Friday, June 19, 2020

How the Accelerating Prize Money Gap Jeopardizes Men's Professional Tennis; Johns Hopkins Men and Williams Women Top Division III Recruiting Class Rankings

Earlier this month, I received an email from high school senior and junior tennis player Nicholas Wernink that contained his independent study of the allocation of prize money in men's professional. Wernink did an outstanding job of researching the uneven distribution of ATP points and prize money in the Futures, Challengers and ATP events over the past decade, and he has given me permission to upload his 42-page paper.

Knowing that many of you would be curious about the results, but not inclined to read a report of that length, I asked if he could put together a brief synopsis of his findings, and he agreed. But please, by all means delve deeper into his graphs and numbers, and his interviews with players impacted by this widening gap, to better understand just how crucial closing it is to the health of tennis as a sport.

Economics of Prize Money Inequality in the ATP
by Nicholas Wernink

In 2019, the ATP Challenger Tour consisted of 158 tournaments awarding a total of just $12.5 million while the ATP Tour awarded about $140 million across 62 events. The severe disparity in prize money allocation between the two levels has to be narrowed to ensure that more players have the opportunity to make a living playing professional tennis. In order to do so, prize money, on average, at the Challenger level needs to be at least doubled.

Since the Challenger Tour’s inception in 1978, prize money at this level has remained relatively stagnant when adjusted for inflation, despite the significant prize money increases at the ATP Tour level. The ATP has made no considerable effort to create a more equitable framework for prize money allocation, and this problem has actually become worse. For example, at the end of 2019, the ATP announced that the total player compensation in 2020 was projected to reach a record-high of $158.7 million representing a 13% increase from 2019. While this press release displays substantial growth, the Challenger Tour was expected to receive no increase in prize money whatsoever.

Instead, prize money is distributed unequally throughout the rankings. The top 100 players in 2019 earned approximately 80% of the total prize money pool for the top 750 singles players in the world. Meanwhile, the bottom two-thirds of players (those ranked from 251-750), received just 6% of all the prize money awarded.

The steep decline in the percent of total prize money for the lower-ranked players represents a vast income inequality. Furthermore, not only is prize money distributed unequally throughout the rankings, but the inequality has been exacerbated over time. The top-ranked players have seen a substantial rise in their prize money earnings while players outside the top 100 have not benefited nearly as much from the overall increase in the total prize money pool. The widening income gap displays the lack of substantial change aimed at bettering the situation for players outside the top echelon of the sport.

The essence of the prize money inequality that persists in men’s professional tennis lies in the disproportionate amount of prize money awarded at the Grand Slams and ATP Tour in comparison to the Challenger Tour and Futures circuit. Players should be rewarded for their success, i.e. the points that they earn and resulting ranking, regardless of where they win the points; however, players outside of the top 100 earn relatively far less than their peers at the top of the game. Furthermore, because the inequality has become more striking, the middle level of tennis, the Challenger Tour, is not developing nearly as quickly as the ATP Tour. Tennis is, in turn, ultimately missing out on a product that even Roger Federer does not believe is very different from the ATP Tour (ATP Media, 2019).

In conclusion, the purpose of drastically increasing prize money at the Challenger level is to support around 500 professional tennis players each year with a break-down of roughly 375 singles players and 125 doubles players. While players like Roger Federer, Novak Djokovic, and Rafael Nadal are relatively unaffected by changes in prize money since most of their earnings come from sponsorships, the livelihoods of middle-ranked players depend on tournament compensation. All in all, investing in the Challenger Tour means promoting the health and future of men’s professional tennis. Players and tournament organizers at this level work tirelessly to help advance the sport yet barely receive any recognition. A restructured prize money allocation system, in which these people benefit, will go a long way in furthering tennis as a world-class international sport.

The Tennis Recruiting Network's series of 2020 recruiting class rankings concluded today, with the Williams women topping the Division III list, followed by Claremont-Mudd-Scripps, Pomona-Pitzer, Amherst and Emory. Wesleyan, Carnegie Mellon, Swarthmore, MIT and Babson round out the Top 10.

The Division III men's list, which was published Monday, has Johns Hopkins at No. 1, the first time that school has had the top recruiting class. MIT, Amherst, Middlebury and Pomona-Pitzer round out the Top 5. Chicago, Emory, Williams, Wesleyan and Carnegie Mellon complete the Top 10.


Voice of the real world said...

No offense, but that report on the inequality of the pay of professional tennis guys is not grounded in any sort of economic reality. Where does the revenue come from? How much of the revenue available to split up comes from the top 50 players? Probably almost all of it.

If most of the money comes from the Grand Slams and other large tournaments, and most of the viewers tune in to see the top 10 players, they are the revenue generators.

