|Browse by Sport
|Find us on
December 3, 2009
THE MODERATOR: Good afternoon, ladies and gentlemen. Welcome to the press conference to announce the results of the Davis Cup Economic Survey. We're all here this weekend for an exciting weekend of tennis, and it's important to know what happens beyond the court, beyond the stands, what it means to have an event like this in a city. That is what we're exactly here to do.
We have many distinguished guests with us today, both on the panel as well as in the audience. And the members of the press, you honor us with your presence here. We have a very knowledgeable and experienced panel here to present the results of the Davis Cup Economic Survey. Let me introduce them.
First of all, we have the International Tennis Federation executive director for finance and administration, Sean O'Loughlin; the International Tennis Federation executive director for the Davis Cup, Paul Smith; the International Tennis Federation executive vice president and chairman of the Davis Cup Committee, Juan Margets; the International Tennis Federation president, Mr. Francesco Ricci Bitti; the International Tennis Federation executive director, commercial, Jan Menneken; and finally Mr. Alun James, managing director of Four Communications, the company that produced the report for the ITF.
We would like to show you a special video presentation of 100 years of Davis Cup by BNP Paribas.
THE MODERATOR: Now it's my pleasure to give the floor to the ITF president, Mr. Francesco Ricci Bitti.
FRANCESCO RICCI BITTI: Thank you and good afternoon. My role is very simple: to introduce this press conference to launch, and I want to welcome all of you and to thank you to be here, of the Davis Cup Economic Survey.
As I said this morning at the draw, I am very happy to be here at this venue, Palau Sant Jordi, and this city, an Olympic city, particularly significant, because I think Barcelona and Palau San Antonio Jordi is going to exemplify what we are going to say about Davis Cup.
Entering the 111th year of this competition, Davis Cup by BNP Paribas combines two things: one is a very successful business model, at least in our opinion; and second, the mission set out by Dwight Davis, the founder, the creator of Davis Cup many, many years ago.
We believe that Mr. Davis could not have imagined that this competition could have grown so much during the year, together with the concept of the teams and the nations and the pride to represent your country in a sport that is basically an individual sport.
I personally am a very privileged person because especially in the last years I can watch the best that our sport can offer everywhere, and from a good seat normally. So I can tell you that I believe that the best matches in my memory is the one of Davis Cup, for the emotion, for the atmosphere, for the passion, for many reasons.
I would mention one that I had the opportunity to see. I was in Croatia for the semifinal, and I attended a match between Stepanek and Karlovic that lasted six hours. It was a great, special Davis Cup tie with four tiebreaks, and the fifth set 16-14. A little bit too long for us, but it was a great, great match and will remain in my memory, I'm sure.
But all of us at the ITF, we are privileged because we can share the privilege to stage Davis Cup every year and to share the passion, the excitement, as I said, with hundreds of players that make themselves available to represent their own country. This, as you can imagine, is a great responsibility, but also a great honor, especially in this particular time when the season is very long, the season of professional players is very long.
We are sharing with hundreds of thousands of people attending all the ties around the world, and we are sharing with millions of fans watching Davis Cup through the broadcasters, television and new media. These are numbers that count, are very important, and cause us to work more and more. I believe there is much more in Davis Cup than what is simply on court.
This is the reason we decided to enter this venture and to have an independent assessment of the commercial value and the impact of this competition on the ITF, on our National Federations, and in general to the city and the communities where all the ties are played.
I want to mention the last factual thing, the legacy in facilities. I want to mention only two facilities. Roland Garros, Philippe Chatrier central court in Paris, and more recently the Parca Rocca in Buenos Aires. These are basically facilities built because of Davis Cup.
Having said that, the ITF believes, as you can imagine, the format has many more advantages than not. In Barcelona this weekend, you will see that Spain is a nation that has leveraged very well this opportunity to organize the final. Davis Cup gives much more than the top World Group nation. Davis Cup gives the opportunity - and this is our mission - to many nations to develop our sport in a better way and with some more money. Davis Cup also gives the opportunity to watch top tennis in countries where, for different reasons, economics, there is no top tennis played.
So this is the reason we enter this independent survey. I hope the presentation will be interesting for you because it surely will give you an insight as to what Davis Cup is. I hope you find interesting the brochure that has been distributed.
