In 2009, Cincinnati needed the USTA. In 2022, the USTA needed cash.
Examining the last two sales of the Western & Southern Open
In 1995, Bengals owner Mike Brown threatened to move the team to Baltimore.
I remember picking up The Enquirer at the end of our driveway and seeing the front-page headline through the plastic newspaper bag. The concept of ownership was foreign to me. (“What do you mean the Browns own the Bengals?” I might have thought. “The Bengals are ours.”)
That was 28 years ago. Twenty-eight years from now, in 2051, I hope that’s how we remember the Western & Southern Open’s potential relocation to Charlotte: a maneuver by very rich men to extract public dollars.
It’s possible new owner Beemok Capital gets Ohio dollars and the world’s best tennis players still come to Mason, Ohio in 2051. The office of Rep. Adam Mathews (R-Lebanon) told me that securing funding to keep the tournament here is “a top priority” for Rep. Mathews and Sen. Steve Wilson (R-Maineville). The version of the state’s budget that passed the Ohio House contains a $22.5 million appropriation to the City of Mason for the tournament. Neal Schear, treasurer of Tennis for Charity, the non-profit that owns the tournament grounds, told me he’s optimistic that the event will stay.
On the other hand, a Charlotte councilmember said last week that he thinks the fate of the tournament is up to Charlotte; if the city wants it, he believes it will get it.
If Beemok breaks our tournament tradition that dates back to 1899, one culprit will have been COVID-19. The pandemic threatened the United States Tennis Association’s financial position, such that selling the tournament made sense.
Before we consider the USTA’s sale of the tournament to Beemok Capital last year, let’s look at how the tournament ended up in the USTA’s hands in the first place.
2009: Local ownership sells to USTA, which promises not to move the tournament
In March 2009, for $12.8 million, the USTA purchased TCI Ventures LLC, which held the sanction to the Western & Southern Open’s ATP event and leased the WTA sanction from Octagon. TCI Ventures had been owned by a group of individuals that included Paul Flory, a former player recruitment volunteer for the tournament who ascended to a 35-year run as tournament director. (Around the time of USTA’s acquisition, Flory characterized his ownership stake as so small “you wouldn’t even recognize it.”)
Through the transaction, the USTA obtained a majority stake in the Western & Southern Open. As a condition of the sale, the USTA was prohibited from moving the tournament from Cincinnati, according to the Business Courier.
Flory, who died in 2013, told the Enquirer at the time that the sale to the USTA was “necessary.” Cincinnati had separate ATP and WTA events, but combined events were becoming more popular, and the tournament needed the USTA to “leverage its muscle within professional tennis” to make a combined tournament a reality, the Enquirer wrote. The Business Courier suggested at the time that the USTA’s purchase would strengthen the tournament’s standing with the ATP.
The USTA appears to have been a responsible steward of our tournament over its 13 years of ownership. USTA’s investments—totaling $65 million, according to Tennis.com—supported a number of construction projects, including a new player’s center named for Paul Flory.
It’s not clear whether selling to the USTA was the right move for the tournament’s long-term future. Perhaps, as Flory suggested, partnering with the USTA was necessary. The tournament needed investment, and the USTA provided it, which might have added years to the event’s lifespan in Cincinnati.
But the Cincinnati tennis community could not have predicted that in just over a decade a global pandemic would force the tournament and the U.S. Open to be played in New York without fans. Nor could it have predicted that, as a result, the USTA would find itself saddled with debt, or that the USTA would land on the sale of the Western & Southern Open—to the highest bidder, one unburdened by any commitment to keep the tournament in Cincinnati—as the solution to its problems.
Cincinnati had lost effective control of its position on the professional tennis map.
2020: USTA holds U.S. Open without fans and loses $182M
In 2020, the USTA spent $182 million more than it made, largely because fans could not attend either of its two tournaments: the Western & Southern Open and the U.S. Open. (The USTA often spends more in a single year than it made that year, but in 2020, the deficit was nine times larger than the deficit in the three previous years combined.)
To address the gap, the USTA opened a line of credit with a two-year term and drew down $25 million that year. The USTA predicted in its 2020 financial statements that it had sufficient liquidity to get through the next 12 months, in part because it had access to that line of credit.
Fans returned to both tournaments in 2021, and the USTA’s operating revenue rebounded to pre-pandemic levels. But the USTA leaned heavily on its credit line that year; it owed $60 million on it by year’s end.
Suddenly, the USTA had a short-term debt problem. Including the $60 million owed on the credit line, it had $88 million in debt due in 2022. To extinguish that debt would have required two-thirds of the cash that the USTA had on hand at the end of 2021. It needed a solution.
2022: USTA cites soaring tournament valuations in explaining its sale of the W&S Open
In February 2022, Sports Business Journal broke the news that the “USTA is shopping its ATP Tour tournament sanction for the Western & Southern Open” and that the USTA was targeting a nine-figure sale price. The USTA’s statement announcing it had begun the process of selling the tournament referenced “strong valuations for individual tournaments.” IMG had just spent $400 million to buy the Mutua Madrid Open, a combined men’s and women’s tournament on equal footing with the Western & Southern Open.
The USTA had found a solution to its debt problem.
Bids for the tournament streamed in, including at least one heroic but unsuccessful effort to keep the event here. Some of the bidders, like Washington, D.C. entrepreneur Mark Ein, explicitly stated that they would relocate the tournament if their bid was selected; Ein had planned to move the more prestigious Cincinnati tournament to Washington, D.C. and bring the less prestigious D.C. event to Cincinnati, according to a source.
Beemok Capital appears to not have been transparent with the USTA about its plans to explore moving the tournament. In an August 2022 interview with Sports Business Journal, USTA CEO Lew Sherr said the sale process will allow the Western & Southern Open to become “a crown jewel in the Midwest.” Beemok’s offer of $270.5 million was ultimately chosen.
The USTA likely lacked incentive to insist that the tournament remain in Cincinnati but, in its joint press release with Beemok announcing the deal, the USTA at least did what Beemok’s own statement failed to do: make reference to Cincinnati as the tournament’s home.
When Mike Brown decided to keep the Bengals here, the chairman of the Maryland Stadium Authority said Baltimore felt “used and abused.” Either Southwest Ohio or Charlotte is likely to come away from this process feeling the same. Charlotte city council will vote in June on whether to allocate $60-70 million toward building Beemok a tennis center, and we’ll learn Beemok’s choice this summer.
Great read! Hope it stays in town.