Report: Australian Open targets $40M prize purse within three years

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Do they just print money Down Under? Sheesh!

The Age reports the Australian Open, which upped its prize money to over $30 million last week, is shooting to increase that number to $40 million over the next three years.

Just days after Tennis Australia announced an almost 18 percent rise in the prize pool for the 2013 event to ward off the threat of a boycott, The Age has learned that players have been advised that what will hit $30 million in January is likely to grow by a further $10 million within three years. In 2007, the total purse was $20 million.

That’s a game-changing goal, particularly in light of the intent to focus all this money on the early rounds, where the lower-ranked players typically make their exits. While the players get into the nitty-gritty of hammering out the distribution issues, executives at the All England Club, FFT, and USTA must be sweating under the pressure to call or raise, taking a hard look at their numbers to pony up the money over the next few years.

Meanwhile, Tennis Australia comes out of this looking like the players’ white knight. That’s the benefit of being the first Slam of the season. You get to set the tone.

  • Published On Oct 08, 2012

    $40 million prize money at the 2016 Australian Open is not as generous as it appears. The Australian Open has no revenue without the golden goose (players) that lays the golden eggs (matches). Yet in 2016 this big business expects to pays just 20% of potential revenue to the goose, while it keeps the rest (80%).


    The women tennis players should celebrate since the richest women’s sport on the planet will become even richer. On the other hand, the men are still being underpaid. Let’s understand why.


    The reality is that men tennis players will get only $20 million prize money (since equal prize money means women automatically get half of the $40 million total prize money, without having to negotiate).


    The men should be paid closer to $66 million in 2016, instead of just $20 million. And the men should be paid $54 million in 2013, instead of just $15 million.


    That’s because in other men’s pro sports (NFL, NBA, MLB, NHL), the players get roughly 55% of total revenue, according to Andrew Zimbalist, a sports economics professor at Smith College. This means that in 2011, pro football paid its players about $4.9 billion annual income from $9 billion revenue. Pro baseball paid its players about $3.8 billion. Pro basketball paid its players about $2 billion. Pro hockey paid its players about $1.6 billion. The top 250 players in men's tennis make about a quarter of the amount of money in tennis as they do in men's golf.


    Of course men and women players both contribute to the revenue of each grand slam. However we need to understand how much revenue does the Australian Open make as well as what portion (percentage) of that revenue was attracted by men’s tennis.


    We’re rarely told what is the huge revenue of these businesses called the grand slams. We can estimate the Australian Open’s revenue with some digging. The Australian Open’s growing revenue has increased from at least $78 million in 2005 to at least $145 million in 2011, based on information about Tennis Australia (see link). At this rate of growth, the estimated revenue of the 2012 Australian Open is probably $154 million, the 2013 tournament will probably be about $165 million and the 2016 tournament about $200 million. (The 2012 US Open already has estimated revenue of $220 million).


    We’re also never told how much of this huge revenue is attracted by men’s tennis. We can estimate that as well. Revenue comes from ticket sales, sponsorship, TV broadcasting rights, merchandise sales, hospitality, etc. – but ticket sales makes up the largest slice (40%) of the Australian Open’s revenue. There are significant price differences in ticket prices for the men’s matches and the women’s matches, which indicate the market values men’s matches much more. If a person saw all the six men’s and women’s singles in the last two rounds (two semifinal and one final matches for each group), he would have to pay $1,310 in total: 64% ($835) for the three men’s matches and just 36% ($475) for the three women’s matches. (The link gives 2013 ticket prices: The Thurs 24 Jan 2013 day ticket price is for two women’s singles semifinals plus one men’s doubles; Thurs 24 Jan 2013 night is for one men’s semifinals; Sat Jan 26 2013 is for women’s singles final, and Sun 27 Jan 2013 for the men’s final).


    Thus men’s tennis probably attracted over 60% to the total tournament revenue based on the significant differences in ticket prices between men’s and women’s matches. In other words, if the 2016 Australian Open revenue is about $200 million, the men probably attracted over $120 million of that revenue. If 2013 revenue is $165, the men probably attracted over $99 milllion of that revenue.


    Given that major pro sports pay men’s players 55% of revenue, the men should be paid closer to $66 million of their 60% portion of $200 million revenue in 2016, instead of just $20 million. And the men should be paid $54 million of their 60% portion of $165 million in 2013, instead of just $15 million. For now the exact figures are not important (even if we lower the estimates and reduce prize money to $60 million for 2016 and $50 million for 2013, this is still a huge difference with what the Australian Open is offering).


    It’s about right to increase men’s prize money by a factor of four in all grand slams. If prize money increases by four times, the top 250 men’s tennis players (who currently make about a quarter of the amount of money in tennis as men's golfers) might finally achieve parity with men’s golfers.


    Each grand slam tournament is a lucrative money-making business that has been exploiting the revenue-generating men’s players for decades. This needs to end.


    Good on them.  It also gives them new relevance and new input into scheduling issues.