The Women’s Tennis Association’s decision to withdraw events from China is an unprecedented statement in favor of Peng Shuai and women’s rights, in part because it could cost the association and its players hundreds of millions of dollars. .
Peng, 35, one of China’s most famous tennis players, claimed last month that she was sexually assaulted by a senior Communist Party official. Chinese authorities were quick to erase the allegation rather than investigate. And for weeks, Peng disappeared from public view.
She has since reappeared, but on Wednesday WTA President Steve Simon said he still had “serious doubts about his freedom, security and the lack of censorship, coercion and intimidation. “. Citing these doubts and the government’s silence, Simon announced “the immediate suspension of all WTA tournaments in China”.
These tournaments are the source of tens of millions of dollars annually. Just three years ago, the WTA announced a landmark deal to bring its flagship event to Shenzhen, China. Shenzhen’s bid for the WTA Finals included a pledge to double the tournament’s price from $ 7 million to $ 14 million per year. 2019 champion Ashleigh Barty took home $ 4.4 million, more than any man or woman has ever won in any other tennis tournament, Grand Slam included.
In total, the WTA planned to host nearly a dozen tournaments in China each year. In 2019, these tournaments represented more than $ 30 million in prize money.
The WTA could, in theory, replace these tournaments, essentially relocating them, but that would come at a cost. While the calculations are obscure, the cash prizes are an indirect function of the revenue organizers expect to earn from a given tournament. Revenue comes from sponsorships, broadcast rights, and ticket sales, all of which are heavily dependent on the venue of the tournament, and most of which flow through the local tournament organizers, not the WTA at large. Shenzhen’s successful bid for the WTA Finals was backed by Chinese real estate developer Gemdale Corporation, who then secured lucrative title sponsorship with Japanese beauty company Shiseido – and, in turn, enabled the WTA to formalize the purse of $ 14 million.
For comparison, the 2021 WTA Finals in Guadalajara, Mexico – relocated from Shenzhen due to the COVID-19 pandemic – offered just $ 5 million.
The WTA had planned to return to Shenzhen in 2022. It is not yet clear how long the tournament suspension in China will last. Simon, in his statement, said that, “given the current state of affairs,” he is “deeply concerned about the risks all of our players and staff may face if we host events in China in 2022” . As for the future, he praised the “tennis communities in China and Hong Kong”, and said that “he remained[s] hope that our appeals will be heard and that the Chinese authorities will take action to legitimately address this problem. But he said that, “unless China takes the steps we have requested,” which include a “full and transparent investigation” into Peng’s claims, the WTA will not come back.
China’s actions so far make an investigation unlikely, which means the WTA could leave China for the foreseeable future. It’s unclear exactly how the WTA would exit contracts with Shenzhen and other host cities, or what the associated costs might be. But the total value of these deals is well over $ 100 million. The 10-year Shenzhen accord came with a pledge of more than $ 140 million in prize money alone. The China Open, a Beijing tournament, offered $ 8.3 million in 2019, making it the fourth-highest-grossing event on the tour.
Shenzhen and its business partner Gemdale had also promised to build a new 12,000-seat downtown stadium. In addition, the WTA concluded four years ago a deal of 120 million dollars over 10 years with the Chinese digital streaming platform iQiyi.
Simon’s willingness to stand up to the Chinese government would appear to jeopardize all of these and other cash flows. In addition to existing agreements, this could have an impact on future negotiations with potential Chinese partners. “Or with American companies that do business in China and buy these sponsorships to promote themselves,” said Andrew Zimbalist, sports economist at Smith College, in a telephone interview.
Overall, “it’s a substantial amount of money, and it’s something that would be very likely to grow if they kept good relations in China,” Zimbalist said. “So this is a very significant monetary sacrifice and a very unusual monetary sacrifice.”
There’s no way to predict or quantify how much Wednesday’s decision will ultimately cost the WTA, but it’s clear the Chinese tennis market was booming. Simon said the financial blow would be significant. Sports Illustrated reported last month that the WTA derives a third of its revenue from China. Simon told Time Magazine the estimate was an “exaggeration”, but admitted that “we make a lot of income from China”, and said the country “has given us great value”.
Players, by extension, will also suffer financially. Most of their revenue does not come from the WTA itself – which reported $ 102.6 million in revenue in 2018 – but rather from individual tournaments, which share the revenue with the WTA. Those tournaments offered $ 139 million in total winnings in 2018. That number soared to tens of millions in 2019, the last full year before the pandemic. Chinese tournaments accounted for about one sixth of the total purse. Replacement tournaments might allow players to get some of that money back, but probably not all of it. An inability to access the Chinese market could also lower sponsor values and, by extension, player incomes.
But the WTA and various stakeholders have concluded that these millions are worth paying to support an alleged victim of sexual assault who is silenced by an authoritarian government. The players apparently supported Simon’s decision. Several had already spoken of Peng’s disappearance. Simon said he made the decision “with the full support of the WTA Board of Directors,” which consists of eight members, three of whom are player representatives chosen by the player council.
WTA founder Billie Jean King also applauded the decision soon after it was made, and tweeted: “The WTA is on the right side of history in supporting our players.”
Simon, in his statement, said: “If powerful people can suppress women’s voices and sweep allegations of sexual assault under the rug, then the foundation upon which the WTA was founded – equality for women – would suffer a huge setback. I will not and cannot let this happen to the WTA and its players. “