Obviously, I hand over, because I'm not part of this exercise, except that I approve, to Juan Margets, executive vice president of the ITF, chairman of the Davis Cup Committee, for the presentation and detail. Obviously, we are all ready to answer your questions at the end. Thank you very much for being here.
JUAN MARGETS: Thank you, Francesco.
As Francesco said, we at the ITF believe in all the positive values of Davis Cup. We know that it works, and we knew already about its financial success. What we didn't know was the total value of the competition to the ITF, the national associations and other stakeholders. That's the overall commercial revenue that the competition generates.
Also what we have been looking at is the ITF, in its own right, and how the competition is placed in the context of the economic and commercial impact of other major sporting events. So in addition to the direct commercial revenues, we've been looking to the impact of the event in the local markets, in the local economies.
We commissioned Fathom Consulting, a leading in economic forecasting based in London, and Four as the communication advisor, to quantify the global commercial revenue and economic impact of the competition. As I said, the initiative was undertaken in order to provide evidence that demonstrates the tangible values of Davis Cup. We know the intangibles. We know the value of tradition, of legacy. We wanted to put some dollar figures to these values.
We also wanted to provide the national associations with the evidence of the value of Davis Cup so they can use it with the host venues, cities bidding for organizing Davis Cup events, regional and local governments interested in bidding.
How did we find this? This analysis has been made in a very conservative basis. The methodology is very conservative. The results will be both accurate and reliable.
We studied the commercial revenue of Davis Cup in U.S. dollars for Davis Cup and national associations. We looked at, as I said, the global economic impact. The global economic impact, without getting into technicalities, for these we have the finance director if needed, have two major components: the traditional approach based on direct impacts, basically here we're talking about hotel nights, restaurant and food expense referring to the organization of a tie, and also the catalytic events, which means beyond the direct expenses or direct income for the city related to the organization of the tie, what else is there, has it been an improvement in infrastructure, has it been something that remains in that city or that market after Davis Cup.
So going to as few as possible key figures. Davis Cup generates for the ITF and the participant nations in 2008 $53 million of income. This is the aggregate ITF and member nations. That includes mainly, as you all know, TV income, sponsorship and commercial revenues, such as merchandising, ticket sales, and also the bids or the fees that the cities normally put on the table to win the bid to host the tie.
On the screen you can see this commercial revenue has been growing and is expected to continue to grow. I've been told the screen is dead. You either trust me or look at the brochure. But, yes, it's been growing. It looks that we are anticipating that it will continue to grow.
So moving from the commercial dollar revenues for the ITF and the nations to the economic impact, which is, I repeat for those not in the economic world, you're all sports journalists, which means what is beyond what I said, the commercial revenues, what is the impact in the market or the city that hosts Davis Cup.
The total figure for 2008, ITF, for this economic impact has been $184 million, which is an excellent return for the host cities and shows the success of the competition around the world.
Just to give you an idea to measure this figure we have taken into account the 82 ties that took place in the World Group last year, which gives an average, in terms of impact, of $2.25 million per tie.
If we look to the 2008 figures in more detail, we can see the average figure per round for Davis Cup, it grows from the $2.25 million average, if we go from the World Group, it grows from $4.45 million up to $6 million for last year's final in Argentina. Of course, other than the final, the other figures are average because we are talking about weeks or rounds where there are many ties. But the final is the figure for Argentina.
So $184 million per year, a four-year cycle, the figure is $736 million. There are events that don't take place every year, and when comparing event to event, you need to put them on equal basis. So in a four-year cycle, it's $736 million.
As you can see now on the screen, Davis Cup is second only to the US Open among the major annual sporting events who's economic impact figures have been published. We compare very well on that.
Just a couple of words about the value for money. Again, the economic impact is a figure that in isolation may not mean that much from the point of view of the city that is investing. To measure the relative value of this impact, we need to look to the value for money, which means the impact generated divided by the cost, by the dollars that have been needed to be invested to get this return.
Again, in this field Davis Cup proves it is an excellent value-for-money event. Why? Because it's very balanced. On the one hand, it does not need a huge new building investment compared to other events that are going to be a one-off event. But on the other side, it generally, as related to the organization of the Davis Cup, has improvements, infrastructure improvements. That places, again, Davis Cup in a very good position in the return of the investment, in the value-for-money analysis.