Economics is pretty basic. Few guys can be Fed, Djoker, Rafa, the guys everyone pays to watch, 1000s of guys can be ranked in and out of the rankings from 300-750. They come and go. Some quit, others jump in. Plenty of players to fill those roles.

In fact, it probably amazing that the players outside the top 100 get 20% of the revenue split among them. I highly doubt they generate any profit at all for the ATP.

Economics is what it is. If you are the #1 salesperson at a company, you will get almost all the commissions and compensation. If I am a low ranked salesperson at the same company, I will scrape by and likely have to live with my parents to survive. If you are a great plumber you will make a lot more than me if I am the 200th best plumber in the area.

Not sure why tennis guys get this unrealistic view of economics. They do not generate a profit for their company, the ATP, thus get very little money in return.

Lastly, if the last 3 months have not given a dose of reality, I do not know what will. Tennis is a luxury, not an essential service. Far fewer guys will make any money from tennis in the future. The harsh reality is pro tennis can survive with the top 150 players and no others. That is enough for the top 10 guys to have some opponents in the early rounds. People pay to watch LeBron and maybe 20 other NBA players, the rest are just there so teams can be fielded. Fans don't really pay attention to lower ranked players. More streaming services, esports, competition for eyeballs, its going to get a lot tighter for guys outside the top 100.

Unknown said...

I totally agree with you, it drives me crazy when challenger players (Noah Rubin in particular) complain that they are not making enough money. The vast majority of top 30 players moved up through futures and challengers relatively quickly, the challenger circuit is not meant for 2nd tier players to make a living. I completely respect the games of all players from top juniors, college, futures and challenger level, but you are not going to make a living unless you hit the tour. There are baseball players who crush AAA pitching but cannot do it at the major league level, and basketball players who score 30 points a game in Europe, and they do not make close to NBA/MLB salaries.

The purpose of the challenger and futures tour is a gateway to ATP/WTA tour, and for injured players to work their way back, not to have a 10 year career between 100-200. It is very difficult to rise above 100 if you are not a freak talent, you have to play a lot of tournaments as your good results fall off from the previous year. When you play to many tournaments you get nagging injuries and are unable to ever get fully healthy. For a player to improve you need rest and training blocks as well as tournament play. Another huge issue for players on edge is they cannot afford coaching, so you don't have anyone watching your game and working on the little parts that you need to improve, as well as scouting opponents.

This is wear player development could step in, provide coaches at future/challenger level for players certain age and certain ranking. They could also provide physio and meal money so players have proper diet for pro athlete.

I wonder how many challenger tournaments break even or turn a profit?

Jon King said...

The young man is just a high school senior so lets give him a break. But he does need to learn more about the world in general. Even to use "income inequality" in regards to tennis men shows he has been in a bubble. Income inequality in any real terms refers to women who do the same work as men and get paid less. Or income inequality refers to minorities of color historically being passed over for jobs or not promoted at the same rate. Or money being put into education of suburban kids more than poor kids.

Income inequality should never be used in regards to sports, especially tennis. Professional tennis is pure capitalism, the men who bring in the fans and make the money for the sport of tennis are rewarded with the majority of the pie. The 600th ranked player could leave tennis and become a great video game developer and make millions. Again, capitalism.

SeminoleG said...

Well lets just have a 16 Draw, or better yet 8...... Golf Pro's make money down to #100, either Tennis wants a "Pro Tour" or exhibition matches until you get to the good stuff. Maybe if they money was better in the lower ranks ROUNDS 1-2 would be more competitive, resulting in more fans?

I've always argued that the TOP players are so far ahead of the field not because of Natural Talent alone. Fund the lower ranks, let them get the HITTERs/PHYSIO/ and "Support" and then lets see how good the TOP players are week after week.

WE will never know until EVERYONE that competes has access to the "Extras"

Jon King said...

Its not realistic that everyone will have the "extras". Tiger Woods flies on a private jet, same with Federer. There is no way to give all players the same access to those things. Michael Jordan had a private trainer, like Lebron James does now.

Professional tennis is the ultimate in a level playing field though besides the perks at the very top. All the players have the same standards for equipment and rules. The best players rise through the ranks and make the most money.

What advantage would there be to give the lower ranked players access to the hitters and physios and see how good the top players are week after week? Lets say that was done and all the top players come back to the pack. No Federer, no Nadal, no Djokovic, basically every few years new guys are at the top.

I think that would be a disaster for the sport and many fans would lose interest and the total money in the sport would decrease. The fans pay for the stars, they want the Tiger Woods and Jordans and Rafas. Making the top of the game more even is not going to lead to the bottom guys having more money. I think would do the opposite.

CA said...

