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How Wimbledon Insurance for Pandemic Paid Off 17 Years Later?

Professor of Financial Economics and Part-time Value Investor, Transfin.
Apr 15, 2020 8:19 AM 2 min read
Editorial

For the last 17 years, Wimbledon reportedly paid $2m a year for “pandemic insurance”. And this year, amidst the coronavirus pandemic, it will reportedly receive a cool $141m from the policy.

 

Pandemic Insurance is Forever

The tennis tournament was scheduled to be held from June 29th to July 12th this year but was cancelled for the first time since World War Two. The Tokyo Olympics holds the same dubious distinction (When were the Olympic Games Cancelled in History?).

 

But thanks to the organisers’ foresight, Wimbledon will receive compensation for its losses - $141m for $34m in payment spread over 17 years.

 

Other sports tournaments, however, weren’t as forward-planning. The NBA, French Open and IPL, among many other major sports events, are staring at cancelled events and mounting losses in the coming months.

 

 

 

An Act of Unexpected Proportions

But businesses that didn't take out a pandemic insurance - which is likely to be most businesses - could rely on a very specific clause within contracts: “force majeure”, a French term that means “superior force". This clause is meant to cover unexpected acts of god and absolve businesses from the terms of a contract or help beget payment from an insurer.

 

A Silver Lining is Not the Sun

It's not like Wimbledon escaped unscathed. A smart insurance plan helped offset some losses but losses weren’t wholly avoided either. Wimbledon 2020 was expected to generate $310m in revenue from ticket sales, broadcasting rights, sponsorships and more. These profits will now be lost because of the coronavirus.

 

FIN.

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