A global expert on sports salaries, and the editor of sportingintelligence.com, Nick Harris considers whether tennis players are overpaid or underpaid.

The most lucrative grand slam in tennis history is nigh, with the Australian Open singles winners due to collect 2.3 million Australian dollars, or 1.49 million pounds, each, which is more than any slam singles champions to date. The winning couples in the doubles will split 454,000 Australian dollars, or 296,000 pounds, each, while the mixed doubles champions will split 135,000 Australian dollars, or 88,000 pounds.

To put that in context, even each half of the winning mixed pair will earn more from one tournament than the average Australian does in a year. Plus expenses for local travel, accommodation and food. The singles winners will make about 40 years’ pay for a ordinary person. And yet it is inevitable that at some stage this year a debate will rage within the sport over whether tennis players are underpaid. Are they? Given that it’s easy to make quick, emphatic cases for “Yes, of course they’re underpaid” and “Not at all underpaid”, I’d have to conclude they’re pretty much paid about the right amount.

We can argue they’re underpaid because typically the total prize funds at grand slams (the biggest, richest and most profitable events) are around 12 to 13 per cent of those tournaments’ income. Let’s consider Wimbledon 2011, where the total prize fund (including per diem expenses) was 14.6 million pounds. Prizes ranged from 1.1 million pounds for the singles winners down to 11,500 pounds for first-round singles losers, and as much as 1,750 pounds for losers in the first round of qualifying. Exact Wimbledon income is not publicly declared but I estimate it was around 120 million pounds, with around 25 million pounds of that from ticket sales, around 35 million pounds from suppliers and sponsors, and around 60 million pounds from broadcasting companies.That means the 14.6 million pounds prize fund falls between the 12 and 13 per cent of income, and it is similar across the slams.

Compared to some of the world’s other major sports, a 12 to 13 per cent cut of income for the players might be considered derisory. Within English Premier League football, players typically take home about 50 per cent of a clubs’ total income, and often a much higher percentage than that. In NFL American football, the players take a 48 per cent split of revenues. In NBA basketball, the players used to take 57 percent but following a pay dispute that led to the cancellation of the first part of the 2011-12 season, that’s down to 51 per cent – or still around four times what tennis players get at slams.

Wimbledon could certainly afford – in theory – to pay the players more. The summer’s big English tournament typically makes a ‘surplus’ (profit) of around 30 million pounds, or around twice the prize fund. So theoretically prize money at Wimbledon could be trebled across the board and the event would still be in the black.

But that doesn’t happen and won’t happen. That ‘surplus’ goes into tennis development. And it isn’t guaranteed in any case; it won’t necessarily always persist and the profit ‘padding’ is healthy for the Lawn Tennis Association. And frankly, why pay players even more than the big sums on offer when nobody is staying away for financial reasons? It would make no sense.

Most tournaments, of course, don’t make anything like the profits that the slams can make. Many events at less glamourous levels actually run at a loss, subsidised by national or regional associations or other benefactors. Even modest prize money could be argued to be too high to be sustainable at such events. This is where is starts to become easier to argue that, in fact, tennis players are not underpaid at all.

In team sports, clubs – generally speaking – will have a fairly fixed income over a season from ticket sales, commercial revenues and television money, and its single biggest expense will be player salaries, and most clubs know they’ll have a stable audience level over a season. But in individual sports, certainly at sub-major level in the two most global ‘solo’ sports of tennis and golf, tournament organisers must shoulder all kinds of costs and risks to stage an event while lacking certainty of income. Often a stellar name or two can make all the difference to ticket sales, sponsorship, media interest – and hence income.

And what’s the best way to guarantee a big name? Pay a big, fat appearance fee, a common but largely unspoken source of significant secondary income for tennis players after prize money. Rafael Nadal will skip the Wimbledon warm-up at Queen’s in 2012 for an appearance fee in Halle, Germany, reportedly worth 750,000 pounds. That’s about seven times as much as Philipp Kohlschreiber picked up for winning at Halle in 2011. Large six-figure appearance fees are not unusual for the leading names.

In fact for many tennis players, certainly inside the top 100, prize money will routinely be a minority part of total income. Appearance money, racket and kit endorsements and other off-court commercial sponsorships can dwarf on-court earnings.

Maria Sharapova made 2.9 million US dollars (1.88 million pounds) in on-court winnings in 2011, out of an estimated total of 25 million US dollars (16.2 million pounds) income, most of which was from commercial sources and endorsements. Five women made more on the court in prize money: from Kvitova’s 5.1 million US dollars, via Caroline Wozniacki, Victoria Azarenka and Li Na to Sam Stosur’s 3.5 million US dollars, and each will have made millions more from other places.

If we assume the world’s tennis fans have an appetite for around 100 top players of each sex at any one time, then I don’t think the No100 ranked players in the world can argue they’re doing too badly for cash. In 2011, the men’s 100th best male on-court earner was Simone Bolelli of Italy (299,021 US dollars before appearance money, kit deals, endorsements and any personal sponsorship) and the world’s 100th best female earner was Laura Pous-Tio of Spain (206,222 dollars). Sure, they’re talented and hard-working. But mid-20s and underpaid on big six-figure sums? Hardly.

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Nick Harris, an expert in the business and finance of sport, especially sports salaries, is the editor of www.sportingintelligence.com and compiles the annual Global Sports Salaries Survey. The most recent edition was published in April.