Nice dialogue here. This is a bit of simplistic view of things, but I think tennis/tennis media has been killing itself slowly for years by focusing on the top few players (Big 3, Williams sisters, etc.). How many times have we seen Fed or Serena crush a player in the opening round of a Grand Slam, while plenty of 5 setters are going on elsewhere, yet ESPN sticks to the blowout? I get that it's a bit of a Catch 22 that you need the big names, but I think the tennis media has underestimated its audience for a really long time. I think you would be hard pressed to find another sport the puts as much emphasis on its top few players. I get it, stars drive things, but we've had the same stars for a really long time.

Mr. Fernandez said...

I think its always about the stars. Besides diehard fans which are not enough to pay the bills, you need a draw for the general public fans. The NBA, tennis, golf, its about the stars.Tiger Woods saved golf. Golf courses 25 years ago were being turned into other uses. The equipment manufacturers were struggling. Tiger ushered in a new generation. Same with MJ, then Kobe, now Lebron in basketball. Always must have that next great thing. CoCo Gauff's matches drew more fans than anyone elses and she had not won a single thing yet. Why? Because the sports world picked up on what they think is the next Serena, the next dominant star. She may not ever win a slam but the mere prospect of Joe Public hearing about the next possible superstar was enough. My 88 year old neighbor who never thinks of tennis even mentioned Gauff at the mailbox last year. It is a superstar's world. If tennis started focusing on the 12th or 20th ranked players, if no great stars come along to take the big 3s place in tennis, the sport will die off slowly but surely as far as relevance in the sports world.

CA said...

@Mr. Fernandez, Don't disagree. All really good points. NBA is a great example (and MLB is an example on the opposite side, lack of huge stars and interest is declining). I do get it. But it's a fine line - promoting the top players vs. exciting competition. (And I realize that you can have both.) I think the networks hurt the sport with how they cover the early rounds of Grand Slams. Does seeing Serena Williams win 6-1, 6-2 in an opening round for TWENTY YEARS help generate more interest than seeing say the No. 12 player in world win 6-4, 4-6, 7-5 against the No. 50 player? God forbid they cut away to a more exciting match. There are plenty of personalities and interesting games out there for the men and women beyond the top 5. It's a little bit of a chicken or the egg debate.

WCB said...

I guess the question here is how many tennis players should be able to make a living for tennis - should it be 50, 100, 200 (probably not 800!)?

While a lot of this is economics and there isn't the same amount of money in tennis as say golf, I would say that how the money is allocated among the pros is important. I do think that over the past decade the grand slams have gotten a bit skewed towards the winners. The Grand Slams have been addressing this and trying to spread out the prize money a bit. While the stars do drive the revenue/eyeballs, they also would still show up at the US Open/French/Wimbledon even if the winner's paycheck was $2 million vs $3 million. I do think it is important to have a viable tour, but again this number might be 150 or 200 players, not 500.

I do agree with the comments that the Futures tour is not meant to be a 5-10 year odyssey. If at some point you can't crack the next level, it is time to move on. That probably stinks for the Amazing players that play in these events, but that is the way it goes.

Marty Collins said...

Tennis most major issue is format and lack of stylistic high-class players. The future is regional leagues and tours that employ the very best and the very entertaining and competitive. No one else need apply.

Jon King said...

WCB, I agree that the number of viable professional players will have to be determined. It will be much lower than it was before the pandemic.

Lets remember the big debate 2 years ago when the ITF announced it was cutting the rankings to support 750 men and 750 women as professionals, instead of the system that had 1000s with ranking points. This led to a lot of outcry, Facebook pages denouncing the ITF, Behind the Racquet started then mostly featuring low ranked players, there were calls for an alternate tour, etc.

Those days seem so long ago. Few could argue that there is any way pro tennis can support even 750 men and 750 women post virus. How low that number goes will not be known for a few years.

My hunch is tennis doubles down on its quest for superstars to promote. I do not think it was by accident that Martin Blackman of the USTA said the goal was still to find the next Grand Slam champion. I think tennis will become even more superstar central. They will bet that parents and family will continue to fund the players ranked outside the top 100, when some give up, another crew will take their places.

The NFL has a free feeder system with the NCAA programs. ATP/WTA has a free feeder system of parents who fund their kids pro tennis dreams. I think the powers that be in tennis will rely on that system to continue and a smaller and smaller number of players will make a profit from tennis.

Tennis 2030 said...

We wouldn't be so impressed with and wanting to watch Fed, Djoker, Rafa if we didn't subconsciously see them as the best of the best in a global sport with thousands of competitors beneath them. Do we care about the #1 in the world in squash? Or in something even more obscure? Not particularly, relatively speaking. If you hollow out the field (what lack of Challenger and Futures prize money is in effect doing), at some point being "Fed" isn't as impressive - and, what's more, in that wouldn't generate the revenue for the sport that it/he does. Viable lower rungs of the tour make the top rungs the cash cow / spectacle that it is; they are symbiotic.

