Insurance Protection and Benefits & FIFA Programmes in Football
Sports and Event Management Focus
When it comes to the exciting world of football, what’s prominently featured in the media is usually the roar of the crowd, the highs of victory and lows of defeat, as well as the suspense of high-profile players transfers.
Law Update: Issue 362 - Sports and Event Management
Bandar Al HamidaniPartner,Corporate Commercial
Di Melody HuangAssociate,Transport & Insurance
Amongst this revelry, an array of risks unfortunately attaches to the football profession - from grassroot teams to long established professional clubs, and from promising new talents to elite professional players. They could take the form of devastating injuries to a player, commercial losses suffered by a club due to a pandemic, violence against teams whilst traveling on a tour bus, injuries suffered by spectators during a game, and many more.
When unexpected accidents happen, the clubs and players face liability, risk management and insurance issues, which often have dire financial and emotional impacts. It is therefore crucial to make sure these issues are appropriately covered and safeguarded against, so we all can continue to enjoy the beautiful sport.
This article will discuss these risks and how best to mitigate them in the world of professional football, from both a player and a club perspective as well as under the various programmes the world football’s governing body, FIFA, offers.
Sporting activities have inherent risks of injuries to the participants. Footballers at all levels are likely to have suffered injuries such as hamstring or knee sprains, ankle injuries, season-ending injuries such as cruciate ligament problems, or even in some extreme cases, major medical episodes (such as heart attacks) on the pitch. Sadly, each year there are many cases of injured football players who face long term rehabilitation and loss of potential future earnings in the event of an accident.
Personal injury insurance is recommended to football players, as it usually provides 24-hour cover, with worldwide protection for injuries sustained whilst participating in activities including:
playing in official matches;
practicing and training sessions;
travelling to and from an official club activity;
participation in an official club function; and
tours and representative matches.
Whilst insurance may be arranged by the players themselves, more often than not it is the clubs who insure their players, given how their worth as assets to the clubs. The insurance normally covers accidents or sickness, as well as accidental death. Common benefits include players’ salaries when they cannot play through illness or injury, as well as hospitalisation benefit, rehabilitation expenses, coma benefit, hijack benefit, retraining benefit, permanent disfigurement or scarring of the face benefit, and so on.
An example of the importance of insurance protection comes from the story of English former professional footballer, Fabrice Muamba, who suffered a cardiac arrest on the pitch, which forced him to retire in 2012 at the age of 24. Similar to the other clubs in English Football League at the time, the club Muamba played for left players to make their own insurance arrangements. Thankfully, Muamba had insurance in place which covered the rest of his £35,000-a-week contract, which had three more years remaining at the time of the accident. The media reported that the insurance payout significantly eased the financial blow to him and his family.
Career-ending insurance pays out a lump sum when a footballer gets injured and can no longer play football. The level of insurance cover depends on specific needs of the player and the appetite of the insurer given the risks. It could cover the potential loss of a specific contract of a finite period or be tailored to a young talent at the start of his/her career who wishes to insurer the loss of their contract plus potential future earnings. The insured amount is usually worked out in advance after taking into account the players’ earnings, contract length, age and so on.
In some circumstances and countries, the clubs insure the player for career-ending risks. At times, the clubs will agree to pay an annual sum towards the costs. The arrangement is usually governed by the player’s employment contract.
Body part insurance is a highly specialised product that is often sought after by elite sporting athletes. The premiums are usually substantial. The objective is to cover for lost income if athletes can no longer use that body part to generate income due to accidental injuries, career-ending events, or disabilities.
A number of reported football athlete insurance policies for body parts include:
a USD 3.5 million policy in 2014 by German goalkeeper Manuel Neuer to insure his hands;
a USD 144 million policy by Real Madrid to insure Cristiano Ronaldo’s legs in 2009;
a USD 195 million policy in 2016 by David Beckham to insure his legs, which set the record for the largest personal insurance policy in sporting history at the time; and
the most expensive sporting insurance ever belongs to a whopping USD 900 million policy by Lionel Messi to have his left leg insured.
It is well established that the sporting participants owe each other a duty of care. Players could be faced with a personal injury claim or legal action made against them from another player for injuries caused as a result of a foul playing challenge, albeit unintentional. Insurance protection against such claims is therefore crucial, and often the clubs of the offending player could also be implicated in such claims. This is discussed further below.
Professional football clubs often take out insurance policies to cover risks such as career-ending injuries for its players, cyber liability, directors and officers’ liability, event liability/cancellation, health and safety, motor fleet, personal accident for teams and individuals, property (including stadiums and training facilities), business interruption, public liability and employers’ liability.
Commonly, BI insurance provides cover for loss of income if the business is unable to operate due to loss or damage arising out events such as fire or natural disasters. What BI insurance does and does not cover has come under scrutiny following the COVID-19 pandemic, which resulted in in shutdowns and a large loss of income for football clubs and related businesses.
In 2022, a coalition of eight English Premier League football clubs including Arsenal, West Ham, Tottenham Hotspur and Liverpool decided to pursue a COVID-19 BI class action against six major insurers. This case is currently going through the motions in the UK court. Cases such as this have gathered momentum in recent time, especially after the UK Supreme Court handed down the landmark judgment in the FCA test case[1] that, subject to the terms and specific provisions of a particular insurance policy, businesses could claim for business interruption losses incurred because of the lockdown measures introduced in the pandemic.
