Massive payout if smoke stops play at Australian Open

Tennis Australia stands to pocket a huge cash payout should any play be lost at the Australian Open due to bushfire smoke

Craig Tiley says Tennis Australia is working on an air quality policy

Tennis Australia stands to pocket a huge cash payout potentially worth tens of millions of dollars should a significant amount of play be lost at the upcoming Australian Open because of adverse conditions caused by the bushfires.

The payout would be as a result of a canny and groundbreaking insurance deal the governing body struck for the first time a year ago with insurers Lloyds of London and Hiscox, designed to protect the financial crown jewel that the Open — which generates more than $300m in revenue each year — has become for the sport.

With smoke haze from bushfires in Victoria’s East Gippsland region having settled over Melbourne in recent days and causing concern about air quality for players and spectators at the Open, Tennis Australia chief executive Craig Tiley said officials had to monitor closely the financial implications. World No 2 Novak Djokovic has called for Open organisers to consider delaying the tournament if smoke haze threatens players’ health.

“Our insurance does cover us, yes. The size of this event now and the scale of it globally, around the world all our broadcasters and our media are going to be watching two weeks of tennis. It is the largest global annual event at this time of year and it is a significant event, so we do have all the (financial) protections obviously.”

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While Tiley would not disclose the exact terms of the insurance deal, first negotiated by brokerage firm Marsh on the eve of last year’s Open, it is understood Tennis Australia would receive well north of $100m in the worst-case scenario of the cancellation of the Open due to a terrorist strike or other unforeseen circumstances, including extreme weather.

Disruptions to a day or more’s play and therefore any cuts to ticket sales or revenue from the lucrative broadcast fees Tennis Australia receives from around the world would also be covered by the insurance should the governing body choose to act on its policy.

Tennis Australia officials have for years been fearful of the financial implications of losing the Open to a country overseas and in more recent times significant cuts to ticketing, sponsorship and broadcast revenue, so important has the two-week event become to the governing body’s coffers.

This has led to Tennis Australia building up a reserve fund worth $80m on its balance sheet as a form of “self-insurance” but more recently to seek out an official insurance policy designed to protect its financial situation.

Tennis Australia’s insurance is believed to cost it a couple of million dollars each year.

Tiley said the Open would now come up with an air quality policy along the same lines of its heat policy, whereby play is suspended on outside courts based on certain heat conditions.

“We do have three stadiums with roofs where we have a controlled environment, so play will always continue. It will come under our extreme heat policy approach and what will be new (is) we will have some real-time (air) quality monitoring on site. We will be more detailed and bring it on site and use that analysis to make some decisions around the safety and wellbeing of fans.

“The players understand this is not something we can do anything about. They want to play, so on the 20th of January we will open the gate and start playing. We will continue to work closely with the Bureau of Meteorology and medical experts to ensure that the safety of our players, fans and staff are of the utmost importance.”

Tiley said ticket sales for the 2020 Open were tracking at least 10 per cent ahead of last year, during which a record 796,435 spectators attended the event.

Tennis Australia’s revenue should hit the $400m mark this year, thanks to a string of lucrative sponsorship deals and broadcast contracts.

The latest new deal is with airline Emirates, which will step up to the associate partner level alongside Rolex and Chinese liquor brand Luzhou Laojiao for the first time in what would almost certainly see it paying more than $10m annually.

Korean car company Kia continues to be the Open’s major sponsor, paying about $17m annually — a similar level to that Luzhou Laojiao is forking out to promote its 1715 spirit via the first tennis grand slam of the year.