There's an obvious conclusion here. There is a clear message for the cities that bid for Davis Cup. What we are saying here is, Davis Cup is worth, not only in the big picture, in the meaning of Davis Cup, in the intangible values, Davis Cup is a good financial operation for you.
We also asked, studies related to 2008, Fathom Consulting to make an estimate of the economic impact of this final in Barcelona. Today is Thursday, so I don't need to say that this is an estimate, but it's an estimate based on assumptions. Economists always work, we work, on assumptions. The question is, are the assumptions able to be validated and reasonable? Here, I believe they are. The two main elements, which is ticket sales, we know that it sold out, ratio of visitors against non-visitors, we have a very precise figure already, and the average hotel night cost, et cetera. It's quite accurate.
With all that, and insisting this is a forecast, the economic impact of the event for the economy of the City of Barcelona will be 37 million Dollars, or 25 million Euros. Again, we believe this is a great boost for the local economy.
Going to the conclusions. Davis Cup is a success story at every level and has the added benefit of driving the growth of tennis worldwide, not only through the reinvestment of income. As Francesco said, we believe that the assets of the competition are the history, the impact of the competition, every round, where is it played, in particular in the final. I think this year obviously is a very good example. The participation of the top players in national teams attracts terrestrial television. We are mostly on free television. It also brings very high audiences, both on-site and on TV.
The global competition, plus the television exposure, attracts and continues to attract top sponsors who are willing to invest in Davis Cup. From that investment we also are able to share the reward with our main partners, which are obviously the national associations.
All these factors contributed in 2008 and will contribute in 2009, we're sure, to make Davis Cup, as we call in the brochure, an economic and commercial success of $53 million in revenue and $184 million in economic impact.
We are proud of the results of this study, proud of the contributions Davis Cup makes each and every year to our sport, to our member nations, and to the cities and countries that host Davis Cup around the world.
Thank you for your attention and we are happy to answer any questions.
THE MODERATOR: Thank you very much, gentlemen. Now it's your opportunity to ask for any clarification, any questions.
Q. How did you do it? How can you calculate what will be the income, what will be the revenue? What sort of study did you do? Did you do interviews? How do you find out these numbers?
ALUN JAMES: Well, we used a company called Fathom Consulting, which is one of the leading forecasting and economic consultancies based in London. The FT put it together with Goldman Sachs as one of the two leading consultancies. We supplied them with all of the data from the ITF, in terms of ticket prices, spectator numbers, all the details of the ties. They built a model. They put all the estimates through that model, across all the ties, using various assumptions, in terms of the ticket prices, costs of transportation, the reach a particular tie has in terms of assumptions on the number of visitors versus the number of people that would come from that city, and from that large model extrapolated that figure over a year. As Juan explained, we also tried to make it comparable on a four-year cycle to Olympics and other events.
It was a lot of data crunching is probably the short answer.
Q. Juan, where does this study leave the debate with people, largely from America, who are suggesting different Davis Cup formats?
JUAN MARGETS: Well, the primary goal of the study was to ascertain the strength of the competition as such. From that point of view, I think the conclusions are that the Davis Cup model is robust, solid, and very importantly is a diversified risk model. By being global, you don't put all your eggs in one market.
But it's obvious at the same time that this is going to help to take a debate that is there in the marketplace, in America, about the format, to a different level, a level where it is not only a philosophical debate about should we play home and away or should we play all together in one place, but also is a benchmark, this is the value.
But allow me to say something else. As I said, the dollar figure that compares very well with other events is only a component of the way I understand the economic success of an event. The other one is the risk factor. I want to stress that we believe that this system or this format is very well-protected against the risk factor. Especially when we look to the last year and a half, we have seen how economies in different places of the world have been struggling, and last week only we had very worrying news for a Middle East market that's very important, Dubai.
Other models that link themselves to a specific market for a number of years are more risky. Having said that, there is something in this question that goes to the bigger picture, it goes to the mission of the ITF. I believe for that I would ask maybe Francesco to expand on the strategic big picture, more for him to answer.
FRANCESCO RICCI BITTI: I believe we receive proposals, different formats. We analyze. We are very open to listen to any suggestion.
