Tennis is uniquely bad at monetizing its audience

Benjamin Zilnicki, a venture capitalist from New York, argues that there’s an opportunity for tennis to start monetising it’s huge fanbase but it needs someone from the business world to bring it all together.

The NBA is on track to sign a 10 year media rights deal worth at least $50BN dollars. That is more than double the last deal they signed, putting the value of its long-term rights at the second highest globally - behind only the NFL’s $110 billion.

The more remarkable point is that this contract came amid declining viewership for both the regular and post-season. The last four regular seasons are among the six least watched over the past 20 years and playoff viewership was down as well.

Tennis, on the other hand, is exhibiting growth in viewership and participation by many measures. Earlier this year, Vogue Business reported that adult tennis participation grew 43% in 2022, while in the US the sport hit 23.6 million players in a third consecutive year of growth. Viewership for Grand Slam finals rival the NBA finals and are trending upwards.

Yet despite a global fan base and growing popularity, Tennis is uniquely bad at monetizing its audience. A widely cited statistic from an internal report by the ATP suggested that tennis accounts for a paltry 1.3% of worldwide sports-broadcasting revenue. Heavy reliance on ticket sales (often 85%+ of an organization’s revenues) means that growth largely comes from increase in pricing (you can’t easily expand a stadium size). With resale prices for major events soaring above $9,000 for a seat in 2022, casual and budding fans can’t afford to see the sport live. This only hurts demand long term.

So, why is Tennis so bad at business stuff and what can be done about it? I explore some key reasons and potential solutions below:

Fragmented Tournament Operators

The most lucrative sports all feature some type of a franchise business model. Tennis is not one of them. The sport is unique in that every Major tournament operator (US, Australian, French Open and Wimbledon) are independent entities that negotiate broadcast rights separately. The ATP and WTA are also separate tour operators, similar to the PGA tour in Golf. These six organizations all host events, earn money from ticketing and selling broadcast rights, and then funnel some of that cash back to the athletes in the form of prize money.

The existence of six or more stakeholders complicates efforts to pull in the biggest revenues from broadcasters and sponsors. Fans suffer too. An aficionado hoping to watch matches through the year has to fork out separate subscriptions for different tournaments.

There has been discussion of a “premier tour,” comprising the four grand slams and a dozen or so smaller tournaments. This unified, streamlined calendar would be easier to sell to fans, who tend to come to life only for the slams, and therefore broadcasters. The risk is that it could further entrench the tennis elite and keep the rest impoverished. Which brings me to my next point.

Underpaid Players

"Why am I here, playing for literally $6?

Tennis ranks very low relative to other sports in terms of the share of money it allocates to players. According to the PTPA (the newly formed Players Union headed up Novak Djokovic), Tennis shares an abysmal 18% of revenue with their players as opposed to 50%+ for many other leagues.

With no dominant league body or well-funded franchise, players are contract workers with no base salary. Compared to other sports, tennis has a much steeper drop in pay down the rankings. Below the top one hundred mark (and even towards the lower end inside of it), players are resigned to entering lower-level tournaments due to not being ranked highly enough. To add insult to injury, players are responsible for covering their own expenses on tour, including their own medical staff! With lower revenues and steady overhead, roughly 80% of the top 1,000 players in the world lose money every year.

Unique talents risk slipping through the net due to a string of misfortunes – bad draws, injuries, poor runs of form – and are at greater risk of hanging up their racket. The platforms are artificially limiting supply by failing to ensure adequate financial safety nets.

Content packaging and delivery

The tour and tournament operators (i.e. the four major slams and the ATP / WTA) have not innovated on content delivery in decades. Fragmented streaming rights makes knowing where to watch any match nearly impossible and there is no shortage of twitter rants on how terrible the viewing experience is.

The number of matches and individual match length makes Tennis ideal for short form content delivery. While I will clear my Sunday morning schedule for the Wimbledon final, I am not going to watch a four-hour, Round of 16 match that may or may not be interesting. What I would do is watch a curated list of deciding sets and pivotal points so that I get all the dopamine of spectating without sacrificing my entire evening.

Startups have tried to tackle this space. Buzzer, a startup that combined the convenience of mobile highlights and the excitement of live streaming into a single package, abruptly shutdown in 2023. They had announced content deals with the National Basketball Association (NBA), the National Hockey League (NHL) and the ATP Tour so there was demonstrable interest from sports associations. However, the app failed to gain traction among consumers. The demand side was the “hard-side” of the marketplace. The tough news is that demand for sports in general is waning, as younger generations don’t exhibit the same viewing habits as their predecessors.

