Australian Open 2021: Tennis Australia lifts lid on costs of February move and COVID rules

Tennis Australia knew a February switch and COVID-safe restrictions would hit the Australian Open’s bottom line. Here’s just how bad.

Russian Alisa Kleybanova hits with kids on a mini-tennis court set up at Federation Square during the 2020 Australian Open.

Restrictions this summer on fan zone activities such as concerts and culinary events are set to have a major financial impact on the Australian Open.

Tennis Australia has over the past decade transformed the grand slam tournament into a fortnight long festival on a massive footprint of land stretching from Federation Square to the Richmond Train Station.

From the moment ticket holders leave Flinders Street station or jump off a tram at Swanston Street, they are bombarded with an array of sponsor-linked activities.

But social distancing and COVID-safe measures will have an impact on the tournament’s bottom line, tournament director Craig Tiley said.

As a result Tennis Australia has had to renegotiate its contracts, and with it a reduction in the Australian Open’s earning potential for 2021.

It comes as Tennis Australia is in discussions with the Victorian government on crowd capacity, with hopes that the tournament can reach at least 50 per cent of its 2020 attendance.

“We are an event where a lot of our partners are spending money on activations as part of their outlay and activations are going to be restricted or limited, so that part will have some impairment,” Tiley told The Australian.

“It is going to be in double-digits (in terms of) impairment and then, of course, ticket sales are going to be 50 per cent less. We may get to have more fans. We don’t know yet. But the broadcasters, for the most part, hold.”

Tennis Australia has agreed to a one-year discount regarding its broadcast contract with Nine Entertainment. The reported concession is 10 per cent on a contract worth $60 million annually.

Tennis Australia is still hopeful crowd capacity can reach at least 50 per cent of its 2020 attendance.

The agreement came as Seven West Media and Cricket Australia continue a bitter public dispute regarding the rights to this summer.

Despite the shock resignation of Nine’s chief executive Hugh Marks in November, Tiley is pleased with the manner in which negotiations with tennis’ main broadcaster unfolded.

“There are two winners out of that — us and Nine. It didn’t play out in the media like all the others have,” he said.

Australia’s Ash Barty during her semi-final on Rod Laver Arena this year.

“Hugh Marks, the (former Nine) CEO, and I had really fruitful conversations and we have a contract with them, but it is about the partnership and not the contract.

“From the beginning we made an agreement that we were going to deal with it ourselves and it was going to be about the partnership, because we are in a long-term relationship with them.

“Now they are feeling really good, we are feeling really good, so we are going to massively grow.”

Craig Tiley says this year the tournament will run at a loss but is confident it is well placed to rebound.

The organisation will receive financial assistance from the government to help offset the massive outlay for the quarantine costs and charter flights for up to 1100 people in the middle of January.

It will pay about $40 million covering the costs of biosecurity protocols and will be forced to borrow money to cover some or all of that sum. In all likelihood Tennis Australia will exhaust cash reserves of up to $80 million it had built over several years.

But Tiley is confident the organisation will be in good shape if the delayed 2021 Australian Open is conducted successfully and the pandemic is under control by the following year.

“It will be a year of running an operating loss. We will burn our cash reserves to do it,” he said.

“We have some support from the government on quarantine, which is really helpful, and we are going to have to (protect) some money too, because we don’t want to be in a zero asset position going into 2022. We have got it all worked out for the next three years.

“If this virus continues through to 2022, there will be more challenges for us. But we are banking on us getting on top of it. I think the economy has to get on top of it in 2022, otherwise we will all be in trouble.”

Originally published as Australian Open 2021: Tennis Australia lifts lid on costs of February move and COVID rules