Kosmos breaks with the ITF for the Davis Cup after not being able to lower the 'fee' of 40 million a year

Kosmos breaks with the ITF for the Davis Cup after not being able to lower the ‘fee’ of 40 million a year

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Kosmos loses the star project with which it was born. The company chaired by Gerard Piqué has decided to terminate its contract to operate the Davis Cup finalsas explained by industry sources to 2playbook. The decision has been adopted after the International Tennis Federation (ITF) has refused to renegotiate the fees that the company promised to pay, and that was around 40 million euros per edition.

The sources consulted indicate that the termination is because an agreement could not be reached to reduce the amount to be paid, as business expectations were not being met, according to sources familiar with the decision, who point out that the rest of the Kosmos business units continue to operate normally. And it is that the commitment was to invest some 3,000 million dollars over 25 years, but the annual fee ate practically all the billing of the eventmaking it impossible to leave a certain profit margin for reinvestment in the product.

The ITF did agree to renegotiate the money to be collected during the pandemic, so that the 40.3 million dollars it received in 2019 was reduced to only 10.2 million in 2020, for the 19.7 million that was paid in 2021. In 2022, the annual price stipulated in the contract signed at the time was recovered. The sources consulted indicate that this year 32 million euros have been paidwhich in 2023 amounted to 36 million and in 2024 to 44 million euros.

The termination is because it has not been possible to reach an agreement with the ITF to lower the annual fee

Proof of the difficulties in making the project profitable is that this year a new multi-venue format for the finals was launched, so that the venue fees paid by the cities were added to the possibility of increasing box office and sponsorship income, by not concentrate all activity in a single country.

If initially it was played in a single venue, Madrid, this 2022 has gone on to play a group stage in Bologna, Valencia, Hamburg and Glasgow, with the finals already in Malaga. This allowed Kosmos to double its income from this concept, up to 20 million euros. Only the Junta de Andalucía will pay 6 million euros for Davis in 2022, although they have a contract until 2023, for the 2.5 million that the Valencian Generalitat will put up for two seasons.

To this were added 2.5 million from the Malaga Provincial Council for two seasons, and 1.5 million from the City Council of the Costa del Sol capital for the 2022 edition. It remains to be seen what the Malaga town hall and especially the Andalusian Government will pay during next year, as Malaga will once again host the final phase of the Davis Cup. I also knowIt is unknown what will happen to the multi-year contracts signed by Kosmos Tennis with the councils of Malaga and the Valencian Autonomous Government.

The ITF has received 52.5 million euros between 2019 and 2021 from Kosmos Tennis as fees

In any case, the 20 million fee did not even cover half of the fee to be paid to the ITF, while the tournament’s operating budget stood at five million euros. To this amount must be added the aforementioned fees, as well as personnel expenses and a prize pool of around 10 million euros. To this were added another 5 million to be distributed among the federations.

Despite the break, the truth is that these three years have made it possible to raise the notoriety of the national team tennis tournament, for which several sponsors bet this year. Among the sponsors is Rakuten, the main partner with whom they were negotiating to expand the relationship, but also Juve&Camps, LaLiga, Lexus, Cervezas Victoria and Quadcode and Socios as global partners.

Kosmos guaranteed 10 million dollars in prizes to Davis tennis players and another 5 million annually to the federations

Despite the loss of the tennis project, the truth is that the exploitation of the Davis finals has allowed Kosmos to raise its notoriety and opt for larger projects. In fact, in recent years it has been diversifying its business lines so as not to depend solely on rackets, where will continue to operate through the representation division.

In the portfolio it has Dominic Thiem, who was the first tennis player to join the Kosmos agency shortly after becoming number three in the ATP ranking. There is also Daria Kasátkina, number 8 in the WTA, and other stars from the racket world such as Andrey Rublez, who is number 6 in the world; Borna Coric, in the 23rd ranking of the ATP, and Elina Svitolina, who in 2017 became number 3 on the women’s circuit. Despite the fact that Kosmos will stop managing the Davis Cup, it will maintain its activity in this line of business.

Kosmos, a sports and entertainment holding company beyond tennis

Aside from the racket world, another of the group’s major projects is soccer. The company brokered the agreement between the Royal Spanish Football Federation (Rfef) and Saudi Arabia to move the Spanish Super Cup there, which ensured significant recurring income. Also, bought FC Andorra in amateur categories and has managed to promote it to LaLiga SmartBank with an approximate investment of six million euros.

The team, which is currently in the middle of the table, has started working on the development of its own youth academy, for which it is finalizing the purchase of Nàstic Manresa, as anticipated 2playbook. The budget for this season is around 8 million euros and the possibility of building a new stadium with an investment of 26 million euros is under study.

In parallel, Kosmos will also continue to strengthen its audiovisual division, taking advantage of the fact that the general manager, Enric Rojas, is one of the leading experts in the sector. And work will also continue on the joint esports project with Ibai Llanos and the creation of new entertainment formats, such as the Balloon World Cup or the 7-a-side football league promoted together with influencers and called Kings League.

One of the largest contracts won by Kosmos in the audiovisual section are the Ligue-1 rights in Spainawarded to the company founded by Gerard Piqué and to Enjoy Television until 2024. The contract, previously in the hands of Movistar+, was valued at 2.5 million euros per season.

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