An acute Gen-Z problem?

Older generations have complained about younger generations since time immemorial, so I am hesitant to make any sweeping claims about Gen Z’s media consumption habits.

However, if we view sports is just another cultural institution, then it’s not a stretch to believe that traditional viewing habits will likely go the way of churchgoing, traditional office structures and any other sorts of community association.

Growth stage companies like Overtime have done an excellent job of meeting Gen Z where they already consume other media — on social media platforms like Facebook, Instagram, Snapchat, Twitter, and YouTube, as well as on Overtime itself. The company currently boasts 26.5 million followers on TikTok and more than 10 million on Instagram, making it a serious sports media brand on social, alongside big players like ESPN (44 million followers on TikTok). The company boasts more than 70 million followers across seven platforms.

But if you scroll through Overtime’s platform, Tennis is non-existent.

Here is a great summary by Matt Willis about what Tennis gets wrong:

“[Gen Z does not] give a shit about a professional looking studio of floating talk-show heads yapping with that irritating intonation of an American or British weather report from the 90's. They want real, varied shit, that often requires smaller compounding exposure to the sport, and have grown up with Twitch, YouTube and TikTok, not traditional TV consumption habits. Let people create around tennis and the discovery will flow. Clips of people's opinions on big topics will flow. Clips of reactions to crazy points will flow. Whole new types and scales of sports media will flow. Let the market decide and inject some goddamn optimisation and meritocracy into one of the stuffiest species of media personality in existence -- the sports commentator/analyst/host. God forbid we select based on who can build a fucking audience rather than who reached the 3rd round of Queens in 1986.”

These tour organizers need to work harder to partner with companies like Overtime or build a dedicated platform themselves. There are plenty of ways to show trick shots and cross court winners in the same dynamic fashion as an alley-oop, you just need to get creative.

“The possibilities are endless and what we've been served until now is a drop in the ocean of what's possible from a UX/UI perspective in 2023. In an even more ideal world this hypothetical platform would be opened up so anyone can commentate, react and create media around tennis, within the walled garden of the ATP/WTA/Slam broadcast rights. Former pros like Roddick, Federer, Serena, or Murray when he's retired, hopping into commentate on a big match whenever they like. Naomi Osaka streaming a training session. Wonkish tennis nerds discussing strategy, statistics or the latest controversy et al. A huge problem many sports have right now is a compelling content shortage. Tennis for example is almost completely dead media-wise outside of match play.”

This supplementary media is expensive to produce professionally and no one seems to agree on formats that work for it. Far better to let the internet do its thing and allow the 0.01% of fans and former players who can create compelling, non-traditional media around the sport pick up the slack and cater to a more varied set of existing and potential fans. The official stuff is fine, a fraction of it great, but it's not sufficient by itself. This democratization of creativity and the distribution of that creativity has exploded in nearly every other media industry apart from sport. We are forced to live in the past.

Brand Partnerships: More Chipotle, less Hermes

Outside of changes to viewing format and social media strategy, Tennis has a broader branding issue: its association with the country club and a culture of exclusivity. Widening the base of consumers requires the Tennis brand to be a bit more approachable.

Publications like Raquet do a good job of talking openly about these image issues and how tennis fits within the broader cultural context around wealth inequality. Yet their distribution strategy needs to be at The Athletic level rather than a niche print publication.

On the brand partnership side, the next wave of tennis talent has been eager to collaborate with companies that have more mainstream associations. Coco Gauff signed a deal with Barilla pasta sauce. Taylor Fritz rocks Chipotle on this sleeve. The last time tennis had such exciting personalities, such as Agassi and McEnroe, Nike was the fresh brand fit to represent them. It felt right and produced some of the most exciting partnerships we’ve seen in sports. Now 40 years later, the same brands don’t feel quite right. This extends to casual players too, we’ve got a more diverse audience of people playing the game than ever before, and they’re waiting for a brand to represent them. On the apparel side, New Balance and On have both been making strong inroads, but the field still feels pretty wide open.

Bringing it on home

Professional sports organizations have adapted to evolving technology and demographic trends through the years. Tennis’ fragmented governing bodies have stubbornly clung to a pre-internet era. The players have done their part to keep this sport exciting. New media companies have chipped in by widening the cultural aperture. Startups have laid out a playbook for how to grow a young fanbase. There is a massive opportunity ahead. Someone needs to step in and seize it. Someone better at business stuff.