ATP profits are distributed according to the ATP points of the singles players in the Masters 1000 tournaments. The more ATP points a player has, the greater the amount of profit sharing he will receive.
Each point is assigned a value in the same way as, say, a share. For example, if one ATP point is worth €500 and the player has won 10 points at the end of the season, he will receive €5,000. This also applies to points earned in qualifying rounds.
50-50 Profit Sharing Formula
The ATP has introduced a 50-50 profit-sharing formula in 2022. In summary, this means that all net profits exceeding the ATP Masters 1000 base prize money (before income tax) will be split 50-50 between the players and the tournament organizers.
The formula consists of three parts:
- Tournaments have a guaranteed Basic Prize Money, which is paid to all players.
- After each of the nine Masters 1000 tournaments, there will be a P&L statement showing all income and expenses.
- The profits are aggregated for all Masters 1000 tournaments. If the profits exceed the total amount of the basic prize money paid out for the whole year, the excess will be split 50/50 between the players and the tournaments. The excess will be paid through the bonus pool.
Who Is Affected By The Profit-Sharing Formula?
The profit-sharing formula mainly applies to ATP singles players competing in Masters 1000 tournaments.
How Does The 50-50 Porfit-Sharing Formula Benefit Players?
The main benefit of the payout formula is that it improves the transparency and openness of tournament economics. This gives players a better understanding of the costs associated with tennis tournaments, which increases trust between players and tournament organizers.
The end-of-season profit and loss statement will also show the impact of additional player requirements such as accommodation, food, and transport on the profit-sharing.
In 2022, $12.2 million was distributed among players through the profit-sharing formula. This generated 22.8% more money for the players than they would have earned with the base prize money alone.
Compared to other sports, profit-sharing offers important benefits such as:
- ATP’s profit-sharing formula includes all revenues except data revenues. In other sports, the payout formulas generally exclude certain sources of revenue, with the result that the players’ share is well below 50%.
- Tennis players are independent agents, which gives them more control over the building and managing of their personal brand. For example, players have greater freedom to plan their own playing schedules and exhibition events. This puts tennis players in a better position than, say, team sports athletes, whose branding and sponsorship opportunities may be restricted by the team or league.
It is also good to keep in mind that tournament organisers bear the full risk of the tournament. Even if the tournament does not produce a profit, the players still receive the full prize money.
Which Revenues Are Included In The Formula?
Profit sharing applies to all revenues from ticket sales to streaming, excluding data sales. Profits from the sale of data are not included as they are considered ATP property and not tournament property.
The data collected from tournaments is managed by TDI (Tennis Data Innovations), which distributes the data directly to players and tournaments. If the data revenues were included in the payout formula, the players would benefit twice over.
Why Is The Profit-Sharing Formula Calculated For The Whole Masters 1000 Category And Not On An Event-By-Event Basis?
When the formula takes into account all Masters 1000 events, it can minimize outliers such as large profits or losses. According to the ATP, the aggregate result gives a more accurate and fairer picture of the state of the business, which better protects players and other stakeholders.
When Will The Profit-Sharing Formula Be Introduced To Other Tournaments?
In 2023, the ATP 500 class adopted the formula and the intention is to implement it in every ATP class.
How Is Prize Money At The Grand Slams Determined?
The Grand Slams are private events that are not under the ATP’s administration. This allows each Grand Slam to determine its own prize money.
The Benefits Of The Profit-Sharing Formula In a Nutshell
- Aligning the interests of players and tournament organizers
- Full transparency
- Long term sustainability