For past 17 years, the All-England Lawn Tennis Club has reportedly paid $2 million a year for an insurance policy to guard against losses if Wimbledon should have to be canceled in the event of a worldwide pandemic. This insurance cover has finally paid off with reported payout of US$141 million.
On the contrary, the world’s most popular annual cricket event India Premier League will not get anything on its insurance cover if the marquee event gets cancelled. As per ET report, IPL apparently has a cover for epidemic, terrorism and climate related events or calamities. Since a serious pandemic has not happened for almost a hundred years, it was not even part of the coverage suggestions.
The definition of pandemic as opposed to that of an epidemic may therefore end up costing the Indian Premier League a precious amount of insurance pay-out. An epidemic is defined “as a disease that affects a large number of people within a community, population or region”, whereas a pandemic is the same, but spread across multiple countries and continents. Is there a difference? Well to the insurance companies, and to the legal fraternity, there obviously is a serious difference.
According to India Today report, a cancellation of the IPL this year would mean a direct loss of Rs 3269.50 crore for the host broadcaster Star India, who had already suffered a Rs 1216 crore loss in the previous financial year with expenses for the IPL reaching Rs 4,000 crore for the 2019 season. The BCCI had also sold the title sponsorship to VIVO for Rs 2,000 crore for a period of 5 years which means a loss of Rs 400 crore in 2020 if IPL is cancelled.
Add to this a loss of Rs 200 crore from central sponsorship, and the combined loss comes out to be Rs 3,869.50 crore, if the Indian and overseas players don’t take the field in the IPL this year. The BCCI and IPL franchises also pay 20% of a player’s annual fee to his home board, which stands to lose that money if the tournament is not held at all. IPL 2015 had contributed Rs 1,150 crore to the Indian GDP, the BCCI had revealed while the total economic output associated with that season stood at Rs 2,650 crore. Therefore, a cancellation would not only hurt all the parties involved in the IPL but would also dent the Indian economy this year.
The recent pandemic has brought an important learning on insurance covers, and going forward the term will be used for coverage. But for now, Wimbledon is sitting pretty. Most other sports events are not.
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