The main problem that we found, at least up to now, is that the formats that were proposed were not fitting with our mission basically. Our mission is not only revenue generation. We are the institution. Our mission is to generate revenue as much as we can, but we have to help the growth of tennis in each nation. More than that, we have to give the opportunity to each member nation to have a link with the professional game. This is very important in terms of creation of skill.
I believe that this is a key program. The formats that have been proposed up to now are different products. We have to consider also our mission, not only the revenue generation.
Q. Juan, basically you have shown us in your information that last year the final generated $6 million in Argentina. This time you're talking about six times that amount, some $37 million. What is this due to? How can there be such a tremendous difference? If so, I suppose you've spoken to the mayor of Barcelona and I'm sure he's very happy after having invested a couple million into this to see all that he's going to get back.
JUAN MARGETS: First of all, it's important to say that last year in Mar del Plata, it was a great success at an athletic level. It was a wonderful final, in all senses of the word. However, we can say that the results achieved there, the economic results, are similar to what we would probably find if we did the same study in other cities that have held the final in recent years. The financial director could go into greater detail, but there are a few things to take into account that accounts for this difference in the amount of money that is the impact on the city.
First of all, the ticket prices are much higher here than they were in Argentina. Secondly, the arena, the capacity of the arena, is much greater here, and therefore a greater volume not only of ticket buyers but also of travelers. Thirdly, there's a greater number of foreign visitors that have come to the city. That, of course, is an important component in all of these calculations. That is not due to great efforts on the part of the City of Barcelona, but due to the fact that Argentina was so far away from many of the spectators that may have been willing to travel to see it if it were a closer place. We have seen at this time for this tie we have from 1500 to 1600 Czechs that have traveled here. That, of course, is much more than in 2008.
Also, a last figure or factor to take into account, is the exchange rate. Obviously, the Euro is much stronger and higher than the Peso was a year ago in Argentina. That in and of itself, these figures would give you a three- to four-time increase. We can give those figures to you in greater detail.
As far as speaking to the mayor, I haven't spoken very much to him, but I have spoken to the sports authorities of the city. They were very impressed with the message we shared with you concerning the outcome of our study.
Barcelona considers itself and is an important city for sport. When the Davis Cup was awarded to Barcelona, they spoke of the importance it represented to the city, comparing it to the 2000 Davis Cup final, to the Olympic Games themselves, other great sporting events that have taken place here. We believe they have the same attitude we do, that there is an investment towards the future. This was done before the results of this impact.
Once they have seen the results, they feel rather proud to see that the investment they have made to be able to bring the tie here has been well worth it.
Q. When I read your report, I understood that $6 million would be from direct economic impact to the city at having the event. I understood that 25 million would be due to the media impact that the city would achieve, shall we say the advertising effect of having this event held here. But now I am not quite getting the same from your last answer. I wonder if you could clarify that and explain where exactly that 25 million comes from.
JUAN MARGETS: There may have been a misunderstanding, but I'm going to ask Sean O'Loughlin to explain that in greater detail.
SEAN O'LOUGHLIN: The 25 million Euros was the impact for Barcelona. The $6 million was an estimate for last year's final in Argentina. The two are necessarily related. Within both of those figures is some direct impact, some indirect impact, and some, whether you call it catalytic or knock-on effects that are, for example, in last year's final improvements made to facilities in and around Mar del Plata.
I hope it isn't confusing. If you want to compare like with like, $6 million with last year, $37 million for this year. Juan has explained some of the reasons why this year's figures are so much higher, which has to do with visitors.
Does that answer the question or not?
JUAN MARGETS: We've not calculated, shall we say, the publicity impact on the city. This is purely the direct, indirect, induced and catalytic impacts.
SEAN O'LOUGHLIN: Hopefully this will clarify one of the earlier points about how do we do it. The idea of the economic impact is to try to understand the additional money, the new money, brought into a city as a result of hosting the event. So it works by taking initially spending a proportion of ticket revenue, et cetera, working out how much of that is filtering into restaurants and hotels. It then looks at some of the knock-on effects that come from that, if you like, recycled. Then you have the local government or infrastructure investments.
