChrysler, owner of Mercedes-Benz brand, is trying seriously associate itself with tennis. Graf Burghard Vitzthum, director of sports marketing says: “We’re convinced the new objectives of the ATP and ISL will work.” That is a major endorsement but even so DaimlerChrysler is spending a paltry US$10 million a year on tennis – a fraction of its marketing budget. If it sees the new approach is working, it will pump in much more.