One GlobalData analyst predicts that events companies will look to secure pandemic coverage after seeing the expected payout to Wimbledon organisers
Spectators on Centre Court celebrate as Roger Federer wins the semi-final of the Gentlemen's Singles over Rafael Nadal in the 2019 Championships (Credit: (AELTC/Thomas Lovelock)
After it was reported that Wimbledon’s organisers will receive a huge insurance payout to ease the financial burden of having to cancel its Championships 2020 tournament, one analyst says other events companies are now likely to buy pandemic cover for the future.
The annual event was cancelled at the start of the month due to the Covid-19 pandemic, with the All England Lawn Tennis Club (AELTC) — the governing body that organises the competition — expecting to receive £114m from its insurer.
According to data and analytics firm GlobalData’s sport-focused wing SportCal, Wimbledon earns AELTC $160m in media rights, $151m in sponsorship and around $52m in ticket sales annually
GlobalData insurance analyst Ben Carey-Evans 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 ($1.9m) per year in pandemic insurance since it took notice of the SARS outbreak in 2003.
“It has paid out roughly £25.5m ($32m) over the 17-year period, and it is set to recover around £114m ($142m), 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 organisers around the world look to invest in this product in the future.”
Despite alleviating some of the financial damage, the insurance claim is still likely to leave the organisation with substantial losses.
“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,” added Carey-Evans.
Sporting and music event organisers are likely to take note of the huge pandemic payout to Wimbledon
It’s not just sporting events that have closed their doors due to Covid-19, with popular music festivals Glastonbury and Download cancelled for 2020, and Carey-Evans believes they too will take note of Wimbledon’s payout.
“This could see pandemic insurance move from being a niche product to an essential one for sports and music organisers,” he said.
“Insurers will face challenges in pricing premiums due to a sharp rise in popularity and the significant level of risk attached to the product.”
One solution touted by the industry to expand access to pandemic coverage for businesses, and by extension event organisers, is for governments to intervene and financially back policies so that insurers are protected from unsustainable claims.