Several factors prompted me to write about the tennis ecosystem this weekend. My recent posts discussing the potential merits of eliminating the Tournament-exclusive NTRP rating drew some comments pointing out that League is more profitable for the USTA than tournaments. The financial aspects of Leagues versus Tournaments were also raised to me in two independent conversations in the last week. I was finally pushed over the edge.
The USTA is a registered 501(c)(3) organization, also known as a nonprofit. The “501(c)(3)” designation refers to the corresponding section of the U.S. Internal Revenue Code, which makes these organizations tax-exempt. To qualify as a 501(c)(3), the organization must operate exclusively for religious, charitable, scientific, educational, literary, or other specific purposes outlined in the Internal Revenue Code.
The following paragraph is exactly what GuideStar has on record as the published mission of the USTA. This is what qualifies the organization as a 501(c)(3).
USTA IS THE NATIONAL GOVERNING BODY FOR THE SPORT OF TENNIS AND THE RECOGNIZED LEADER IN PROMOTING AND DEVELOPING THE SPORT’S GROWTH ON EVERY LEVEL IN THE UNITED STATES, FROM LOCAL COMMUNITIES TO THE CROWN JEWEL OF THE PROFESSIONAL GAME, THE US OPEN. THE USTA IS A PROGRESSIVE AND DIVERSE NOT-FOR-PROFIT ORGANIZATION WHOSE VOLUNTEERS, PROFESSIONAL STAFF AND FINANCIAL RESOURCES SUPPORT A SINGLE MISSION: TO PROMOTE AND DEVELOP THE GROWTH OF TENNIS. THE USTA HAS OVER 500,000 INDIVIDUAL MEMBERS, 8,000 ORGANIZATIONAL MEMBERS AND A PROFESSIONAL STAFF AND VOLUNTEERS DEDICATED TO GROWING THE GAME.
If the USTA was organized as a for-profit company, it would be appropriate for the organization to eliminate underperforming product lines, such as most tennis tournaments. The owners or investors would expect the organization to strive to maximize the return on investment for more profitable products. In a for-profit scenario, eliminating underperforming activities is just good business.
The objective of the USTA isn’t to make money. However, the organization does require financial resources to support its mission “to promote and develop the growth of tennis.” According to the USTA’s IRS Form 990, the organization earned $334,845,098 in revenue in 2021. That includes a little over $305 million from “Program Service Revenue.”
The USTA identifies three sources for Program Service Revenues:
- Tournament Related (aka the US Open) $305,002,478
- Tennis Program Fees (believed to be USTA Tournaments and Leagues) $500,004
- Ball Test Fees (A topic I have blogged about previously) $102,882
In other words, even if USTA League is the only source of revenue under Tennis Program Fees, that represents at most 0.14% of total USTA National revenue. It is an inconsequential amount that certainly should not be driving business decisions.
The USTA doles out grants to each of its 17 Sections. The amounts that each Section receives are different. It is believed to be based on membership or participation within each Section. For example, Southern receives more money than any other section, $10,821,997. That’s about three times as much as my home Section of Texas receives, which is $3,365,913.
The NWTO recently performed a study on 16 of the 17 Sections to identify best practices and levels of support for Senior Women’s tennis. The overarching observation from that exercise is that there are extreme differences in how each Section embraces and promotes tournaments for older Adult players.
The USTA has not imposed or even suggested priorities from the National level. Consequently, that is probably the single most influential factor why there is so much variation in the tournament products that are offered to the playing community in each Section.
At the National Level, the committees overseeing Adult Tournaments (ACC) and USTA Adult League operated in completely separate silos. However, both are critical parts of the Adult tennis ecosystem. Each committee’s objectives and performance measures apparently don’t consider how these products must necessarily work in close collaboration to develop and preserve the Adult tennis ecosystem. That’s a problem.
The domination of USTA League programming has pushed a critical element of the Adult tournament ecosystem to the precipice of viability. Before I delve into the details of that tomorrow, it is first important to know that tournament committees and proponents working in isolation cannot solve the problem. The dominance of USTA League in the ecosystem has left tournaments without a viable solution space.
Additionally, it is not realistic to expect the USTA Sections to each solve the problem in isolation either. The USTA must understand what role each form of Adult tennis serves in the overall tennis ecosystem to identify the desired solution space. In other words, what does a healthy ecosystem that closely supports the mission “to promote and develop the growth of tennis” look like anyway?
A top-down National strategy is needed that transcends both USTA League and Tournaments. It has to go beyond handing each Section a chunk of money without any performance or accountability standards that align with a healthy overall tennis ecosystem.
- The United States Tennis Association, Inc, Guidestar Profile, last viewed June 23, 2023.
- IRS Form 990, The United States Tennis Association, Public Inspection Copy for Tax Year 2021.
