Australian Open miracle is story of both sporting and financial success

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Melbourne champion: Novak Djokovic.

The financial recovery the Australian Open has managed to pull off during the past decade has been nothing short of extraordinary. A little over 10 years ago, Tennis Australia’s flagship event was struggling to attract sponsors and the opening grand slam of the season was under serious threat of relocation.

Today, Tennis Australia (TA) is reporting record revenues and net surplus and the tournament has 30 different partners and sponsors including KIA, ANZ Banking Group, and Emirates. The Australian Open is being broadcast to 200 territories around the world and organisers claim the current TV deals have a potential of taking the tennis action to 900 million homes across the globe.

The Australian Financial Review reported that TA is on track to reach annual revenue of A$300 million (Dh780.6m) in the current fiscal year, which is a significant increase to the A$254.6m revenue published last November in the company’s annual report for 2014- 2015.

The tournament’s host venue, Melbourne Park, has undergone significant expansion in recent years and it is the only grand slam that has three stadiums with retractable roofs – Rod Laver Arena, Margaret Court Arena, and Hisense Arena.

The Australian Open, dubbed the ‘Happy Slam’ by the players for catering to their every need, pays extra attention to the fan experience and this year a visitor to Melbourne Park not only got to watch some world-class tennis but also had the choice to go to an onsite luxury spa, eat at one of seven new fine-dining restaurants, watch players before the walk-on in a new hospitality area or catch the practices by sitting on grandstands placed right behind the players, separated only by the newly-installed glass walls.

The players were given unlimited food for the first time – an experiment that might not last – and centre court was surrounded by two-metre digital walls that played ads and videos during changeovers.

The prize money has gone up to A$44m this year – a 10 per cent increase on 2015’s total purse. But how can Tennis Australia finance all this in what is a challenging financial climate for all global sporting events?

“It’s never easy. But we’re a very fast-growing business,” TA CEO and Australian Open tournament director Craig Tiley told Sport360 in Melbourne. “We’re a new leadership team and I’ve been the CEO for two-and-a-half years now and our objective every year is to innovate, push the limits, challenge the status quo and do things that are different because we know our fans like that. And that’s why our ticket sales are up and that’s contrary to what many sporting events are experiencing.

“The last two years have been the most successful two years in our business’ history – we’re over 100 years old. And this year is shaping up to be the most successful.”

In 2015, TA reported a 46.1 per cent increase in sponsorship revenue, which rose from A$45.3m the previous year to a record A$66.2m.

The 2015 results don’t include several agreements concluded in the new financial year, such as the Australian Open’s first partnership with a gambling company, William Hill, a new deal with coffee brand Lavazza and an expanded arrangement with Canadian Club. ANZ Banking Group renewed its associate sponsorship of the Australian Open at the end of 2014 in a deal worth about A$7m annually, double the amount the bank has previously paid, according to the Australian Financial Review.

The new broadcast deal with Seven West Media (currently in its second year) is worth about A$35 million annually, up from the previous A$21m Seven was paying for the Australian Open and lead-in events.

But sponsorship money represents just 26 per cent of TA’s overall revenue, so surely there are more reasons why the Australian Open is thriving at the moment? The answer could be TA’s move last year to produce their TV content in-house and sell their own media rights.

TA now own the production rights previously held by Seven. In 2015, for the first time in grand slam history, all 411 main draw matches were filmed live and distributed to the rest of the world. Some 170m minutes of footage was produced.

“We’ve opened offices in Shenzhen and Shanghai and Hong Kong and also this year in Tokyo. So we’re expanding our footprint globally and we do all of our rights sales, media rights, we do that inhouse and also we’re the only grand slam and tennis event in that we produce all of our own content as well,” explained Tiley.

“We’re the host broadcaster as well and have a production team that works full-time. They deliver all the content and our broadcast partners can customise it. Last year was the first year and it was very successful.

“It’s made a big difference because we’ve been able to really localise the content so like if India want to see one of their players on Court 6, we could do that. We could package it, send it off to them and they can customise it.

“We now have 200 territories around the world and we’ve never had as many as that. So we could sell our rights to lots of local broadcasters, regional and national ones and it just helps get our brand, our event and our fan experience out to the rest of the world.”

According to TA’s annual 2014-2015 report, a record 369m television viewers around the world watched the 2015 Australian Open in more than 200 countries, reaching in excess of 900m households daily. Japan alone represented nearly a third of the total audience.

Merchandising represents one per cent of TA’s profits and last year there was a seven per cent growth in sales with the official Australian Open towel once again proving the most sought-after item, with sales close to 25,000 units. Emirates is a relatively new partner for the Australian Open and Tiley stated the deal with the UAE airline is an exciting one.

“We have a great relationship with Emirates, this is our second year. We do some innovative things with Emirates. We did the flyover last year and this year we’re doing the entry. So they’re good partners of ours and we’re on a long journey,” he said.

“We want to make sure we always have partners that have the flexibility on that journey to make changes and adjustments as long as both partners are benefitting.”

The Australian Open’s deal with William Hill has come under-fire with ads for the betting provider seen around the grounds, raising moral issues – some players calling it “hypocritical” especially in light of the match-fixing allegations that have risen in the past fortnight.

“The interesting thing is that the sport of tennis has already been partnered with many (betting companies) because Perform as a broadcaster provide all the content directly onto the betting providers,” said Tiley.

“They just act as an intermediary to do that. And then there are tennis tournaments around the world that have betting partners like the German Open, Bet365 I believe (Bet-at-Home Open). So we didn’t see it as an issue. They’re very reputable, they’re a well-respected organisation, everything they do is legal.

“For us it’s a good partnership that they can also help us identify any illegal activity and so that close partnership gets us closer to that because we want to make sure we’re avoiding it as a sport.”

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