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Wimbledon inspires new landscape of insurance strategy


In 2002, the German Bundesliga was caught with their metaphorical pants down when the powerful media company Kirch Group, the deep-pocketed broadcast partners of the Bundesliga, the FIFA World Cup, and other sports, went belly up. Kirch’s collapse evaporated hundreds of millions of dollars owed to Bundesliga clubs, which had a devastating affect for years to come, including thousands of soccer players becoming unemployed, and player salaries tumbling up to 40 percent.

In 2020, the entire professional sports world has been, never mind caught with their pants down with COVID-19, it’s been tarred and feathered and had its toenails pulled out. If the Kirch meteorite was seismic for the sports world, the COVID-19 meteor is what Billy Bob Thornton’s character in the movie Armageddon called a “global killer.” Just like a meteorite, it was unforeseeable and uninsurable. Or was it?

The iconic Wimbledon Championships were canceled due to the pandemic. Forbes reported on April 9 that Wimbledon had an insurance policy covering a pandemic, and was set to receive a payout of $141 million, half of the expected $300 million revenue expected for the 2020 tourney. It remains the only major sports entity that had such an insurance policy covering the unforeseen and the “uninsurable.” Was it a fluke? Insider knowledge / trading? Nope.

Rewind to 2003, and a very smart, risk mitigation oriented cookie in the Wimbledon organization, concerned about the SARS outbreak, took out a $2 million insurance policy in case the tournament was canceled. SARS didn’t affect them, but they continued paying the $2 million each year. Imagine the heat that cookie(s) received every year, where pre-pandemic this year, they had “wasted” $34 million on pandemic insurance. Amazing, right? Nope. 

Insurance and sports have been going hand in hand for as long as they have existed concurrently. Baseline Performance is a London-based company that provides bespoke (yes just like tailored fashion) insurance packages to the global sports market. BaseLine Chairman Steve Miller, a lifelong sports executive, and current CEO of Agassi Graf Holdings, is unfazed by the shockwave COVID-19 is causing, as he as a sports executive has been utilizing insurance as a corporate and financial tool for decades.

“Insurance has unlimited applications,” Miller said. “Most people think one-dimensionally in terms of its role, such as acts of God. However, insurance is about anticipation on whatever level or function you apply it to.” As a former Nike executive, Miller has overseen countless sports contracts and endorsement deals and uses insurance like a footnote.  

“We use insurance to do what it is meant to do,” he said. “Essentially hedge our interests while encouraging performance successes that we wouldn’t be financially responsible for. Particularly one-time performances. Imagine, I have a long jumper on an endorsement deal we can comfortably afford, I would also incentivize this athlete with a clause in their contract that if they broke the world record at the Olympics, there was a million-dollar bonus in it for them, which was insured by a $15,000 policy. That’s performance insurance.” Miller’s “unlimited applications” mindset is consistent with Wimbledon’s limitless foresight that kept them protected from COVID-19 long before it happened.

Event cancellation used to be a term reserved for a snowed-out ballgame or a rock concert canceled due to a band member falling ill. COVID-19 has taken the term to a new level. However, a league or concert promoter cannot merely pick up the phone and call an insurance company to seek out a policy that will protect them from an existing event. It’s like calling Geico as your house is being swirled around in a tornado. It doesn’t work that way. However, this pandemic will change the nature of sports and live events forever, as it highlights an unspoken security blanket that is not restricted to mere event cancellation. 

Paddy O’CleryBaseLine’s CEO, is a veteran in the sports insurance world who has seen it all, and recently handled a surge in insurance policies from professional cricket players in India’s lucrative yet financially volatile Indian Premier League. Today, in many sports and leagues, an “all bets are off” policy is being adopted. “The obvious expectation in today’s climate is event cancellation,” O’Clery said. “But what about contracts that are the other focus points they should be exploring such as, contracts not being honored or voided or renegotiated under extreme pressure due to COVID-19?”

O’Clery predicts a major shift in the future of sports contracts where lower guarantees, and incentivized higher-than-normal bonuses are the norm, much like the long jumper. “We believe performance-related bonuses will play a bigger part in future contracts. We can help preserve the value of contracts and remove uncertainty of costs by underwriting the success criteria,” O’Clery said.

BaseLine’s Miller foresees a new dependence on the niche experts in this world. “We’re providing a service that is unique,” he said. “Everybody that works in our team has been in this world as a giver or receiver — we have the unique skill sets to understand contracts, event risks, and what governing bodies are trying to accomplish. It’s like when you go to an Apple store, you know going in that they will have the expertise that you require.”

In this uncertain COVID-19 era, one thing you can be certain of is the sports world scrambling for a different kind of playbook that doesn’t contain any strategies involving a ball. This new playbook is one with creative and unforeseen insurance strategies, clauses and policies that in future months and years will spawn outrageously clever initiatives, protections, and creatively genius sports plays from front offices, inspired by that smart cookie at Wimbledon.

Miro Gladovic is an international sports consultant, multimedia producer and writer, and a former FIFA agent.