It's an attempt to categorize the new money that's drawn in, call it additional value or whatever, new income that you'd like to call it, but it's not to do with the PR, the promotional side, no.
Q. It looks like Davis Cup is very successful worldwide. I'm afraid it's basically just the top. Do you have any plan or concept to help those National Federations which basically are losing a lot of money each year by organizing a Davis Cup tie?
JUAN MARGETS: Well, another survey we conducted two years ago with the nations, we asked our countries to provide us with financial information, so in this case it's not assumptions, it's hard data provided by the national associations, would not confirm your statement about nations losing money. So overall clearly national associations don't lose money organizing Davis Cup.
Of course, there are countries that are in more difficult positions than others. Of course, in some cases it's a challenge to organize Davis Cup. But, as I'm saying, the data provided by the nations proved that overall, especially host nations, make a profit organizing a tie.
If we go finally down into the categories or divisions of Davis Cup, when we go to the lower levels, I'm sure you know we don't play home and away, we play in a round robin format, in that case it's one host, and the ITF contributes significantly to the travel costs, et cetera.
Finally, we've added some benefits to the nations in recent years, city name on the court, team sponsor, domestic sponsor opportunities, local institutions.
As I said, I would not say that nations lose money organizing Davis Cup.
Q. Sorry to inform you, but maybe Hungary is not the only nation in this position. The Hungarian National Federation in the last 10 years, year by year, lost a lot of money by organizing Davis Cup ties. We are in the Euro free zone number two. We were in the Euro free zone number one a couple of years before. I'm sure we are not the only ones in this position. The question is, do you have plans to put more back to these nations? In the Champions League in soccer, even if you are in the qualification level, you are guaranteed to make a lot of money and not losing it.
JUAN MARGETS: Paul will expand. I'd like to say, as I say, we acknowledge there are countries in trouble. But not to discount your comment, it's obvious that we could put a large number of countries that are doing well.
Having said that, with respect to your specific question, which is what are your plans or what you're thinking to do or whatever, I'll ask Paul to expand.
PAUL SMITH: Just to say one of the reasons we carried out what we called costs of staging a tie one or two years ago, to ask all the nations to submit their profit-and-loss account, was to find out some places where the ITF could best assist those nations to try and reduce their costs.
Hence, we tried to look at increasing benefits such as the team travel, when a team goes away. We now pay 80% of that travel. When the officials go to each tie, we now pay 80% of that. We've looked at the team sponsor element to try to give more rights to team sponsors so that national associations can attract them easier, but also to keep them longer because we know you can see here with the Spanish Federation with a long-term agreement which can benefit the whole of the organization. Obviously, at the same time trying to increase prize money across the competition, not just in the World Group, the last two years where we've made increases, it's been across the competition, in World Group, Group One and Group Two.
Yes, we still have some work to do. We're targeting those places where we know we can reduce the cost base for the national associations and help them make a profit.
Q. We talk about the relationship between Davis Cup and ATP and WTA. Is it okay or how is that working?
FRANCESCO RICCI BITTI: There is a lot of emphasis in our sport about the fragmentation. I have to say that I never suffered so much. At the end we always find agreement. Everybody has his own agenda between the major governing body, but at the end we always find a solution.
In fact, in Davis Cup there is an agreement of five years, including point allocation. What I want to say very clearly, I don't think the players play because of the points, but the points are a good reward to the players that makes themselves available in these weeks. I believe it's a very fair situation.
Q. Apart from the motivation that was just mentioned, playing for one's country, et cetera, I'm sure that the teams also have an economic motivation to reach the final and be a finalist or win the Davis Cup. Could you tell us, please, what is the prize money that is awarded to the winner and to the finalists or the runner-up in the Davis Cup.
JUAN MARGETS: I want to clarify one thing now, because obviously this is a team sport, team competition within a sport of individual players, I want to make it clear that the ITF, when there is so-called 'prize money', which is probably not the best word to use, it is not paid to the players at all. The money always goes to the winning nation.
Just to give you some figures, the total amount that is given out during the Davis Cup season is $10 million. The winning team, the winning nation, takes $1.1 million, and the runner-up somewhere between $750,000 and $800,000.
THE MODERATOR: We would like to thank you all very much for having joined us. I thank all the members of the panel for their presentation.
End of FastScripts