Big or small, international or local, sporting events have an even bigger supporter — insurance.
By Michael Furtschegger|July 10, 2018 at 11:22 AM
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Over 1 billion people — or one in every seven persons on the planet — watched when Germany took on Argentina in the 2014 FIFAWorld Cup final. The spectacular numbers allow FIFA, the sport’s governing body, to proclaim the quadrennial event “the greatest show on Earth.”
In terms of visitors, worldwide audience and prize money —$400 million — the World Cup outstrips the other great show on Earth: the Olympics.It’s not just the support of passionate fans that makes these events possible. Big or small, international or local, sporting events have an even bigger supporter —insurance. In fact, you can call it the “enabler.”
Without insurance, there would be no World Cup, no Olympics or little organized competitive sport at all. Few would take on the risk required to stage an event, particularly one the size of the World Cup.
Given the scale of the event,its insurance needs are also spectacular. For this World Cup, FIFA has earmarked $134 million alone for insurance for clubs whose players get injured — more than a quarter of the prize money on offer to the 32 competing teams.
The World Cup and the Olympics are always on the radar. Staging either is an enormous risk for both the host country and organizers. The final bill for Russia is expected to be around $11.8 billion, excluding some new stadiums and costly infrastructure. There is also big money at stake from companies: advertising, broadcasting rights and sponsorship.
The cost of cancellation or postponement due to a naturalcatastrophe, infrastructure failure or a terror attack is great. Both Russia and FIFA have insurance that pays out if a game is abandoned, moved to another location, or if the World Cup is canceled.
While the World Cup has yet to be disrupted, an outbreak of foot-and-mouth disease in 2001 caused several Six Nations Rugby games to be postponed. In 2011, an earthquake hit Christchurch in New Zealand, forcing eight games of the Rugby World Cup scheduled for later that year to be shifted. Organizers were forced to offer ticketholders either refunds or new tickets at the other venues, hurting revenue. Here, contingency insurance protected against the fallout.
Among those who buy covers for such events are broadcasters, sponsors, travel firms, airlines and retailers. Lloyds estimatesthe total insurance for the 2010 World Cup in South Africa at $9 billion — $4.8 billion for stadiums and training venues and $4.2 for linked business opportunities.