Cristiano Ronaldo, Juan Mata, Wayne Rooney, Mario Balotelli, Luis Suarez, together currently valued in the transfer market at nearly $500 million, are playing no further part in the 2014 FIFA World Cup.
But in one respect, FIFA has reason to be happy that they all headed home earlier than expected — and that’s down to injury insurance.
The players are all employees of their club teams in the domestic leagues in which they play. Should a player be injured during the World Cup, FIFA has to pay compensation to the club for loss of the player until he has recovered. The compensation would normally be to cover the wages of the player during the recovery period.
With Rooney and Ronaldo rumored to be on annual salaries in excess of $25 million, and the others not far behind, FIFA has been saved from a large potential payout. Because the premiums quoted for these risks are so high, FIFA has effectively self-insured.
FIFA has certain costs that are fixed in relation to the 2014 World Cup, which includes paying the national football associations of each country participating as follows:
In addition, FIFA has agreed to pay clubs with players involved a total of $70 million for “borrowing” their players during the competition, which takes the total to $476 million. All these costs are fixed in nature, and have a degree of certainty attached to them.
But, in addition to the above, FIFA has something called the Club Protection Programme (CPP), which is effectively an insurance scheme to cover players who get injured during the tournament. FIFA prudently budgeted $100 million for this, a figure which would have proven to be too little had two of the players mentioned at the start of this article suffered career-ending injuries. The money is paid out to the clubs the players are registered with.
Historically the majority of claims in relation to CPP claims are based in Europe, with UEFA affiliated claims representing 77% of the money paid out by FIFA in 2013 to players from UEFA countries. The loss of Spain, Italy, Portugal and England so early in the competition is likely to ensure that FIFA’s CPP commitments stay within the $100 million sum it originally estimated.
In 2013, CPP payments were approximately $37 million and, of the 80 reported cases, 46% were in relation to players who ply their trade in England, Spain, Italy and Portugal. Fans and managers of players from those countries should in theory benefit from their stars having extra recovery time over the summer with a new season starting in mid-August.
At the most recent FIFA congress in June 2014, each of the 209 FIFA national football associations was promised $750,000 and the six confederations, $7 million from the profits of the tournament. This will be a financial commitment of $199 million. But the continued good news in relation to player injuries (with the exception of Italian defender Georgio Chiellini’s slightly nibbled shoulder) would allow FIFA to increase the payouts still further.
Although the amount due to the World Cup participants, clubs, national football associations, CPP and congresses comes to $775 million, FIFA still looks like it will be reporting a surplus in 2014. With revenues of nearly $1.4 billion in 2013, profits from the World Cup mean they should be much higher this year. And, the early exit of so many big names should give it even greater confidence of this.
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This article originally published at The Conversation