World Cup: Most heavily insured sporting event starts in Germany

For the majority of Americans, June 9 is a Friday between June 8 and June 10. But for the rest of the world, that day marks the debut of a month-long football festival — not the kind played in the United States, but the kind played everywhere else with just a round ball.

Professional soccer hasn’t attained the degree of popularity in the United States that it enjoys in the rest of the world. But that doesn’t mean Americans are ignoring the World Cup. According to the Federation Internationale de Football Association (FIFA) rankings, the U.S. team is currently 5th in the world — tied with Spain, but ahead of such traditional soccer powerhouses as England, France, Italy and Germany — so hopes are high that the team will live up to expectations.

The opening game in the 31-day tournament begins with a match between the hosts, Germany, and Costa Rica in Munich on June 9. Overall, there will be 64 games in 12 cities, which poses both security and coverage problems.

According to Swiss Re, which is a major insurer for the tournament, the World Cup and the Olympic Games are the most heavily insured sporting events. The broadcasting rights alone have an estimated value of $1.66 billion. There’s also a great deal of concern with security; 21 of the 64 matches have been classified as “high risk” by Germany’s Federal Bureau of Criminal Investigation. The security problems range from hooliganism to outright terrorist threats.

In an interview on the Swiss Re Web site, Peter Luck, head of Underwriting Special Risks, gave details on the coverage. “The German organizers purchased a cover for postponement into 2007 and for total cancellation/ abandonment from a whole syndicate of insurers in the value of approximately $191 million. Another liability cover was purchased to cover damages up to ≠140 million $179 million. Accident covers, were also considered, indemnifying visitors to games in the case of death or disability.

In 2003, FIFA, on the other hand, issued a catastrophe bond worth an equivalent of $260 million to cover the risk of a cancellation of the World Cup 2006 in Germany. The bond covers marketing revenue that FIFA would have to refund if the matches were cancelled due to natural catastrophes and terrorism.”

Soccer is, in some ways, similar to baseball and cricket. You have to have grown up with it (or watched your kids grow up with it) to appreciate it. The fact that more people are fans than any other sport shows that it must have something going for it. According to FIFA, “an accumulated audience of more than 37 billion people watched the France 98 tournament, including approximately 1.3 billion for the final alone.” An even greater audience awaits the start of Germany 2006.

Topics USA Germany