U.S. Open revenue will fall by roughly 50%, a drop of at least $150 million, after the Grand Slam was forced to hold its two-week event behind closed doors.
While the final numbers are still being calculated, the United States Tennis Association also expects net operating income to fall by roughly 80%, according to CEO Michael Dowse. That means the event, which culminated in singles wins by Naomi Osaka and Dominic Thiem, made less money than normal but still turned a profit.
That’s a huge success, according to Dowse. Event organizers approached a decision about the 2020 event with three main questions: Can this be done safely? Is it good for the sport? And does it make financial sense?
“Now that we’re done, I would say yes on all three of our guiding principles,” Dowse said. “Within the financial side of it, it met all of our readjusted budgets and goals.”
The U.S. Open, held every year at the USTA Billie Jean King National Tennis Center in New York City, is one of the biggest tennis events of the year. In 2018, the event earned nearly $300 million in revenue, according to the USTA’s most recent financial disclosure.
Even more that other sports, tennis events are heavily reliant on in-person attendance. About 50% of the U.S. Open’s revenue comes from ticket sales and concessions, money that more or less disappeared without fans on-site.
The rest comes mostly from its sponsors, a group that includes American Express, Chase, J.P. Morgan and Emirates, and media partners like ESPN. Dowse declined to comment on any specific partners but said the USTA saw “no big changes” to its pre-COVID budget plans in either area.
Viewership in the U.S. did take a dip, however, likely due to diminished star power in the later rounds and more competition than usual—including the NBA and NHL playoffs. The women’s final on Saturday was down 42% from last year, and the men’s championship match on Sunday, the first Grand Slam final since 2016 without anyone named Federer, Nadal or Djokovic, was down 46%.
The USTA is the national governing body for tennis, and beyond its role with the professional ranks, it spends tens of millions each year on grassroots programs to growth the sport nationwide. In 2018, the association brought in $320 million in revenue—$291 million of which came directly from the U.S. Open. The rest comes from membership dues, investments and royalties.
Though the U.S. Open was still profitable, it was not profitable enough to cover all of the association’s other annual costs. Dowse said the USTA had to dip into its reserves to ensure that all of its programs for 2020 and 2021 are fully funded. The organization’s 2018 financials show $88.5 million in savings and temporary cash investments.
Tapping the reserves came alongside other organizational changes. The USTA downsized its staffing by 25% and many others took pay cuts. The group froze a majority of its non-critical spending, held its semi-annual meeting virtually, and suspended all capital projects to upgrade its facilities in New York and its campus in Florida.
The bubbled U.S. Open also presented a unique set of budgeting oddities. The event’s staffing costs dipped significantly, but some costs went up, Dowse said. They include the 13,000 COVID-19 tests, and the cost of transporting players and coaches, given that the people inside needed to be socially distanced.
One area that was not significantly altered—the prize pool. The total payout to players across the U.S. Open and the Western & Southern Open (a tune-up tournament that was moved to New York this year) was 97% of last year’s total, Dowse said. That was critical for attracting the sport’s biggest names. Though some stars were absent, notably prior winners Federer and Nadal, Dowse noted that the men’s draw had 90 of the top 100 players.
In a more indirect way, Dowse said he’s already heard from teaching pros and tennis facility owners that participation in the sport nationwide has jumped since the tournament began, further bolstering the growth tennis has seen in recent months, as sales of entry-level equipment like pre-strung racquets and tennis balls also rose.
“It’s a lot of new players coming to the sport,” Dowse said. “We always say that the key to growing the sports is to attract, engage and retain. In a weird way, COVID has attracted people to tennis, and then maybe the U.S. Open can engage and retain them.”