SAN DIEGO — CVC Capital Partners, a global private equity firm that once owned the Formula 1 racing series and remains a major sports investor, is joining forces with women’s professional tennis.
The WTA announced Tuesday that CVC has become a commercial partner after it made a $150 million investment giving it a 20% stake in a new commercial subsidiary named WTA Ventures. Subsidiaries will focus on revenue generation, including sponsorship sales and management of broadcasting and data rights.
WTA Chairman and CEO Steve Simon said: “We hope this partnership will allow us to address the chasm between the commercial rights we can secure and the rights that men can secure. I hope so.” The BNP Paribas Open kicks off this week in Indian Wells, Calif.
Prize money is equal for men and women in the four Grand Slam events, but the difference in prize money between many independent men’s and women’s events has widened in recent years. Inequality will reach its highest level in 20 years in 2022, with men earning on average about 70% more than non-major women.
Last year, the season-ending ATP Finals on the men’s tour offered $14.75 million in prize money. Her WTA Finals, the equivalent women’s event, presented her $5 million, and her No. 1 player in women’s singles, Iga Swiatek, expressed disappointment at the disparity.
With no tournaments in China, the WTA is losing significant revenue. Tour made a big presence there, signing her a lucrative 10-year deal to host her WTA Finals in Shenzhen. Her $14 million prize was offered in her first year as host in 2019. With the coronavirus pandemic beginning in 2020, the WTA has suspended all Chinese tournaments in late 2021 due to sexual assault allegations by Peng Shuai, a former Chinese player who remains in China.
The WTA has said it will not resume tournaments in China until it has direct contact with Peng and Chinese authorities conduct a full and transparent investigation into her allegations.
Simon said Monday that neither condition has been met and the WTA continues to seek multi-year deals to host the WTA Finals in other cities in case the China window remains closed. Said there was
“We will make a decision at the end of this month,” he said.
Simon said he hopes the new CVC partnership will lead to a short-term increase in prize money at Tour events. “You will certainly see plans for that, which will be announced soon,” he said.
Most of all, though, he said, CVC’s investment will allow the Tour to invest more in marketing women’s games and producing or commissioning media shows that raise awareness for players and tournaments.
“Telling stories, building brands and reaching consumers directly are some of the key things that I think we have to do better than we are doing now to improve our commercial performance.” “As we improve our commercial results, it makes it much easier to discuss things like player compensation.”
Simon said most of the WTA’s current rights contracts will expire in 2026. Refused to disclose a timetable as to when the tour will receive her $150 million investment in CVC.
“But it’s certainly not a drip effect,” he said. “There is a lot of money coming in over the next few years that will allow us to invest at unprecedented levels.”
Simon said the CVC deal was not directly related to the drop in China’s revenues. “This was not done because of China,” he said. “I had the concept of introducing capital investment into the company for years, but I felt it needed to be taken to the next level.”
Simon, however, has only recently gained support for the move from the WTA Board, reiterating that the WTA still has autonomy despite its contract with the CVC.
“The way we set it all up, WTA Tour Inc. hasn’t changed,” he said. “The WTA still has 100% control over governance, regulation and calendar issues.”
However, he acknowledged that officials from the tour and CVC will stay in touch to ensure the WTA’s decision does not hurt commercial opportunities.
“Absolutely,” he said. “But the WTA has full control over both organizations and can make decisions as it sees fit.”
CVC will not be represented on the WTA Board, but will have two of the eight seats on the new WTA Ventures Board chaired by Simon.
Based in Luxembourg, CVC was founded in 1981, has 25 offices worldwide and manages over $100 billion. The WTA investment is relatively modest compared to his more than $2 billion spent to acquire his 10% stake in the commercial sector of Spain’s main football league, La Liga, in 2021. CVC will also pay him more than $700 million to acquire the Indian Premier League’s Ahmedabad cricket franchise in 2021, and an additional approximately $700 million to acquire his 14.3% stake in the Six Nations rugby union series in the same year. Paid $500 million. CVC agreed to sell control of Formula 1 to America’s Liberty Media in 2016.
Tennis has had some spectacular failures with outside investors. In 1999, Swiss-based marketing firm ISL Worldwide signed him to a 10-year deal with the ATP for $1.2 billion, but it went bankrupt two years later. In 2018, the International Tennis Federation signed a 25-year, $3 billion deal with Spanish investment group Cosmos, a radical change to the Davis Cup team event, but this year the partnership fell apart.
CVC has held talks with the ATP, but its investment in tennis is limited to the women’s game. At this point.
Simon continues to support convergence and has expressed interest in merging the ATP and WTA at some stage.
“If we can get it all together, this deal with CVC will allow us to do that,” said Simon.