A Tennis vs Basketball Comparison

Sometimes I think the easiest way to introduce what goes into managing the expenses of a tennis career is to take a look at another pro sport and notice some of the differences. Imagine I’m Dirk Nowitzki, for example (which is to say, a bit taller and more German): My job is to compete. I show up, I train, I play. During home games I live in my house in Dallas, during away games I hop on the team plane and stay in the team hotel. The Mavs organization has a full roster of professionals, from executives in the head office, to coaches to physios and medical staff to cheerleaders, all of whom are paid to by the organization to support me and the rest of the team. (I’m sure Dirk, in his constant, personal drive for greatness, covered extra treatments and training sessions, especially during the off-season.)

Now think about tennis, with regards to the infrastructure of running a business. Overhead is an easy place to start. For example, when I travel to a grand slam I need to look for a place to stay in for me, my family, and my team. Me and 256 men and women (that’s just singles players) - plus the tourists, television and media crews, and the entire tennis industry – are also looking for houses in the same neighborhood in the same weeks. At Wimbledon this year, I found a nice home a short walk from the All-England Club for around £30k for the duration of the tournament. The prize money for the first round at Wimbledon is £45k, which weighed against flights, salaries and expenses for my team, would make the tournament would be a money-losing event for me.  

I also maintain a full staff throughout the year. I have a coach, his name is David MacPherson and he’s one of the best coaches in the world, and I have a chiropractor, Clint Cordial, who works to keep me healthy. I pay their salaries. I buy their flights as we travel around the world on a weekly basis, and I pay for their hotels and meals while we’re on Tour. Additionally, instead of having a front office manage the business of my team like Dirk does, I do it, and I enlist the help of a management agency to help me so I can focus on winning matches. 

The coaches/trainers are employed in relation to my on-court performance, and my agency is responsible for the endorsement and sponsorship work. These guys share in my success, and my earnings (which I introduced in my previous post).  While it varies from player to player, the standard coaching fee structure on the ATP Tour is salary plus a percentage of prize money earned, with a bonus based on end of year rankings. Players have different agreements with agencies, but they will typically take a fee of anywhere from 10 to 20 percent on the deals they bring in. 

Additionally, taxes need to be entered into this discussion, as well. Just to use the £45 in First Round Wimbledon prize money as an example, don’t quote me but I believe the UK tax rate is a staggering 45% or so. Of course, each country is different and there are some complicated rules but the point I’m trying to make is that taxes are significant, and it’s something to keep in mind as the tournament prize money numbers get put up in headlines and bright lights but can vary substantially from what ends up in a player's pocket.

Finally, the only other point of comparison to Dirk I’d like to make is that my expenses are largely a fixed, sunken cost, regardless of how much revenue I earn. I try not to make a habit of spending the whole year losing in the first rounds of events, but tennis is one of those sports where nothing is guaranteed. Just as the Mav’s don’t stop paying the entire coaching staff after a few losses or pull the plug on covering the team hotel if a player dips in his free throw percentage, the expenses don’t quit even if the performance (and in the case of tennis, the earnings) drops. Unlike Dirk, I’m on the hook for these. 

I want to be clear that I see expenses as something to be managed, not eliminated. My coaches, trainer and agency have all helped make me the player and the business that I am today. I love building a team around me and being able to support a group of people is one of the best feelings I’ve come to know during my career; I imagine this is what a lot of business owners can relate to this. Being able to travel with family and friends so they can cheer me on as I play is something it’s hard to put a price on, though my point is simply that for all of this there is indeed a price. 

Source: Forbes.com

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