Nearly 158,000 people attended the U.S. Open’s Fan Week over the last six days to watch qualifying matches, practice rounds and organized performances, shattering the previous record of 115,355, set in 2019.
The numbers bode well for the tennis season’s fourth and final Grand Slam, which officially starts on Monday, but to USTA CEO Lew Sherr, they also represent an important shift back to the “more exciting” parts of his job. After a few years where the COVID pandemic dominated the USTA’s financial planning and operations, the tournament operator is back to spending money on programs—like the U.S. Open’s free opening week—that grow both the sport of tennis and the organization’s own business.
“We’ve put far more resources into Fan Week than we did last year and the year before, and we’re seeing that reflected in attendance,” Sherr said last week in an interview from his office at the Billie Jean King National Tennis Center. “It’s a lot more fun to be focused on growth and new opportunities than to be in conversations about what we can do without, what we can make good with for a year, and what we can defer or delay. There were two years of that, and now the conversations are much more exciting.”
The USTA brought in a record $529 million in revenue last year (up 9% from 2019), according to its consolidated financial statements, thanks largely to the commercial growth of the U.S. Open. Like the NCAA with the men’s basketball tournament, the nonprofit USTA leans heavily on this one major event to fund much of its annual agenda. The Grand Slam made up just 38% of the organization’s operating expenses last year, but 89% of its revenue. (The $472 million in revenue specifically from the U.S. Open outpaced the organization’s entire operating expenses from 2022, according to the document).
By almost all major metrics, the USTA is in a healthier position now than it was in 2019. Cash reserves have more than doubled to $360 million following the $270 million sale of the ATP’s Cincinnati event last September. Ticket revenue, broadcast rights, sponsorships and hospitality revenue are all up. A credit facility opened during 2020 and renewed last year was terminated in February.
It’s a big shift from a few years ago, when the pandemic disrupted the entire 2020 global sports calendar. Similar to leagues like the NHL and NBA, the USTA held its 2020 U.S. Open and the Cincinnati tournament in New York without fans, which cost the organization roughly $200 million in revenue. Income from the U.S. Open shrank from $400 million in 2019 to $181 million in 2020, according to the financial reports. To help get through that period, the USTA cut staff by about 25%, liquidated as much as $85 million worth of investments, and opened a $150 million revolving credit facility to meet operating cash needs.
In September 2022, the organization sold the ATP Tour’s Cincinnati event (and the lease to WTA event in the same city) to Charleston businessman Ben Navarro for $270 million. Sherr said he believes the sport will benefit from another high-profile event in private hands. Cincinnati is one of just three top-tier ATP events held annually in the U.S., and the others are owned by billionaire Larry Ellison (Indian Wells) and billionaire Stephen Ross/IMG (Miami), who have heavily invested in their futures.
It also produced a valuable windfall for the USTA. The organization owned 93.8% of the Cincinnati event, which it bought in a pair of transactions that totaled less than $20 million. After deducting book value, closing costs, LP distributions and outstanding debt from the $270 million purchase price, the USTA made $210 million from the transaction, according to the financial statements. Much of that money went to boost the USTA’s cash on hand, which jumped from $139 million in 2021 to $360 million last year. (The accounting does not include about $70 million that the USTA invested in the Cincinnati event in prior years).
Another thing that Sherr said helped in the past few years: the strength of the USTA’s corporate partners. Many sports teams and leagues lost sponsorship revenue in the pandemic because of the partner’s struggles, but Sherr said the USTA has intentionally targeted relationships with companies such as Disney (NYSE: DIS), JPMorgan Chase (NYSE: JPM) and American Express (NYSE: AXP) that are structured for long-term stability.
“Our [credit] rating with Fitch never wavered, but one of the questions that always gets asked is, ‘Who owes you money, and how stable are they?’” Sherr said. “And the good news was if you look at who our partners are, these are all great, enduring companies and businesses that were able to sustain themselves through that period in the same way that we were.”
The USTA’s financial growth comes as players grow more vocal—and more organized—about securing more rights and benefits throughout all aspects of the sport. The Professional Tennis Players Association (PTPA), founded in 2020 by Novak Djokovic and fellow pro Vasek Pospisil, recently raised $26 million from investors including hedge fund titan Bill Ackman, and has spent the last year sourcing new business opportunities and pushing the sport’s establishment for reform.
“We have to try to collectively create an environment in the future where more tennis players, both male and female, will be able to live from this sport,” said Djokovic, who juxtaposed the struggles of many players with the overall financial health of the sport. “Tennis is, by some statistics, the third most-watched sport on the planet, followed by 1.4 billion people. That, for me, is concerning. And there’s a very long way to go.”
Sherr said that one of the things he’s proud of financially in the last few years is that the U.S. Open’s payments to players barely dipped during the pandemic. The prize pool in 2020 was $53.4 million, nearly 95% of the pool from 2019. This year that number is up to a record $65 million.
The pandemic had another lasting effect on tennis—it drove people to their local courts. About 23.6 million people played tennis in 2022, according to the Sports Fitness Industry Association, a 33% jump from 17.7 million in 2019. Tennis is one of the biggest participation gainers in the past three years, per the SFIA data.
The USTA makes money from membership fees, but it doesn’t sell racquets, or balls, or own tennis clubs. So while more casual tennis players likely means more people watching or attending events like the U.S. Open, the participation boom’s biggest impact may be on the money the USTA spends to support the sport’s grassroots level.
“The conversations that we’re having today are very different than the conversations that were happening in the building 10 years ago, or even five years ago,” Sherr said. “Today we’re talking about a shortage of coaches in America, and a shortage of facilities in America, so we’re investing more money into our facility assistance program to subsidize court construction, and trying to recruit and train new coaches to come into the sport, in order to keep the momentum going.”
Ultimately the USTA didn’t need all of the $150 million credit facility it entered in July 2020. The program was renewed last June at a reduced amount of $75 million and remained untouched as of December 2022, according to the financial statements. Two months later, in February 2023, the USTA terminated the facility “given it has sufficient liquid financial assets,” the document says.
With assistance from Lev Akabas.
(This story has been updated in the first paragraph to accurately reflect the previous Fan Week record, after the USTA confirmed it initially shared the wrong number.)
