Victoria’s secret $63m Tennis Australia bailout, months before sport body’s $62m surplus

The Victorian government approved a secret taxpayer-funded bailout of Tennis Australia on the eve of the last state election, just four months before record crowds flooded back to Melbourne Park for last year’s bumper Australian Open.

The previously undisclosed “solvency and cash flow support” payment of up to $63 million, approved by Treasurer Tim Pallas on September 1, 2022, was purportedly made so that Tennis Australia could pay its bills after its cash reserves were depleted by the additional cost of staging successive tournaments during the pandemic, documents obtained under freedom-of-information laws reveal.

The Australian Open is expecting a record crowd this year.Credit: Eddie Jim

Tennis Australia chief executive Craig Tiley said on Sunday that the financial contingency was part of an arrangement reached during contract negotiations with the state government, which extended the tournament’s tenure in Melbourne to 2046.

“The Victorian government made possible what you see today,” Tiley said at the formal opening of this year’s tournament, which for the next two weeks will dominate Melbourne’s sporting and social life.

“It was about ensuring that Victorians had an opportunity to come to an event which we are extremely proud of. There isn’t an event like this in the southern hemisphere. There is not an event like this is in the world globally.”

The contingency was approved about the same time the government forgave a $40 million loan made to Tennis Australia in February 2021 to cover additional costs at the height of the pandemic.

Tennis Australia chief Craig Tiley (right), pictured with acting Premier Ben Carroll (left) and Minister for Tourism, Sport and Major Events Steve Dimopoulos on Sunday. Credit: Getty Images

In its most recent financial statement to Australia’s corporate regulator, Tennis Australia described that decision as “a one-off derecognition of liabilities from the state of Victoria in exchange for Tennis Australia’s commitment to extend the period of the Australian Open being held in Victoria by two years to 2046”.

The two sums combined mean that Victorian taxpayers covered Tennis Australia’s entire pandemic-related losses from 2021 and 2022.

The tournament surged back to profitability last year, with record crowds of nearly 840,000 people, which in turn led to Tennis Australia posting a record surplus of $62 million. This year’s event is seeking to attract 1 million visitors over an expanded 15-day main tournament.

The state government, through its $1.7 billion Economic Survival Package, provided extensive financial support to businesses that struggled to trade throughout the pandemic years.

Tennis Australia’s financial lifeline was extended after pandemic restrictions had lifted but at a time when the organisation was facing a short-term cash shortage caused by having to quarantine players in hotels, limit stadium capacity and close the tournament to international visitors.

The government estimated that the cost of staging the 2022 Australian Open – a tournament marked by the deportation of 10-time winner Novak Djokovic and that summer’s deadly Omicron COVID-19 wave – was $70 million higher than it otherwise would have been.

Steve Dimopoulos, the Minister for Tourism, Sport and Major Events, wrote to Pallas in August 2022 seeking the release of the contingency funds.

A Department of Treasury and Finance ministerial briefing signed by Pallas and obtained under freedom-of-information laws by the state opposition notes that the release of $63 million would “ensure that Tennis Australia remains solvent and can manage its cashflow” for the next six weeks and meet its commitments for the 2023 Open.

“Given delays in providing funding to [Tennis Australia] could lead to delays in commitments and decisions regarding to the AO2023 event, DTF (Department of Treasury and Finance) supports the release of $63 million in 2022-23 for TA solvency support and to support its cashflow.”

The ministerial briefing provided for Tennis Australia to use the money on an “as needs” basis and return any unspent funds at the end of the financial year. Neither Tennis Australia nor the government confirmed on Sunday whether any funds were returned. A government spokesperson said its arrangements with Tennis Australia were commercial in confidence.

Tiley agreed that Tennis Australia could have secured a line of credit from a commercial lender. “There were other options ... which we did explore,” he said. “But the option for us was always to work closely with the Victorian government.”

Acting Premier Ben Carroll defended the use of public money to prop up the Australian Open, an event he said generated between $300 million and $400 million each year in direct economic benefits for the state.

“The statistics speak for themselves: $2.7 billion has been contributed to the Victorian economy over the past 10 years of the Australian Open,” he said.

Opposition spokesman for tourism, sport and events Sam Groth, a regular competitor at Melbourne Park during his previous career as a professional tennis player, questioned the secrecy surrounding the financial bailout.

“We support the Australian Open, which delivers significant tourism and economic benefits for Victoria,” he said. “But there seems to have been no accountability and transparency for $100 million of taxpayers’ money spent by the Allan government.

“The government needs to explain why it has spent more than $100 million in secret deals to bail out what is a commercially successful event.”

The long-term contract to keep the Australian Open in Melbourne was renegotiated in the same year that the state government secured the rights to the 2026 Commonwealth Games and extended its hold on the Australian Formula 1 Grand Prix.

The government subsequently scrapped its plans to host the Games. Last year’s Grand Prix weekend was delivered at a record $100 million cost to taxpayers.

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