Volume 8 Issue 2 Macro Trends Participation Trends Wholesale Market Retail Market Consumer Trends Facility Trends
TENNIS HEALTH INDEX +10.8% INCREASE (2003-2007) (SEE CENTER INSERT) www.tennislndustry.org Dave Haggerty, President Jolyn de Boer, Executive Director P.O. Box 7845, 117 Executive Center Hilton Head Is., SC 29928 Tel: 843-686-3036 Fax: 843-686-3078 BOARD OF DIRECTORS Jean Louis Boyre, Babolat Dave Bone, USRSA Kevin Callanan, IMG Linda Clark, ATP Tom Cove, SGMA Rick Devereux, IHRSA Steve Dunlap, The Sports Authority David Egdes, Tennis Channel John Embree, Prince Sports Group Don Galliers, SportMaster Industries Chris Gaudreau, Racquet Koop John Graham, DecoTurf Dave Haggerty, HEAD/Penn Racquet Sports Ray Harrington, Gamma Sports Tim Heckler, USPTA Kurt Kamperman, USTA Ilana Kloss, World TeamTennis Jon Muir, Wilson Sporting Goods Kai Nitsche, Dunlop Sports Group Dale Queen, Your Serve Tennis Dan Santorum, PTR John Welborn, Lee Tennis Products Jeff Williams, Tennis Magazine Jolyn de Boer, Executive Director The Tennis Marketplace posted healthy year-end figures on all fronts with participation levels the highest since 1999 at 25.1 million players, plus positive industry shipments including an impressive 80% increase in youth racquet shipments since 2003. Making its debut (see insert), the new Tennis Health Index will annually combine six different elements to collectively provide an accurate measure of the state of U.S. tennis participation. However, as overall economic indicators show declines, it s important to keep a steady pulse on our industry. On page 4, we ve analyzed these measures against tennis data the good news is tennis players do not stop playing in a bad economy, although there are other factors to consider regarding sales. Tennis products cost more to manufacture, higher fuel prices affect distribution and there are growing shortages and competition for materials. And while the consumer may eventually have to bear the brunt of these realities, tennis as an industry is somewhat cushioned with relatively easy access and low-cost to play plus an overall demographic that may be less affected by economic fluctuations. Another focus of the tennis marketplace is consumers ever increasing appetite and growing demand to access online information, services and products. The Tennis Consumer Study (page 8) shows 24% of racquet purchases were made online (up from 6% since 2002) while the relative share of purchases at pro/specialty has declined in all categories. However, due to the overall increase in the size of the market and a small decline in the retailer base, individual pro/specialty stores are typically reporting increased racquet sales and also forecasting positive future sales. (page 6-7) On page 9, we ve analyzed facility and consumer trends using the Growing Tennis System - the national database provides online information about places to play, instructional programs and leagues, and player matching. We ve seen a 1000% increase in facilities using this technology, with an equally impressive reaction from consumers searching online 1 million queries per month. There are many new tools, services and online products that can benefit our industry and tennis consumers, and we must carefully examine the impact they may have as we go from adapters to adopters of this technology. As always, we need to work together to make sure the outcome will be positive for tennis, its players and our businesses. P AGE TWO
CONSUMER CONFIDENCE CONTINUES TO FALL Says Lynn Franco, Director of The Conference Board Consumer Research Center: Consumers confidence in the state of the economy continues to fade and the Index remains at a five-year low (March 2003, 61.4). The decline in the Present Situation Index implies that the pace of growth in recent months has weakened even further. Looking ahead, consumers' outlook for business conditions, the job market and their income prospects is quite pessimistic and suggests further weakening may be on the horizon. The Expectations Index, in fact, is now at a 35-year low (Dec. 1973, 45.2), levels not seen since the Oil Embargo and Watergate. Consumer Confidence Index Index 1985=100 The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by NFO WorldGroup. Source: Conference Board Consumers assessment of present-day conditions weakened further in March. Those claiming business conditions are "bad" increased to 25.4 percent from 21.3 percent, while those claiming business conditions are "good" declined to 15.4 percent from 19.1 percent. Consumers appraisal of the job market was also more pessimistic than last month. Those saying jobs are "hard to get" rose to 25.1 percent from 23.4 percent, while those claiming jobs are "plentiful" decreased to 18.8 percent from 21.5 percent. P AGE THREE