"Sports aren't socialism" is a valid point. Challengers and Futures tournaments aren't profitable, except for maybe very rare exceptions. The sport has never been bigger. The powers that be could just say "things are fine as is" and have a legitimate position. But you could also look at it and say "Is there an even better way to the grow the game and the $ pie that comes with it?" Maybe there is. Maybe there isn't.

If it was known that you could be 300 in the world, not just Top 100, and make a solid living playing tennis, how much more interest would that drive in youngsters and parents to take up the sport and stick with it? And with that many more people playing and interested, what would that do to the main tour's media market, ad sales, etc.? Prize money redistribution/subsidization could jumpstart this. Maybe this is wishful thinking. But if we think outside the box of the current status quo, there are knock on effects that could create a whole different picture of things down the road. It's not so cut and dried direct of "this salesperson earns this commission" or "this tournament isn't profitable". It's part of a system. Why does the Challenger Tour have to be the place where diamonds break through but otherwise dreams go to die? We would likely all agree that the athletes at that level are truly world class in a global sport, so why shouldn't it be an echelon that gives a decent living? It's worth a try at some new policy to see if there's a way. It seems there's a chicken and egg issue of "We can't pay Challenger players because they don't attract eyeballs and don't generate revenue", but if you did pay them, would they long term start to attract eyeballs and generate revenue?

Thanks, Grand Slam A, B, C, D, for the annual record purse yet again. We're going to take that additional $5M and sprinkle it across the Challenger Tour instead.

(Regarding that it will at the end of the day always be about the stars, yes. How do not for profit national tennis federations with mandates to broadly grow the game spend their funds? Are you going to pay 100K for your top player to bring on an additional trainer to get them over the hump from a semifinalist to a Grand Slam title, or spend that 100K on grassroots programs? As crazy as it sounds given their mandate, it's the former. Because if the player win, the windfall of that in marketing dollars, ticket sales and all that for your federation that you can THEN put towards grassroots far exceeds that initial 100K. It's an investment.)

Jon King said...

Tennis2030, the tennis powers do not need to do any of that because there will always be parents and other family that will fund the feeder system. There will always be thousands of players below the top stars. We hire amazing hitters who have ATP points for our juniors for $30/hour.

The USTA spends $4 mil for the purse at the Open and little on futures because it can. There will never be a shortage of grandparents who fund their grandchild's dream of being a pro player. There is no incentive for the USTA to change a thing in regards to how they disburse the pro money.

Its been well known for decades that only the top 100 make a profit from tennis yet there will always be thousands of guys willing to give it a go and have family willing to back them.

Tennis2030 said...

Good points, Jon King.

If it was well known that the top 300 could make a profit, would there be tens of thousands giving it a go?

Unknown said...

Sports is an entertainment product and in a capitalist society we allow the market to dictate the economic splits, agreed. The interesting thing is that tennis is an outlier. When you look at the gini coefficient for income in tennis compared to golf, soccer, football, basketball, and baseball (pg. 21 of the report) it is apparent that it does a very bad job of distributing income. Even compared to individual sports (i.e. golf), tennis is an outlier and can do better.

Jon King said...

It does not work to compare the income spread coefficient to any other sports because tennis is unique. Even golf, another individual sport, is so different.

Tennis scoring is unique in that there is no cumulative effect of winning the first set 6-0 or 7-5, still counts as only one set. No other sport has this advantage to the underdog. Win the first half by 30 points in basketball or football, that lead has to be taken away by the opponent. Not true in tennis.

To get the huge ranking points and money of a Grand Slam purse, multiple matches have to be won against various opponents. Each set must be won on its own over and over again, match after match, no matter how much the 1st or 2nd sets are won by. Injuries can sideline a top player at any moment.

If anything, compare tennis to boxing. The top 1-2-3 boxers earn huge purses, the 12th best boxer not much. But one lucky punch or injury can take out a top fighter.

Tennis is a winner take most sport like boxing. And also driven by a few superstars. Just watching the CoCo Gauff phenomenon answers any questions you might have about income inequality. Superstars, even just on potential, make and drive the sport.

Like I said before, no incentive to change a thing for the tennis powers. The top players drive the ratings and produce the income for the sport. And mommy and daddy will fund the dreams of the lower ranked players at no cost to the ATP.

Mr. Fernandez said...

Tennis is only superstars in the minds of the people that run the sport. Look which American players got long term endorsement deals. Gauff and Anisimova, not Kenin. Two girls who have not won yet got large endorsement deals, a 21 year old who actually won a slam has much less in endorsement deals. The tennis money is banking that Gauff and Anisimova have more superstar potential than Kenin.