Saturday, August 2, 2008

ATP vs Hamburg Day 9

posted by Savannah

ATP Claims Hamburg Trial Taking Toll On Organizational Finances

By Daniel Kaplan, Staff Writer, SportsBusiness Journal

Galloway Says Trial Has Taken Toll On ATP Finances

The ATP’s antitrust legal battle has taken a toll on the organization’s finances, the circuit’s CFO Philip Galloway testified Thursday. The ATP’s nondesignated assets, or mainly all the assets other than items like pension funds that are committed for express purposes, declined from $6M to $1.2M from '06 to '07. “Our normal operations essentially operate more or less at a break-even level usually, maybe a little more, maybe a little less,” he said. “The difference here was fees relating to litigation.” SportsBusiness Journal has reported that as of May, the ATP had spent $7M in legal fees on the now 17-month old case. While the ATP takes in $55M annually in revenue, and of that $40M commercially, as a non profit the ATP does not look to book a surplus, Galloway said. These statements were perhaps designed to undercut the argument made by the plaintiffs that the ATP was enriching itself with the new format for next year. Earlier this week, the counsel for the German and Arab organizers of the Hamburg event suing the ATP said the system would bring in $350M in new money to the tour.

Philip Galloway
ATP'S DEFENSE UNDERWAY: Galloway’s statements were part of the ATP’s opening defense as the antitrust trial entered its ninth day. Much of the day featured laborious testimony on the group’s bylaws and articles of incorporation, as well as purchase agreements that seemed to suggest that the circuit has the right to downgrade events. The event’s lawyer has argued the ATP violated it own bylaws that says the circuit cannot take away memberships. But ATP general counsel Mark Young and former CEO Mark Miles testified that did not preclude the tour from downgrading an event. Young even went so far as to say it did not preclude the ATP from downgrading an event if that meant financial harm to the event, though the ATP has said it believes Hamburg will be successful as a second-tier tourney. In fact, Miles pointed to two top-tier events, Tokyo and Sydney, that were downgraded in '93 while he was CEO. Meanwhile, former player board rep Jacco Eltingh testified that while players had objected to many elements of the new format that Hamburg, he took a longer-term approach. “A lot of the players who are actively playing, obviously, they are pretty much thinking about their self-interest, mainly for the short term, while they are playing,” he said. “For them it is sometimes very difficult to look at the whole picture and where you would like to go with your sport in total in many years.” He also said the players' main concern in '07 when they sent a letter to the ATP protesting the planned changes was the downgrade of Monte Carlo, not Hamburg. There was no action from the judge on four ATP motions filed late Wednesday to dismiss some or all of the charges.

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