Seven in battle to win back tennis from Nine as Tennis Australia charts financial recovery from $100m loss

Seven West Media is gearing for a bidding war with Nine Entertainment over the Australian Open broadcast rights – despite Nine having more than two years left.

Ash Barty’s run to the Open women’s final has helped Tennis Australia attract more sponsorship income. Picture: Clive Brunskill / Getty Images

Seven West Media is gearing up for a bidding war with Nine Entertainment over the Australian Open broadcast rights – despite more than two years left on the current $300m, six-year deal.

Seven executives have made several unofficial approaches to officials at Tennis Australia in ­recent weeks, The Weekend Australian has had confirmed.

Tennis Australia signed with Nine at a similar stage of its previous contract with Seven for its last deal, and could be officially in the market for the local rights as soon as later this year.

Though the recent Ashes ­series was a ratings success, Seven is keen to shed its cricket rights and is unhappy with the domestic Big Bash League. Interest in the BBL has slipped for the past three years.

Seven is also set for a court battle with Cricket Australia beginning next month over financial compensation the network is seeking for the pandemic-interrupted 2020-21 summer.

Nine’s ratings for this year’s Australian Open have been strong, buoyed by Australian star Ashleigh Barty’s run to the women’s final. Her semi-final on Thursday evening averaged more than 2 million viewers ­nationwide and Saturday evening’s final is likely to have a peak audience of more than 3 million.

The domestic rights could be worth $80m or more annually for the next deal and Tennis Australia is also in negotiations with several potential broadcasters in the important and lucrative North American market.

“We are talking to everyone who is interested there. We have a strong relationship with (incumbent) ESPN and we are quite confident they will want to renew,” Tennis Australia commercial officer Cedric Cornelis told The Weekend Australian.

“The likes of NBC and Amazon are interested as well.”

But Tennis Australia is likely to lose tens of millions of dollars on this year’s Australian Open as the Covid-19 pandemic continues to hurt the sport’s finances.

However, Tennis officials are hopeful that a series of commercial and broadcast deals will help repair the tenuous balance sheet that has been smashed by the pandemic in the past two years.

Tennis has turned to technology investments – emerging as a shareholder in Israeli, US and Australian artificial intelligence start-ups, a payments platform and a green technology firm. The sport’s new venture capital arm is hoping to have 10 companies in its venture capital portfolio, investing up to $20m on behalf of a syndicate of sporting and wealthy investors, in the next year.

Tennis Australia will seek to clinch extensions or replacements for its two biggest sponsors, worth $35m combined, and a new television deal in North America after signing a lucrative extension in Europe.

Mr Cornelius said Tennis Australia was also achieving good ­increases from sponsorship renewals. Its two biggest deals worth more than $16m annually, with Korean carmaker Kia and Chinese liquor firm Luzhou Lao­jiao, expire next year.

“Kia is coming up and we’re not waiting until the end of the contract. Conversations are already happening,” he said. “But we are seeing strong demand from sponsors. We have new ones coming and have extended some core partners recently.”

The tournament will still suffer financially from a lack of big crowds, with total attendance likely to be about 350,000 for the two-week event – well down on the 820,000 it attracted pre-pandemic in January 2020. As a result, Tennis Australia could end up in the red again.

“The financial situation is hard to tell before the event finishes, but we have had a significant uplift commercially, and broadcast numbers and digital numbers have been even higher than before the pandemic,” Mr Cornelis said.

One future money-spinner is Tennis Australia’s investment arm Wildcard Ventures, which has invested in four start-ups since its inception in July last year as part of a commitment worth several million dollars by the governing body.

In a rare move for an Australian sport, Wildcard Ventures is acting as a syndicate and bringing in other investors, including tennis players and wealthy individuals and families, to its deals. It has put money into US artificial intelligence sports tech business SwingVision, which can track tennis swings and shots, player movement, video and match analysis from software, and Canberra start-up Samsra, which uses plastic-eating enzymes to break down plastic waste.

Wildcard Ventures also took part in a $US65m Series A funding round in mobile ordering platform Mr Yum in November alongside investors led by Tiger Global and billionaire Scott Farquhar’s Skip Ventures.

Its latest deal is investing in Israeli AI firm Minute, which has technology that automatically identifies the most captivating moments of a video and compiles them into short previews.

Tennis Australia’s head of innovation, Machar Reid, said the Minute technology was integrated into the Australian Open website, which “enables rights holders to present content in automated and more engaged ways”.

The new deals will all go towards helping Tennis Australia repair a balance sheet hole. The organisation posted a $99.9m net loss for the 15 months to September 30 from revenue of about $360m.

Income for the period was almost $100m less than the record $455m revenue it made in what had been a bumper 2020 ­financial year – which featured the last Australian Open held before the global pandemic.

The 2021 accounts reveal that Tennis Australia took out a $41.02m loan from the Victorian government in February to help the organisation hold the Open during Covid. It also received $19m in government grants and had to spend the $80m in reserves it had built up for the best part of a decade in a future fund. The latest balance sheet shows it now has only $2.4m net assets.