For the semifinalists in the European football championship, success "is expensive," according to Paul McClean of the FINANCIAL TIMES. Germany’s players each stand to receive €300,000 ($333,000) from the German FA (DFB) if it wins the tournament, at a total cost of €6.9M ($7.6M) to the governing body, while Wales’s players and staff will share an €8.7M ($9.6M) pool if they lift the trophy.
These bonus payments are often funded by prize money distributed by the tournament organizers -- total prize money for Euro 2016 is up more than 50% "compared with the previous tournament" to €301M ($334M), with a potential €27M ($29.9M) awarded to the winning team. In other contests, however, "such as domestic leagues, the potential bonuses far outweigh the prize money." An "increasingly popular option for teams faced with the double-edged sword of success is insurance." The governing body or football team "can hedge its bonus payment with insurance." The club "pays a premium, and if the team goes on to win, the insurer covers the cost of bonus payouts." Rod O’Callaghan, director at Airton Risk Management, a branch of Paddy Power Betfair which hedges bonuses for a variety of sports teams, said, "Whether the team wins or not, the cost for the year is known." Many of the teams in Euro 2016 "have offered bonuses to their players for progressing in the tournament and a handful have hedged their exposure." Hedgehog Risk Solutions Dir Luke de Rougemont said, "We have a number of teams in the competition on our books, some of which are return clients, and others are coming to us for the first time." Airton, founded in '07, said that business "has grown fivefold since 2011." O’Callaghan: "Football clubs are, more and more, being run like businesses, and many are now saying, 'If we can take millions in potential liabilities off our balance sheets, why wouldn’t you do that?'" (FT, 7/6).
