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Life in the fast lane: Death and disgrace

Big sporting events can mean big money for advertisers and sponsors. But with the costs of potential scandals involving premiership footballers and other leading sports celebrities, these campaigns can come at a price.

Thu 26 Jun 2014

High stakes

Today, top flight footballers earn seven figure sums a year endorsing products and fronting marketing campaigns for major brands - Manchester United’s Wayne Rooney reportedly earns $3m from endorsements while Real Madrid’s Cristiano Ronaldo is reported to make around $21m thanks to deals with Nike, Castrol and others, according to Forbes.

Although retired from professional football, David Beckham is said to earn $42m from endorsements, according to Forbes, making him the world’s highest paid footballer.

But one slip-up can ruin a multi-million dollar advertising campaign and result in financial losses for a brand. For example, a well-known ex-footballer was dropped by a major drinks company after he was involved in an air-rage incident, but thankfully death and disgrace insurance was on-hand to pick up some of the costs.

Death and disgrace

There is an increasing trend for advertisers to buy death and disgrace insurance to cover campaigns involving celebrity athletes, musicians, and film stars, according to Paul Evans of Marsh. Professional footballers and other athletes in particular have been gaining in celebrity profile and increasingly feature in multi-million dollar marketing and advertising campaigns, he explains.

We have seen an increasing trend of requests for death and disgrace insurance for athletes, while there is a growing appetite for the cover among Lloyd’s syndicates.

There are currently a number of endorsement contracts featuring athletes and professional footballers covered by death and disgrace insurance placed in the Lloyd’s market.
Paul Evans of Marsh

Policy limits

With advertising campaigns costing millions, insured values can be as high as $10m, according to Alan Norris, contingency underwriter at Talbot Underwriting, which has insured campaigns featuring Premiership footballers in the past. In more extreme cases, death, disability and disgrace cover has been underwritten in the market for in excess of $60m, he says.

In addition to covering the costs associated with amending or dropping a campaign, it would also be possible for insurance to cover a drop in sales linked to the death or disgrace of a leading sporting personality. However, such cover is challenging for underwriters as it is difficult to assess the loss associated with an endorsement, explains Chris Rackliffe, contingency underwriter at Beazley.

Although players cannot buy death and disgrace insurance, some lending institutions in the US do buy it when players are borrowing against future earnings. The cover, which repays outstanding debt should the player not be able to complete his or her career due to death, disablement or disgrace, has become increasingly popular in recent years, explains Norris.

Social media

Disgrace has become a big concern for advertisers, especially with the potential for bad news to spread quickly via the internet and social media. At the same time, costs for advertisers have been rising as the fees paid for endorsements and media expenses have been increasing.

The internet has created additional risk for brands using celebrity athletes like professional footballers. What a celebrity says or does can now easily get into the public domain.

As with other celebrities, issues relating to sex, drugs and alcohol are concerns for advertisers.However, disgrace is subjective, and some brands may have a higher tolerance to certain indiscretions.
Paul Evans of Marsh

Footballing brands

Underwriters are careful when providing death and disgrace cover for any individual, including professional footballers. The high values involved and the potential for injury on and off the pitch, make them relatively high risk when compared to actors and other celebrities, explains Rackliffe.

Drugs – both recreational and performance enhancing -are a key risk for underwriters to consider when cover involves athletes, although football has a good record compared with some other sports. However, there are instances where footballers have had criminal convictions – in one case insurance paid the cost of removing a player from an advert, according to Norris.

Racial abuse has been a particular issue for football in recent years, and is also a consideration for underwriters.

Life in the fast lane

Life style is a factor to consider when assessing the risks of death and disgrace, according to Rackliffe. Footballers are often young, wealthy and drive fast cars, he notes.

Surprisingly, celebrities with existing convictions may actually present a better risk. A squeaky clean image can present a bigger risk if tarnished.

Any indiscretion could be seen as more dramatic compared with an athlete with a known past.
Chris Rackliffe, Contingency Underwriter at Beazley