TENNIS PARTICIPATION GOOD NEWS FOR TENNIS INDUSTRY We ve analyzed 2 leading economic measures against player numbers and equipment shipments. The results of the regression analysis were very interesting. Balls, Racquets, Players types vs. Dow Industrial & Consumer Confidence (Indexed to 2002) Player totals tend to be independent of economic consumer confidence The number of frequent players tend to increase during times of increased consumer confidence Racquet and ball shipments tend to increase in line with industrial trends P AGE FOUR
WHOLESALE MARKET Aim: To define the total size of the U.S. market for tennis racquets, balls strings, and accessories. This report enables participating companies to track market changes and determine their own market share. Method: Confidential quarterly reports provided by all manufacturers in that category on wholesale shipments (units and dollars) TENNIS INDUSTRY SHIPMENTS 2007 Racquets Shipments Wholesale Dollars (In millions) Ball Shipments Units (In millions) Racquet shipments (Wholesale dollars) have increased for the last 5 years Racquets +42.1% (in dollars) from 2003 Balls +15% (in units) from 2003 Strings +6% (in units) from 2003 Tennis Racquet Shipments Exceptional Growth in the Youth Market By Type 2003 Units 2004 Units 2005 Units 2006 Units 2007 Units 4 Yr. % Change Adult 2,395,924 2,688,239 2,941,843 2,962,553 3,120,679 30.2% Youth 745,911 949,502 1,080,921 1,110,883 1,341,106 80.0% Total 3,140,935 3,637,741 4,022,764 4,073,436 294,461,785 42.1% Source: TIA Census Reports P AGE FIVE
RETAIL MARKET The Retail Audit measures actual sales at the model level using a panel of representative retailers across the USA. Sports Marketing Surveys has been tracking tennis racquets in this channel for 18 years. Top Selling Tennis Racquets (not combined) Year-End 2007 Avg. Price 1 BABOLAT PURE DRIVE CORTEX MP $171.69 2 PRINCE O3 WHITE MP $185.37 3 WILSON K SIXONE 95 (16X18) MS $174.21 4 WILSON K SIXONE TOUR 90 MS $183.77 5 WILSON K SIXONE TEAM 95 MS $176.00 6 PRINCE O3 SPEEDPORT RED OS $223.42 7 BABOLAT AEROPRO DRIVE CORTEX MP $174.82 8 PRINCE O3 SPEEDPORT BLUE OS $240.61 9 PRINCE O3 SPEEDPORT SILVER OS $263.30 10 WILSON K SURGE MP $165.65 Top Selling Tennis Racquets (combined) Year-End 2007 Avg. Price 1 BABOLAT PURE DRIVE CORTEX $171.62 2 WILSON K SIXONE 95 $174.76 3 BABOLAT AEROPRO DRIVE CORTEX $174.14 4 PRINCE O3 WHITE $185.37 5 WILSON K SIXONE TOUR 90 $183.77 6 HEAD MICROGEL EXTREME $151.88 7 WILSON K SIXONE TEAM 95 $176.00 8 PRINCE O3 SPEEDPORT RED $223.42 9 HEAD MICROGEL RADICAL $163.57 10 PRINCE O3 HYBRID HORNET $147.64 Combined includes racquet head sizes (mid, mid-plus, oversize) of one model are combined for the analysis and correspondingly a Not combined analysis recognizes different head sizes of the same racquet model as different units. Specialty Store Racquets Sales: Specialty sales continue to increase (+30% 2007 vs. 2003) (In millions dollars) P AGE SIX
DEALER SURVEY The results are based on 100 in-depth interviews with pro/specialty tennis retailers across the US. The panel is representative of dealers in terms of store size and region. Research was carried out by Sports Marketing Surveys. Considering the positive trend in unit shipments (2006 to 2007 Racquets +10%, balls +3.2% & Strings +15%) inventory levels look good, especially when compared to 2004 levels. Pro/Specialty Dealer Forecast Increase in Racquet Market Future Racquet Sales Increase Decrease Same Net (Increase minus Decrease) Early Season 2003 17% 41% 42% -24% Late Season 2003 36% 21% 43% 15% Early Season 2004 49% 14% 37% 35% Late Season 2004 47% 13% 40% 34% Early Season 2005 59% 10% 31% 49% Late Season 2005 59% 13% 28% 46% Early Season 2006 53% 5% 42% 48% Late Season 2006 43% 9% 48% 34% Early Season 2007 58% 11% 31% 47% Late Season 2007 51% 17% 31% 34% Late Season 2007 saw the highest predicted decrease in future sales since 2003. However the Net predictions are still positive. Year End Inventories Back Under Control % of carrying dealers PAGE SEVEN
CONSUMER POINT OF PURCHASE TRENDS The following data is derived from the TIA tennis consumer study that interviews over 2,000 frequent tennis players each year. The pro/specialty channel still accounts for 51% of frequent player racquet purchases but this has declined from 62% in Early Season 2002. % of Purchases Made at Pro/Specialty Frequent tennis players % of Purchases Made Over the Internet Frequent tennis players Consumer purchases over the internet have increased in all categories. P AGE EIGHT
