Saudi ready to take over Tennis now! ATP Tour in talks about joint investments

The Saudi Arabian sovereign wealth fund and the ATP Tour are currently in discussions about potential co-investments as the country’s oil-funded capital continues to transform the sports industry. Saudi money has already transformed sports like Football, F1, and Golf.

In order to support various sports projects and businesses, including infrastructure, technology investment, and events in new areas, ATP Tour chairman Andrea Gaudenzi said he had “positive” negotiations with the Public Investment Fund and other potential investors.

Gaudenzi cautioned that outside investors must “stick to respecting the history of the sport and the product, working with the current stakeholder rather than against” just weeks after the US PGA Tour ended its resistance and reached a deal to collaborate with the PIF, which stunned the golf world.

“You have to preserve something which is almost sacred, the rules of the game,” In an interview with the Financial Times, Gaudenzi announced his election as the ATP Tour’s chair for an additional three years. “This is not a video game, this is not a movie.”

The Italian’s remarks highlight the fine line sports organisations must walk when looking for outside investors to support them in expanding and developing their media and entertainment earnings.

The sovereign wealth fund had established a competing breakaway tour, LIV Golf, but their alliance with the PGA Tour put an end to an expensive conflict.

The ATP head claimed that the affiliation proved PIF and the PGA Tour had come to the conclusion that working together would be beneficial.

“If you’re a golf fan you want to see the top players playing against each other,” Gaudenzi said. “You want one ranking and you want one simple story.”

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Due to growing investor recognition of sport as a distinct asset class, private equity firms and sovereign wealth funds have started investing heavily in it.

Last year, CVC Capital Partners teamed up with the Women’s Tennis Association, investing $150 million for a 20% ownership in a new business venture between the two organisations.

The ATP Tour’s own discussions with CVC, however, have not resulted in a contract. According to Gaudenzi, the ATP “don’t need cash and need to be careful with dilution.” However, he claimed there were chances to work with outside investors in a variety of fields, including technology, data collection, and media production.

“There’s many ways to become an investor of the ecosystem. It’s not only about creating a new tour or buying a tournament,” he said.

Revenues for the US-based ATP Tour Inc. have increased since they reached a low of $93 million in 2020, a season that was adversely affected by the coronavirus outbreak. Gross revenues for the governing body increased to $250 million in 2022 from $176 million the year before. Its gross revenues reached $159 million in 2019.

The Tour upped the player prize money and bonus pools to $218 million in 2023 from $180 million in 2018, which was the highest annual increase in Tour history.

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Although Gaudenzi cautioned against a “complete break it apart, disrupt it” approach, he acknowledged that outside investment firms can assist sports with investing in new technology and accelerating innovation.

Because professional tennis players are frequently independent contractors who participate in the circuits, the sport is akin to golf.

The four major tournaments, collectively referred to as Grand Slams, are managed independently from the ATP, WTA, and International Tennis Federation, which serves as the sport’s global regulatory body and organises significant tournaments like the Davis Cup and Billie Jean King Cup.

Tennis, a sport with complicated and dissimilar governance and financial models, is one of the sports where Gaudenzi is an advocate for minimising fragmentation.

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