Huge television deals and global advertising sponsorship opportunities continue to tempt investors from around the world into acquiring UK premier league soccer clubs.
Many of the buyers are canny business people adding diversity to vast corporate empires. Some of them are simply passionate fans of the beautiful game, whose entrepreneurial judgement has been left on the bench.
Whichever way you look at it, owning a football club must surely be one of the riskiest commercial ventures around. How many other enterprises combine so many risks, from the high value human capital of the players right through to the complex public liability risks represented by a football ground filled with delirious (or disappointed) fans?
On face value, owning a football club looks like a risk management nightmare! But, in reality, nearly all of the risk exposure issues that any soccer club faces are insurable - at a price.
On me head!
Soccer players are highly trained athletes and they frequently take a knock. The sports pages are filled with stories of star players going down with anything from knee injuries to broken bones.
Clubs need to buy standard accident and injury covers that protect players and their club from personal accident costs, through to loss of earnings and private healthcare. Depending on the player and size of the club, such covers are sometimes negotiated through a player’s agent and the premium cost shared with the player.
But it’s complicated, as Chris Nash, active underwriter with Sportscover Syndicate 3334, points out. “There are side issues that need to be taken into account relating to, for example, players that are on loan and players that are loaned out,” he explains. “Players’ representative duties, when they play for the national team, must also be addressed. The club won’t normally release the player unless the national team demonstrates it has cover in place.”
Owners face risks to their prized assets off the pitch as well, of course. Soccer teams are always on the move, playing away games in their own country and, if they are successful, cup ties abroad.
There hasn’t been an incident to match the Munich air disaster of 1958 when eight Manchester United players lost their lives, but 50 years on the loss still resonates strongly with owners and underwriters alike.
“It is usual for entire teams to not travel together and for insurers to ask for the team to be split between different scheduled flights,” Chris Nash explains. “If the team does travel together the insurer will usually include an aggregation limit in the coverage.”
Offside ref! Offside!
Back at home, there are wide ranging liability exposures, the most obvious being public liability and the risk management of big crowds. Around the stadium, owners also have employers’ liability exposures that extend to ground and security staff as well as players.
With players, including the opposition, clubs face an on-field risk exposure relating to foreign objects on the pitch that could lead to injuries. “We insurers usually ask clubs to do an ‘emu parade’ before games where staff walk the pitch in a line to look for potentially harmful objects,” Nash says.
A good groundsman is worth his salt, as liability problems to do with the quality of the pitch could arise. But it pays to hire a decent electrician as well. A lot of games are played at night and it is not unusual for fixtures to be cancelled because floodlighting has failed. The penalties for compensating disappointed fans and keeping unhappy sponsors on side are immense.
“That’s a contingency that can be insured if a club owner is prepared to pay the premium and accept the conditions placed upon them,” Sportscover’s Nash points out.
There are less tangible – but nonetheless insurable – issues that owners need to address if they are to avoid scoring an own goal with sponsors or advertisers. “Reputation – or ‘death and disgrace’ - is an important risk where star players are closely associated with the club’s own brand,” Nash points out. “A scandal surrounding a player could spell the end of a relationship with sponsors or even the direct sales of a club’s product.”
A scandal surrounding a footballer: how likely is that? Hmm. The more you think about the risks around owning a football club, the more attractive the fantasy football league becomes.
