The 2010 World Cup: An issue of economic concern

South Africa is hosting the 19th soccer World Cup from June 11 to July 11, 2010. It is the first time that a sports event of this scale takes place in the African continent.

The 2010 World cup means

  • 2010 World CupThe sale of approximately 3 million tickets,
  • 300 000 visiting tourists,
  • A 5 billion USD budget, that is, twice the budget devoted to the 1998 France World Cup,
  • Huge investments with the construction of five new stadiums, airports renovation, transport improvement and the updating of communication systems,
  • The creation of about 1 million jobs since the start of the arrangements for the competition,
  • Expected revenues of more than 2.4 billion USD for the local economy,
  • A comprehensive economic impact of 12 billion USD, according to the accounting firm, Grant Thornton.

For this first World Cup on the African soil, the financial and economic stakes are thus great and any sideslip could result in dramatic consequences. Moreover, risks like attacks, technical breakdown, broadcast delays, cancellation or postponement of matches are not excluded.

The 2010 World cup : the position of insurance

Stadiums, International Association Football Federation (FIFA), sponsors, players, national teams, TV channels as well as other various stakeholders must have underwritten policies to protect against various hazards that may occur during this competition.

Soccer CitySoccer City, Soweto © Marcello Casal Jr/ABr, CC BY 3.0 (Brazil)

According to an estimate conducted by the Lloyd's, the World Cup is covered by insurers with up to 9 billion USD of sums insured.
The bulk of this amount is allocated to the insurance of stadiums and teams' training camps, that is, 4.6 billion USD.
The remaining 4.4 billion USD are allocated to the different hazards that are likely to happen during the competition.
Are concerned by this cover, the sponsors, the distributors as well as the other stakeholders that may sustain a financial loss.

The 130 TV channels which paid broadcasting rights, amounting to 3 billion USD in total, are also included in this category. Some of them, have also opted for the underwriting of a cover for the staff members and the technical teams dispatched on the spot.

As to the professional players taking part in this event, they benefit from a cover in the case of injury or sickness. The amount of engagements differs from player to player according to each one's level of career and notoriety.

footballAccording to the Lloyd's, the insurance of a player in the prime of his career may amount to 90 million USD, approximately 72 million USD of which are designed for the cover of a bodily injury that is likely to keep the player temporarily or definitively from playing. The remaining 18 million USD are allocated to the insurance of the player's image and reputation.

The eighty-year-old World Cup, which was cancelled only once in 1942 because of the Second World War, has, since the 1970s, had a significance that goes beyond the simple notion of sport. It has become an economic challenge and a considerable financial stake for the host country.

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