London:
The All England Club, the organiser of the world famous “Wimbledon'' is preparing to submit an insurance claim 'in excess of £100million' following the the cancellation of the tournament this week due to the scale of the coronavirus pandemic, according to UK's Mailonline.
The All England Club's insurance policy, in the region of £1.5m a year, was updated in 2003 after organisers asked for a virus-related clause inserted following concerns over the SARS outbreak.
“We’re fortunate to have the insurance and it helps,” The Guardian quoted AELTC chief executive Richard Lewis as saying on Thursday. “The insurers, the brokers, and everybody involved have been excellent to work with so far, but there’s still a lot of work to do.”
Outgoing chief executive Lewis revealed a virus clause was put into the All England Club's insurance policy in 2003 due to fears over the scale of the SARS disease.
Wimbledon was set to bring in around £250m in revenue for the grasscourt Grand Slam.
Ben Carey-Evans, Insurance Analyst at GlobalData said Wimbledon has shown it is one step ahead of most businesses by having insurance in place for current events. It has been paying around £1.5m per year in pandemic insurance since it took notice of the SARS outbreak in 2003. It has paid out roughly £25.5m over the 17-year period, and it is set to recover around £114m, making it a very sensible investment.
“Reputable sporting events, such as the Premier League and The Open (golf), have been cancelled or postponed, causing the organisers to lose a lot of their investment. This unprecedented disruption to events caused by COVID-19, and the significant pay-out to Wimbledon will surely see all event organizers around the world look to invest in this product in the future. This could see pandemic insurance move from being a niche product to an essential one for sports and music organizers. Insurers will face challenges in pricing premiums due to a sharp rise in popularity and the significant level of risk attached to the product,'' he said.
Data from GlobalData’s SportCal team, shows that Wimbledon earns around $160m in media rights, $151m in sponsorship and around $52m in ticket sales annually. It will save $38.7m on prize money, and more on staff wages, but this still represents a significant loss of income, despite the sizeable insurance pay-out. Insurance represents damage limitation for the competition, and it will find itself in a much stronger position than most other events in the world during this period.
The exact amount of the pay-out the organisers will earn from their policy remains unclear with the organising costs and the prize money, to the tune of £40m, to be considered as deductions now it has been cancelled.
It marked the first time since the Second World War that the SW19 Grand Slam tournament was to not go ahead as planned, due to the scale of the coronavirus pandemic.
According to the Times, Wimbledon chiefs are to see their insurance triggered by the cancellation with the clause that covers infectious diseases set to be worth as much as £100m.
Wimbledon is the only Slam of the four – Australia, France and US – to have an insurance policy that includes a virus-related clause and it is reported that the French Tennis Federation felt they had no option to cancel entirely, risking a loss of £230m.
Figures from 2018 showed that The Championships had an annual turnover of £254.8m. There will, inevitably, be some financial hit from the annulment, such as a dip in merchandising and food revenue.
All England Club bosses made the tough call to abandon the third Grand Slam in the calendar entirely, a marked shift from the decision made by the French Open to hastily rearrange to late September, just a week after the US Open in New York ends.
Wimbledon will return next year, with the 134th edition of the tournament happening from June 28 to July 11. For now the club’s efforts will be focussed on contributing to the emergency response and supporting those affected by the pandemic.
Lewis warned that, despite the good insurance policy, Wimbledon would sustain a financial hit, although the knock-on effect for British tennis would be limited.
Olympics
Delaying the Olympics is likely to cost insurers much less than cancelling the Tokyo Games altogether, with a chance that some of those involved may not have policies specifically covering a postponement, industry sources say.
The Tokyo Olympics were postponed on Tuesday to 2021, the first such delay in the modern Games’ 124-year history, as the coronavirus crisis forced the delay to one of the last international sporting events still standing this year.
Insurance industry sources said the pay-outs would be smaller because companies would still be able to make money out of the Olympics when it finally happens.
Simon Sloane, partner at law firm Fieldfisher, said postponement insurance could cover money already spent and additional costs incurred to rearrange the event.Jefferies analysts have estimated the insured cost of the Games at $2 billion, including TV rights and sponsorship, plus $600 million for hospitality.