Public liability insurance provides protection against legal liability by covering defence costs and compensation awards for bodily injury and property damage to third parties. In the football context, it’s helpful to mitigate risks associated with accidents and injuries involving spectators, volunteers, visitors and other third parties at the premises owned by the clubs.
In the event of a bad tackle by a player which results in injuries to another, it’s not just the offending player who is exposed in liability, clubs can be and is often sued in such incidents, through its vicarious liability as the employer of the player who allegedly caused the injury. In such accidents, and without any public liability insurance cover to defend the legal liability, the clubs could face the possibility of funding a claim themselves and ultimately face losing their assets.
As seen in many cases from common law jurisdictions, for such claim to succeed the victim must satisfy a negligence-based test; by proving he/she was owed a duty of care, that duty of care was breached, and the damage suffered was caused by that breach. In order to show a breach of that duty, the conduct must be reckless and must be more than an error of judgement or a mere breach of the rules of the game. It’s a high threshold.
When unexpected accidents happen, the clubs and players face liability, risk management and insurance issues, which often have dire financial and emotional impacts. It is therefore crucial to make sure these issues are appropriately covered and safeguarded against, so we all can continue to enjoy the beautiful sport.”
For footballers that have national duties, it seems intuitive that players (who are exclusively trained and paid for by the clubs) should be insured by the event organisers of national team matches and tournaments. If the player suffers an injury during these events and as a result is unable to participate in club’s training and matches, the clubs are usually required to pay the player’s salary based on the employment contract.
In order to fairly compensate the clubs in this situation, the FIFA Club Protection Programme (the Protection Programme) was introduced in 2012 and FIFA recently confirmed that the Protection Programme has been extended to cover the 2023 to 2026 period.[2]
The Protection Programme is an insurance policy that covers all clubs affiliated to a FIFA national association that release players for “A” national team matches listed on the FIFA International Match Calendar, including the Olympic Games, against the injury risk of these players during the release period. This includes all playing, practicing, training, training matches, travelling and time spent away from the clubs.
Coverage is limited to temporary total disablement, and this includes bodily injury caused and/or contributed to by pre-existing injuries. However, it does not provide compensation for sickness, permanent total disablement or death, or any costs of medical treatment. Existing injuries are not covered either, except for Confederations’ final tournaments.
Compensation amount is based on the fixed salary that the club pays to the player under the employment contract. It has a limit of EUR 7.5 million per player per accident and is calculated at a daily “pro rata” compensation of up to EUR 20,548 (1/365). It is payable for a maximum benefit period of 365 days after the 28 days of disablement (first 28 days not covered). The maximum capacity of the Protection Programme is EUR 80 million per annum.
In addition to the FIFA Club Protection Programme, the clubs have been able to find comfort also in the FIFA Club Benefits Programme (Benefits Programme), whereby a portion of the competition revenues from the competition will be allocated to member associations, which will in turn pass on those amounts to their affiliated clubs of the players wo participated in the FIFA World Cups. The Benefit Programme was established ahead of the 2010 FIFA World Cup South Africa.
The Benefit Programme is the mechanism through which football clubs are recognised for their indispensable support and contribution to the success of international football by releasing players to the national teams, through the redistribution of a pool of money that FIFA sets aside. The clubs have the choice to participate in the Benefits Programme via a digital application form prior to the commencement of each tournament.
The distribution mechanism is calculated by reference to the number of players from a club who were selected for the tournament and the number of days each player was at the tournament. This period started two weeks before the opening match and up until the day after his national team was eliminated. There is a fixed amount per player for each day that he spends with his national team (“per player per day”).
For the FIFA World Cup Qatar 2022, the “per player per day” amount was USD 10,950 and a total amount of USD 209 million was allocated under the Benefits Programme, with 440 clubs from all 6 confederations receiving a share.
Top 10 benefited member associations include:
England (The FA) - USD 37.7 million;
Spain (RFEF) - USD 24.2 million;
Germany (DFB) - USD 21.0 million;
Italy (FIGC) - USD 18.7 million;
France (FFF) - USD 16.6 million;
Netherlands (KNVB) - USD 6.64 million;
Saudi Arabia (SAFF) - USD 6.59 million;
Qatar (QFA) – USD 6.34 million;
Portugal (FPF) – USD 6.30 million; and
Belgium (RBFA) – USD 5.6 million.
Top 10 benefited clubs include:
Manchester City FC - USD 4,6 million;
FC Barcelona - USD 4,5 million;
FC Bayern Munich - USD 4,3 million;
Paris St-Germain FC - USD 3,8 million;
Real Madrid CF – USD 3,8 million;
AFC Ajax - USD 3,5 million;
Chelsea FC – USD 3,3 million;
Manchester United FC - USD 3,3 million;
Atlético De Madrid - USD 3,2 million; and
Juventus F.C. - USD 3,0 million.
As outlined above, there are a myriad of insurance products and programmes out there to protect the players and the clubs for financial risks associated with injuries, accidents, losses and claims. Prudent financial planning and risk management will go a long way to mitigate these risks, and more importantly, to contribute to a more harmonious football environment to all.
Source:
[1] The Financial Conduct Authority v Arch Insurance (UK) Ltd & others [2021] UKSC 1
[2] https://digitalhub.fifa.com/m/42eb059f3848c2e8/original/Circular-1852_FIFA-Club-Protection-Programme-2023-2026_EN.pdf
[3] https://www.fifa.com/en/legal/football-regulatory/stakeholders/fifa-club-benefit-programme/fifa-club-benefits-programme-qatar-2022
For further information,please contact Di Melody Huang and Bandar Al Hamidani.
Published in October 2023
