The WTA’s hundred-million-dollar statement to China

The Women’s Tennis Association’s decision to pull events out of China is an unprecedented statement in support of Peng Shuai and women’s rights — in part because it could cost the association and its players hundreds of millions of dollars.

Peng, 35, one of China's most celebrated tennis players, alleged last month that she'd been sexually assaulted by a high-ranking Communist Party official. Chinese authorities moved swiftly to erase the allegation, rather than investigate. And for weeks, Peng disappeared from public view.

She has since reappeared, but on Wednesday WTA chairman Steve Simon said he still has “serious doubts that she is free, safe and not subject to censorship, coercion and intimidation.” Citing those doubts and the government’s silence, Simon announced “the immediate suspension of all WTA tournaments in China.”

Those tournaments are the source of tens of millions of dollars annually. Just three years ago, the WTA announced a landmark deal to bring its banner event to Shenzhen, China. Shenzhen’s bid for the WTA Finals included a promise to double the tournament’s prize money from $7 million to $14 million annually. Ashleigh Barty, the 2019 champion, took home $4.4 million, more than any man or woman had ever won at any other tennis tournament, Grand Slams included.

In total, the WTA planned to host almost a dozen tournaments in China annually. In 2019, those tournaments accounted for over $30 million in prize money.

The WTA could, in theory, replace those tournaments, essentially relocating them, but doing so would come at a cost. Although calculations are murky, prize money is an indirect function of revenue that organizers expect to earn from a given tournament. Revenue comes from sponsorships, broadcasting rights and ticket sales, all of which depend heavily on the location of the tournament, and most of which flows through the tournament’s local organizers, not the broader WTA. Shenzhen’s successful bid for the WTA Finals was backed by Chinese real estate developer Gemdale Corporation, which later secured a lucrative title sponsorship with Japanese beauty company Shiseido — and, in turn, allowed the WTA to formalize the $14 million prize money purse.

By comparison, the 2021 WTA Finals in Guadalajara, Mexico — relocated from Shenzhen due to the COVID-19 pandemic — offered just $5 million.

The WTA has not held events in China since the pandemic's outbreak. Citing this fact, the Chinese government-affiliated Global Times accused Simon of staging a politically-motivated, high-profile boycott of events that "have a slim chance of being held" in the near future anyway.

But Simon, a month before Peng's allegations, had said the WTA planned to return to Shenzhen in 2022.

It’s now unclear how long the suspension of tournaments in China will last. Simon, in his statement, said that, “given the current state of affairs,” he is “greatly concerned about the risks that all of our players and staff could face if we were to hold events in China in 2022.” As for the future, he praised the “tennis communities in China and Hong Kong,” and said he “remain[s] hopeful that our pleas will be heard and the Chinese authorities will take steps to legitimately address this issue.” But he said that, “unless China takes the steps we have asked for,” which include a “full and transparent investigation” of Peng’s allegations, the WTA would not return.

China’s actions thus far make an investigation seem unlikely, meaning the WTA could leave China for the foreseeable future.

It’s unclear how, exactly, the WTA would get out of contracts with Shenzhen and other host cities, or what the associated costs might be. The Global Times claimed to have an exclusive statement from the Chinese Tennis Association promising that the CTA and Chinese tournament stakeholders would "firmly protect their legitimate rights and interests according to the relevant agreements and laws. All the legal consequences should be borne by the WTA."

Regardless of those costs, the total value of the WTA's business in China is well over $100 million. The Shenzhen deal, which spans 10 years, came with a commitment to over $140 million in prize money alone. The China Open, a Beijing tournament, offered $8.3 million in 2019, making it the fourth-most lucrative event on the tour.

Shenzhen and its corporate partner Gemdale had also promised to build a new 12,000-seat downtown stadium. Separately, the WTA is four years into a reported 10-year, $120 million deal with Chinese digital streaming platform iQiyi.

Simon’s willingness to stand up to the Chinese government would seem to imperil all of these cash flows and others. In addition to existing deals, it could impact future negotiations with potential Chinese partners. “Or with U.S. companies that are doing business in China, and buy these sponsorships for exposure,” Andrew Zimbalist, a sports economist at Smith College, pointed out in a phone interview.

All in all, “it's a substantial amount of money, and it's something that would be very likely to grow if they maintain good relations in China,” Zimbalist said. “So it's a very significant monetary sacrifice, and a very unusual monetary sacrifice.”

There is no way to predict or quantify how much Wednesday’s decision will ultimately cost the WTA, but it’s clear that the Chinese tennis market was booming. Simon has indicated that the financial hit would be sizable. Sports Illustrated reported last month that the WTA derives a third of its revenue from China. Simon told Time Magazine that the estimate was an “overstatement,” but admitted that “we do realize a lot of revenue from China,” and said that the country has “brought great value to us.”

The players, by extension, will also suffer financially. Most of their income comes not from the WTA itself — which reported $102.6 million in revenue in 2018 — but rather from the individual tournaments, which share revenue with the WTA. Those tournaments offered $139 million in total prize money in 2018. That number soared by tens of millions in 2019, the last full year before the pandemic. Chinese tournaments accounted for roughly one-sixth of the total purse. Replacement tournaments could allow players to recoup some of that money, but likely not all. An inability to access the Chinese market could also depress sponsorship values, and by extension player earnings.

But the WTA and various stakeholders have concluded that those millions are a price worth paying to support an alleged sexual assault survivor who’s being silenced by an authoritarian government. The players apparently backed Simon’s decision. Several had previously spoken up about Peng’s disappearance. Simon said he made the decision “with the full support of the WTA Board of Directors,” which comprises eight members, three of whom are player representatives chosen by the Players’ Council.

In the immediate aftermath, Shelby Rogers, the 27th highest-earning player on the tour in 2021, tweeted that she was "Proud to be a part of an organization like the WTA and proud of how we step up for our tennis family when it matters."

Billie Jean King, the WTA’s founder, also applauded the decision shortly after it was made, and tweeted: "The WTA is on the right side of history in supporting our players."

Simon, in his statement, said: “If powerful people can suppress the voices of women and sweep allegations of sexual assault under the rug, then the basis on which the WTA was founded – equality for women – would suffer an immense setback. I will not and cannot let that happen to the WTA and its players.”