A General Landscape of Tennis Development

According to a market research on audience rating, following football and basketball, Tennis has steadily become the third most popular sport for Chinese spectators to watch on television. Let’s look at the numbers: 30, 000 established tennis courts and a roughly estimated 14 million tennis professionals and enthusiasts are in the process of making this sport one of the fastest growing sports in China. More surprisingly, based on research done by Tom Cannon, a professor and sports finance expert at the University of Liverpool, this new emerging market is gradually generating approximately $4 billion per year.

Two Biggest Tennis Events in China

The Shanghai Masters, as part of the ATP World Tour Masters 1000, was established in 2010 in order to fulfill the desire of ATP and Chinese Tennis Association to develop the tennis market in China, and is held annually at the Qizhong Forest Sports City Arena in Shanghai. Yang Yibin, the Marketing Director of the Shanghai Masters, stated that the amount of Shanghai tennis fans have dramatically increased from 540,000 6 years ago to nearly 1 million spectators in 2011. As a member of the organizing committee, what he really appreciated about ticket sales in 2011 is that it increased nearly by 40%, showing that the event is growing in popularity, but also that it can decrease its dependence on sponsors for revenue.

However, China Open seems to receive a lot of controversial comments about its model of development. This controversy has led to a decrease sales. Although sales last year achieved a record of 110 million RMB, the main source of revenue was from the event’s sponsors. Approximately 90 million RMB came from sponsoring deals and less than 20 million RMB from ticket sales, and zero from authorizing broadcasting rights. According to the analysis of China Business Journal, this developing trend is damaging what a normal commercial tennis event should become. Take the French Open’s operations as an example. Revenue from selling broadcasting rights usually account for 45% to 50% of the total revenue, ticket sales make up to 30%, but sponsorship deals are meant simply to supplement the other two major sources of revenue due to its instability. Accordingly, the total value of this package is estimated to be about 200 million Euros, with a profit margin at 20% to 25%.

“Li Na Gust” in China

In addition to the initial “Li Na Gust” that blew through the country, it seems as though tennis is experiencing yet another surge in China because Li Na has become the first Asian player to win the Grand Slam title. By winning this honor, Li Na gained seven endorsements with an estimated value $42 million in value.

From Nike, Rolex to Haagen Dazs and SpiderTech, Li Na not only performed well in the female tennis rankings, but also became one of the highest paid female athletes in the sport, just behind Maria Sharapova. On June 19, 2011, this 29-year-old Chinese tennis player signed an endorsement deal with Daimler AG to endorse its Mercedes Benz, which is worth about $1.5 million annually for three years.

Written by Limo for Daxue Chinese consultants from Daxue Consulting

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