FACILITY TRENDS GROWING TENNIS SYSTEM More than 13,000 facilities are in the growing tennis system, currently 2,100+ are TWCs and 1600 Cardio Tennis sites. Any facility can update their information and program listings 24/7 to appear on consumer sites. In a oneyear period there was a 1000% increase in facilities using this system to manage and market their information. These technology tools are proven to help businesses grow and increase participation and retention. Online Court Reservations are a function of the TennisConnect system. Growing Tennis.com Utilization ecalendar (Event) Queries Online Event Enrollments Online Tennis Court Reservations P AGE NINE
CARDIO CONSUMER STUDY In the second year of this study over 1100 visitors to the Cardio Tennis web site answered a 20 question survey. To better understand fitness behavior of consumers additional questions were added to this year s survey. Work-out patterns of tennis players Before contacting the Cardio Tennis site what level of tennis player were you? How likely are you to play tennis in the future? Did you play any tennis, other than Cardio Tennis, during the year? 2006 2007 Of the beginners who contacted the 2006 2007 cardio tennis website: Took part in a cardio tennis session 21% 28% Are still playing tennis 43% 59% P AGE TEN
CARDIO TENNIS FACILITY STUDY The results are based on over 240 Cardio Tennis sites across the United States. Administrators and pros completed a 50 question survey covering a variety of questions of, programming, planning, marketing and implementing Cardio Tennis programs at their facilities. How do you think cardio tennis programs will impact your facility? Number of Cardio Tennis Sessions during Peak season Average # of Participants per Session New Cardio tennis programs are perceived to attract more fitness orientated participants & increase the play time of current members Has the Cardio Tennis program benefited your facility financially? Continued growth in peak season programming & participation What financial benefits has your facility seen? Cardio tennis programs continue to provide favorable financial benefits Highlights of the financial benefits Cardio tennis provides facilities P AGE ELEVEN
2007 YEAR-END EXECUTIVE SUMMARY Research and Market Intelligence Highlights About This Report This 2007 End of Season Executive Summary contains highlights from the following research studies. These complete reports are available for purchase by contacting the Tennis Industry Association. Tennis Participation This research was carried out by Taylor Research and Consulting Group and Sports Marketing Surveys USA on behalf of the USTA and the TIA, Results are based on 25,500 random screening household interviews (covering 66,000 individuals) across the USA and 2,500 indepth interviews with tennis players, former players and non-players during the Fall of 2004. The survey methodology was designed to be comparable with previous studies: 1988, 1989, 1992, 1995, and 1996 for the TIA conducted by Audits and Surveys 1999, 2000 and 2001 for the TIA conducted by Sports Marketing Surveys 2002, 2003, 2004, 2005 and late 2007 conducted by Taylor Research and Sports Marketing Surveys. Tennis Consumer Study The results are based on 2,000+ interviews with tennis players across the country. Tennis players were recruited from the spectators at a wide range of professional and amateur tennis events during the 2007 season and online using a number of tennis websites. This is the fourth year of this research. The questions asked enable results to be trended from 2001. There were also several new areas of investigation to improve our knowledge of the tennis consumer. Research was carried out by Sports Marketing Surveys. Dealer Trends Study The results are based on 100 in-depth interviews with pro/specialty tennis retailers across the US. The panel is representative of dealers in terms of store size and region. Research was carried out by Sports Marketing Surveys. Retail Market Overview Pro/specialty Retail Audit The Retail Audit measures actual sales at the model level using a panel of representative retailers across the USA. Sports Marketing Surveys has been tracking tennis racquets in this channel for 18 years. The Tennis Industry Association is a not-forprofit trade association representing all areas of the industry. TENNIS INDUSTRY ASSOCIATION 117 Executive Center Hilton Head Island, SC 29928 Telephone: 843-686-3036 Fax: 843-686-3078 email: info@tennisindustry.org www.tennisindustry.org