Wimbledon will receive a $141 million insurance payout after its 2020 coronavirus induced cancellation.
This is great news for Wimbledon along with its sponsors, fans and investors.
It’s incredible foresight to have this insurance and they’re fortunate to be able to invest $2M a year for this cover. From experience, I’m sure there were tough discussions about this investment and it was likely met with opposition from some.
Wimbledon Cancellation History
Looking at a quick history, I believe it was only cancelled once prior, during WWII in its 143 year history. I’m not sure on the scope of cover, but presumably it provided cancellation and abandonment cover for a broad scope of risks.
With basic math, the cancellation risk would now be loosely considered 1 in 71.5 year event (cancelled twice in 143 years) whereas last year it would be 1 in 142 year event. If you’re paying $2M for 142 years (or the equivalent at the time), it might not appear a good investment but the argument would’ve been…it’s only a matter of time.
Was Having Insurance Worth It?
With the understanding it’s been cancelled twice in 143 years, the big question is…… was it worth it?
When you look at it right now, it appears they’ve made the right decision. I’m certainly no financial advisor, however you also need to consider what could’ve happened if they used their $34M elsewhere and what return could they have achieved over the past 17 years?
This being said, there are also some significant benefits of holding this protection that far outweigh the premium vs loss argument. There’s also the strong likelihood that the presence of this insurance encouraged more investment and sponsorship in the event. This would’ve been an excellent bargaining chip for the organisers to generate more revenue on the basis that everyone who invested had their money somewhat guaranteed. It’s fair to say that their $2M premium outlay each years was more than offset with confident sponsorship spending. Assuming this is the case, it’s an excellent risk strategy.
Assuming this insurance was supported by a strong risk management and business continuity strategy, it was excellent planning and a great investment.
The Question Now…
How much is their premium next year and will they take the cover?