With CVC’s stake in WTA, the tide is rising for equal prize money

WATCH: Fifty Years of the WTA, Chapter 1

The recent news that CVC, a European private-equity titan that once owned F1 racing, has taken a 20 percent stake in the WTA and will funnel $150 million into the sport triggered some immediate questions, including what, if anything, the WTA is selling—and what CVC is hoping to gain by hooking its wagon to the premier professional sport for women.

All we know right now is that CVC will play a major role in a new commercial enterprise, WTA Ventures, which will be tasked with managing the sale of WTA rights for broadcast, data, gaming, sponsorship, licensing and NFTs. Of more immediate impact: a significant portion (as much as a half by some estimates) of CVC’s $150 million stake will be distributed in the form of prize money by the WTA, as it seeks to close the pay gap between itself and the ATP.

“The WTA continues to champion equal prize money, and the players are a big beneficiary of that,” Phil de Picciotto, founder and head of premier management firm Octagon, said of this unusual deal. “The intention of this investment is to create a pathway to commercial returns based on the equal prize money concept.”

Caution of CVC’s intentions is understandable. Private equity firms are less famous for altruistic largesse than notorious for acquiring assets, reorganizing them in sometimes ruthless ways to make them profitable, then dumping them—or their stripped-out components—for a profit. According to some PE insiders, though, the recent trend in PE has been toward securing assets and properties and improving them to the point where they represent an attractive long-term investment for a buyer.

The overarching reality here is that the WTA can desperately use an infusion of cash.

“Keeping going during Covid was difficult on the budget, and losing [tournaments in] China was also a big hit,” Pam Shriver, the Tennis Channel analyst and a former WTA board member, told me.

The situation is compounded by the fact that while the WTA is the global leader in womens’ pro sports, it is estimated that it generates just one-third the revenue produced by the ATP. Shriver added, “The WTA needed some creative, open-minded thinking in order to continue funding all of its programs (including elements like health services and the WTA pension fund).”

The deal with CVC certainly is creative. Tennis insiders, many of whom are reluctant to speak on the record because so little is known of CVC’s long-term plans, view the prize-money portion of CVC’s investment as a bridge loan. Some called it a “subsidy.” Throw in, “lifeline.” But it’s the rest of the investment, while not enormous (CVC Capital Partners has $113 billion of assets under management), that is more likely to have long-term impact on the sport.

CVC will have two seats on the nascent WTA Ventures board, but no official place on the WTA Board.

“The way we set all this up,” Steve Simon, chairman and chief executive of the WTA, told the New York Times, “WTA Tour Inc. is not touched. It still controls (via the WTA Board) 100 percent all of the governance, regulatory and calendar issues.”

Simon’s comment suggests a church-and-state relationship between, respectively, the WTA and CVC. There are good reasons for that beyond the fact that the dog doesn’t want to end up wagged by the tail in the pursuit of profit. de Picciotto told me, “Give CVC credit for recognizing that tennis has traditionally been managed with an internal focus on things like rankings, the calendar, tournament commitments. The WTA board (composed of players and tournament representatives) also has had to drive commercial success.

“CVC may feel that the commercial value of WTA tennis has been under-optimized based on the Board's attempt to balance commercial and non-commercial interests.”

The deal with CVC was welcomed by Bob Moran, the tournament director of the popular, upcoming WTA 500 event in Charleston. That’s partly because the new board is modeled on the men’s ATP Media entity.

“When you look at the ATP and the revenues they bring in at every level of event, it is almost ten times more than the WTA,” Moran told me. “ATP Media is also a separate entity, with a separate board, and they wake up every day with just one mission—to sell the ATP. That’s just what the WTA needs.”

This is a substantial bet on women’s tennis, and at least one aspect of it represents a deft play by the new partners. The injection of prize money will boost the status of the players, especially when it comes to inevitable comparisons with the ATP. If the WTA can arrive at some semblance of equal prize money, it will enable a higher valuation of its product when it comes time for WTA Ventures to negotiate commercial deals.

Having the women valued the same as the men is really a development that would float all boats. Phil de Picciotto, founder and head of premier management firm Octagon

Also, if the WTA were to become a more profitable entity, the sport would be one step closer to a merger of the two tours, an outcome that is universally perceived as the grail. (It’s no coincidence that back in June of 2021 there was talk of CVC making a $600 million investment if the ATP and WTA joined forces.)

“Having the women valued the same as the men is really a development that would float all boats,” de Picciotto said.

But some of the rights the new board will be negotiating take CVC into territory different from anything the organization has explored in its relationships with F1, soccer and rugby. Sponsorships are a relatively straightforward area, but broadcast—a big piece of the rights pie—is maddeningly complicated, as the WTA learned the hard way.

In 2017, the WTA entered into an ill-fated, four-year deal with Qatari subscription-based beIN Sports television. The Middle Eastern money was just too big to resist. But the result was that WTA tournaments all but disappeared from television for some time, at least in the U.S., ignored in favor of other sporting content.

“You try to put tennis into the model of any other sport and it doesn’t work,” Ken Solomon, the CEO of Tennis Channel told me. (TENNIS.com is owned by Tennis Channel.) Citing the 24/7, 11-month, dual-gender, global nature of the game, he added: “I can’t give you months of lead time to prepare for a tennis broadcast, like I can with football. I can’t even tell you who’s playing this Thursday, much less on Saturday or in the Sunday finals. I can tell you who’s playing today, but wait—it’s raining. I can tell you what time, but wait—this player is scheduled for third on after 11 am. . . It just doesn’t work for a broadcaster to try to use tennis as a tentpole property, either.”

When CVC had F1 (for roughly a decade ending in 2016) it made some controversial moves, including selling licenses to governments that could outspend more familiar endemic promoters (which is why you have a Grand Prix race in Baku, Azerbaijan). But it’s hard to imagine WTA Ventures squeezing much more in the way of licensing fees from WTA 250s, which have a hard time eking out profits from a cocktail of modest broadcast fees, sponsorships, ticket revenues—and the goodwill and pride of local fans and civic leaders.

The appeal and financial viability of the 250s has been on the wane in the U.S., which is bad news for those who favor a greater dispersal of opportunities for pros of either gender.

“The 500s in general are in a good place, and part of the process here is increasing their number,” Moran said. “There aren’t too many 250s in this part of the world anymore, where there used to be 15, 16. That’s part of the problem, and one reason why we need to strengthen the sport.”

At the moment though, tennis appears to be moving toward greater consolidation and fewer but more high-profile tournaments. Combined events are now the gold standard among sub-Grand Slam events, and are seen as the wave of the future.

Then there is the cascade of “sportswashing” money that has already disrupted golf, erupting from the Middle East. Those are potentially large revenue streams. As well, if CVC donates half its investment to the WTA as a prize money subsidy, the other half of the commitment would have to earn double the return the firm may have in mind to hit its targets.

But let’s also not forget that Kosmos, the company that, amid much fanfare, promised to invest $120 million per year in Davis Cup for 30 years in 2017. It bailed out after just five years—leaving the world’s oldest international team competition in the lurch and the ITF with egg on its face. CVC appears to be a far more reliable partner for the WTA and ultimately, perhaps, for a combined tour.

Coming in through the back door gets you to the same place as entering through the front.