Two of British sport’s biggest organisations will cash enormous cheques thanks to infrequently used communicable disease cover.
Wimbledon and English cricket are expected to receive two of the highest insurance payouts in sporting history when their claims for the 2020 summer are settled - and many other sports will look at their financial planning with envy.
The coronavirus outbreak has destroyed the global sporting calendar, with the majority of countries abandoning all elite events for the foreseeable future.
Wimbledon was cancelled for the first time since the Second World War, while the English cricket season should have got underway last week. Tentative plans are being made for the domestic and international game to resume in June but there is also an acceptance that July seems more likely.
The pandemic has left administrators desperately searching for small print in insurance policies that could help them scrape back some of the cash lost in revenue, which is expected to total billions of pounds across the global industry.
The All England Lawn Tennis Club has been open from the start about its confidence in its insurance policy. As reported in March, it expects to refund all customers who bought tickets for the championships thanks to the deal.
Wimbledon has always had to be conscious of risk due to the enormous role adverse weather, specifically rain, can play in the championships. While the building of a roof on Centre Court and No 1 Court has mitigated that risk significantly, pandemic insurance, known as communicable disease cover, actually predates both of those developments. It is understood the option was included in 2003 after the SARS outbreak left executives worried about what another, bigger pandemic could do to their revenues.
Industry sources suggest that given the extortionate cost of insuring an event like Wimbledon because of the rain risk - premiums are understood to be in the region of £1.5m a year - additional pandemic insurance could easily have been brokered at a price that would have made it affordable and good value. Most brokers, it is understood, “would have thrown it in for next to nothing”.
Reportedly only 10 per cent of commercial customers invest in communicable disease cover, but it is usually those with the most financial exposure who are willing to include the add-on.
“Of course we are fortunate to have insurance – it helps – but it doesn’t serve all the problems,” AELTC chief executive Richard Lewis said last month.
“There are a lot of details to work through. The insurance will help protect the surplus to an extent, I would say to a large extent.”
By comparison, the French Open is understood not to have such cover, hence their early decision to move the tournament to an autumn date, a move that made significant waves in the tennis world due to its proximity to the US Open and lack of consultation with any other bodies.
There is a similar story to tell at the ECB, where English cricket is starting to count the cost of the Covid-19 outbreak and thank fate that the Sars outbreak caused them to invest in a suitable product. Cricket in the UK is similar to tennis in that insurers charge enormous premiums to cover it, because of the inherent risk to factors such as rain. The ECB’s insurance package is also understood to guard against early finishes, where large ticket refunds are often doled out.
However, the ECB's communicable disease cover will not deal with any losses in the county game, where budgets are generally razor-tight. The ECB is planning a reduced schedule that will protect the fixtures that generate the most revenue, with the County Championship likely to be pushed to the very fringes and the likes of the T20 Blast and the brand new Hundred prioritised at domestic level. The ECB has also not ruled out playing two international matches on the same day to cram in as much cricket as possible.
If England's matches cannot be completed, the ECB's insurers will cover the lost revenue from ticket sales and hospitality as all men’s senior international fixtures are covered by the pandemic insurance. Any other cancellations such as Lions, women’s or domestic finals fixtures will not incur a payout.
There is also an ongoing discussion with Sky Sports about TV rights. The latest deal, signed in 2017 and worth more than £1bn to English cricket, came into action in February this year. The ECB is understood to have recognised that it will be unable to provide a percentage of the product paid for by the broadcaster and discussions are underway about potentially handing back some of that sponsorship.
The ECB are also looking at squeezing postponed international games into the calendar in 2021 and beyond in an effort to avoid any lost TV revenue, which would likely not be covered by their insurance.