if you prick them (with lawsuits), they will bleed (millions)

Mounting legal expenses add to ATP’s losses
By Daniel Kaplan
SportsBusiness Journal

May 05, 2008 — The ATP World Tour is losing millions of dollars because of steep legal expenses tied to a lawsuit brought by one of its tournaments against the men’s circuit, tennis sources said.

Last year, the sources said, the ATP lost $5 million, and it is projected to lose $6.4 million this year.

In 2005 and 2006, the ATP earned $9.2 million combined, so the losses mark a significant shift in fortunes for the men’s tour. They also come as the ATP has been criticized by top players, the U.S. Tennis Association and representatives of top events on the tour. The ATP is in the midst of a tumultuous remake of its calendar, as well as its image, and the fallout has left bruised feelings and depleted coffers.

At the same time, the head of ATP Media, Mark Webster, is resigning this summer. He will be replaced internally by Steve Plasto, currently head of content and production.

An ATP spokesman described the 2007 and 2008 figures as “speculative,” even though the 2007 figure should be publicly available shortly when the group’s tax return is filed. The figures were presented to ATP members at a meeting in California in March, the sources said.

Without legal expenses, the 2007 loss would have been $1 million and the 2008 projected loss $2.5 million, one of the sources said. That translates to almost $8 million in legal expenses. In 2005 and 2006, combined legal fees were $1.7 million, according to the ATP’s tax returns for those years.

The ATP event in Hamburg, Germany, is suing the ATP for trying to downgrade the event in the tour’s tier structure next year as part of the calendar remake. Initially, the Monte Carlo stop also sued the ATP over the same issue, but that lawsuit was settled. The Hamburg case is scheduled to go to trial in July in Delaware. Were the ATP to lose, it likely would throw the schedule plans into turmoil.

The top events, called the Masters Series, have also been communicating with the ATP about concerns over the schedule and efforts to brand the nets with the ATP logo.

Peter Lawler, a former attorney for Octagon who is representing the Masters Series, said the tournaments are awaiting research from the ATP to see if its idea to place the logo on nets would detract from branding for title sponsors at these events. The USTA has come out against the plan.

Meanwhile, most of the top 20 players recently sent a petition to the ATP demanding that they be part of the process of reviewing whether Executive Chairman Etienne de Villiers has his contract renewed. His contract expires at the end of the year.

The ATP’s finances could improve in 2009. As part of the remaking of the schedule, a number of tournaments upgraded to the second level of events, which next year will be known as ATP 500s. Those increased sanction fees might not be reflected in the 2008 results.

ATP profits (losses)
2008* ($6.4 million)
2007 ($5 million)
2006 $5.5 million
2005 $3.7 million
2004 $4.3 million

* Projected

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