CVC Capital Partners, a global private equity firm that once owned the Formula 1 racing series and has remained a major sports investor, is joining forces with women’s professional tennis.
The WTA announced Tuesday that CVC had become a commercial partner after making a US$150-million investment that would give CVC a 20-per-cent stake in a new commercial subsidiary named WTA Ventures. The subsidiary will focus on generating revenue by managing, for example, sponsorship sales as well as broadcasting and data rights.
“Hopefully this partnership will allow us to begin addressing that valley between the commercial rights that we are able to secure and the rights that the men are able to secure,” Steve Simon, the WTA’s chair and CEO, said in a telephone interview from Indian Wells, Calif., where the BNP Paribas Open is set to begin this week.
Although prize money is equal for men and women at the four Grand Slam events, the gap in prize money for many stand-alone men’s and women’s events has widened in recent years. The chasm reached the highest levels in 20 years in 2022, with the men earning on average about 70 per cent more than the women outside the majors.
Last year, the ATP Finals, the season-ending championships on the men’s tour, offered US$14.75-million in prize money. The equivalent women’s event, the WTA Finals, offered US$5-million, with Iga Swiatek, the No. 1 women’s singles player, expressing disappointment at the disparity.
The WTA has lost significant revenue because of the lack of tournaments in China. The tour had a major presence there and had signed a lucrative 10-year deal to stage the WTA Finals in Shenzhen, which offered US$14-million in prize money in its first year as host in 2019. But China has cancelled most professional sports events since the start of the coronavirus pandemic in 2020, and the WTA suspended all Chinese tournaments in late 2021 because of the allegations of sexual assault made by Peng Shuai, a Chinese former player who remains in China.
The WTA has said it will not reinstate Chinese tournaments until it can have direct contact with Peng and a full and transparent investigation is conducted by Chinese authorities into her allegations.
Simon said Monday that neither condition had been met and that the WTA was continuing to explore a multiyear deal to stage the WTA Finals in other cities in case the China window remains closed.
“We will make a decision at the end of this month how we are going to proceed,” he said.
Simon said he hoped the new CVC partnership would lead to a near-term increase in prize money at tour events. “You certainly will see a plan with respect to that, which will be forthcoming,” he said.
But above all, he said, CVC’s investment will allow the tour to invest more in marketing the women’s game and in producing or commissioning media programming that will raise the profiles of players and tournaments.
“To tell the story and to build the brand and to get directly to the consumer, which are some of the key things I think we have to do a better job of than we do today to enhance the commercial results,” Simon said. “As we improve the commercial results, things like player compensation become a lot easier discussion.”
Simon said most of the WTA’s current rights deals would expire in 2026. He declined to disclose a timetable for when the tour would receive CVC’s US$150-million investment.
“But it’s certainly not something that is a drip effect,” he said. “We have significant funding coming in that’s going to allow us to invest over the next several years at levels we’ve never been able to before.”
Simon said the CVC deal was not directly linked to the lost Chinese revenue. “This hasn’t been done because of China,” he said. “I have had the concept for many years of bringing in some capital investment into our company, which I felt we needed to go to the next level.”
But Simon was only recently able to get support for the move from the WTA board, and he emphasized repeatedly that the WTA still had autonomy despite the CVC deal.
“The way we set all this up, WTA Tour Inc. is not touched,” he said. “The WTA still controls 100 per cent all of the governance, regulatory and calendar issues.”
But he acknowledged that tour and CVC officials would communicate to ensure that WTA decisions did not hurt commercial opportunities.
“Absolutely we will,” he said. “But the WTA has complete control of both entities and can make the decisions it feels are in its best interest.”
CVC will have no representative on the WTA board, but it will have two of the eight seats on the new WTA Ventures board, which will be chaired by Simon.
CVC, based in Luxembourg, was founded in 1981 and has 25 offices worldwide and more than US$100-billion under management. The WTA investment is relatively modest compared with the more than US$2-billion it spent in 2021 to acquire a 10-per-cent stake in the commercial arm of La Liga, Spain’s leading soccer league. CVC also paid more than US$700-million in 2021 to acquire the Ahmadabad cricket franchise in the Indian Premier League and about US$500-million more the same year to take a 14.3-per-cent stake in the Six Nations rugby union series. CVC agreed to sell its controlling ownership stake in Formula 1 to the U.S. company Liberty Media in 2016.
Tennis has had some spectacular misfires with outside investors. In 1999, ISL Worldwide, a Switzerland-based marketing company, signed a 10-year agreement for US$1.2-billion with the ATP that fell apart two years later. In 2018, the International Tennis Federation signed a 25-year, US$3-billion deal with Kosmos, a Spanish investment group, that led to radical changes in the Davis Cup team event, but the partnership imploded this year.
CVC has held talks with the ATP, but its tennis investment is only in the women’s game. For now.
Simon continues to favour convergence and has even expressed interest in a merger between the ATP and the WTA at some stage.
“If we can ever get to the point where we could bring it all together, this agreement with CVC allows for that to happen,” Simon said.