UK: Football Fever: Insurers’ Headache?

Whatever disappointments the recent World Cup may have brought, football is possibly more popular than ever. With this, of course, comes opportunity. The money to be made by the clubs, media and the players has escalated at an incredible rate. As the stakes get higher an increasing number of conflicts appear and the threat of financial loss becomes even greater. This can lead to disputes and mean that people turn to the insurance market to manage their risk.

As a backdrop to the recent World Cup the ‘club versus country’ debate was raging well before Messrs Ferguson and Eriksson disagreed over Wayne Rooney’s foot.

The powerful G14 group representing some of Europe’s richest clubs is currently locked in a power struggle with world football’s governing body, FIFA. G14 are supporting respective claims brought by Charleroi, a club in the Belgian first division, and Lyon, French champions, against FIFA. Charleroi sued FIFA in the Charleroi Commercial Court accusing it of "unlawful use of club players in national teams". The Belgian club filed this case after one of its players, Abdelmajid Oulmers, was hurt playing on national duty for Morocco in 2004. FIFA had used its powers to insist that Oulmers play for his country. G14 and Charleroi want the current FIFA rules on the compulsory release of players for international matches judged illegal or amended through a dialogue with the clubs. G14 also asked for €860m in damages from FIFA for the cost incurred, over the past 10 years, of putting players at FIFA’s disposal to play in national teams and their subsequent unavailability if they suffered injury.

The Belgian Commercial Court ultimately rejected the G14 demand for €860m but referred the case to the European Court of Justice on the question of the fundamental legality of FIFA’s rule on releasing players. The ECJ is now set to rule on whether FIFA regulations for the status and transfer of players complies with the EC Treaty, specifically Article 39 (Free Movement of Workers) and Article 49 (Free Movement of Services) and whether the FIFA rules governing player release are an abuse of dominant position under Articles 81 and 82 of the Treaty. In the past, European courts have designated sport to be a "special case", regarding football as a "social movement" rather than a business, thus avoiding an adverse ruling under the above Articles. FIFA seeks to retain its rights to insist, in certain circumstances, that a player must play for his country.

The ECJ’s eventual finding on whether FIFA regulations should be subject to EU law and, if so, whether the national football associations should compensate clubs for injury sustained in their employ whilst on international duty will undoubtedly be of the utmost importance. As there has been no requirement to compensate clubs up to this point, insurance coverage of national football associations is not the norm. FIFA currently has a pool of approximately £6m from which it can compensate where players are injured on international duty, but this is felt to be inadequate. Also, although the rather speculative claim for damages was rejected in the Charleroi case, it may well light the way for further claims. If successful damages claims are made throughout Europe, this will also be another reason for national associations and governing bodies to seek cover.

This issue has been thrown into stark relief in England following the serious injury to Newcastle’s Michael Owen at the World Cup. At the time of writing, it seems unlikely that Owen will play again in 2006. The English FA has agreed to pay his wages during the period of his recuperation and has insurance cover for that purpose. It appears that Newcastle purchased additional insurance cover through the FA but still consider the compensation offered by the FA to be inadequate. It is, however, unclear how any greater level of compensation might be calculated. Any allegation that Newcastle would be more successful on the pitch but for an injury to a star player seems far too speculative to be successful and there are similar problems is assessing the loss of merchandise sales or sponsorship earnings. These problems, and the Charleroi case, underline the need for clubs to review the insurance cover for players on international duty - their standard policy may not cover international training and matches.

If international associations do face the prospect of having to pay compensation to clubs, this could pose serious problems for those associations outside the world’s elite. Were Arsenal’s Emmanuel Adebayour to injure himself playing for Togo, for example, it is unlikely that the Togo National Association would be able to afford the kind of compensation that the Premiership club would demand. Insurance in those circumstances would seem essential, but the National Association may baulk at the premium. In the circumstances, there have been suggestions that an insurance pool be set up, the richer associations providing funds to the pool on which the poorer national associations could draw.

It is vital that those insuring and seeking insurance in relation to football players focus on the wording and the precise scope of cover. The difficulties that may arise are highlighted in the recent case of Avon & Others v Blackburn Rovers (2006) (see case note opposite). Avon were found not to be liable to pay a claim under the terms of Rovers’ player insurance policy as a degenerative back condition was found not to come within the scope of a clause to cover the players’ ‘permanent total disablement sustained solely and independently of any other cause’. Preexisting injuries or degenerative conditions can mean that a claim based on a particular injury is not covered. The definition of the scope of cover is therefore vital. It must be precise and reflect the exact circumstances in which cover will respond.

Difficulties may obviously arise if an injury is sustained on international duty by a player who had already been injured playing for his club and the insurance wording requires disablement to result solely from the injury sustained whilst playing with the national squad. Wayne Rooney’s metatarsal has survived the World Cup, though Michael Owen and David Beckham are casualties. These injuries may well raise issues of causation which may be played out between the insureds and insurers.

There are signs that the amount of money involved in football is leading to an ever wider search for deep pockets to compensate clubs for players’ injuries. Thus, West Bromwich Albion is suing the surgeon who treated one of their players claiming that the surgery recommended and performed by the surgeon should never have gone ahead. The case is currently before the Court of Appeal on the issue of whether the surgeon owed a duty of care to West Brom. A finding in favour of the club may well have consequences for professional indemnity insurers.

Of course, these issues only scratch the surface of the relationship between football and insurance. The insurance industry will already be familiar with event cancellation insurance, business interruption insurance and the threat of terrorist action. Indeed, it is reported that FIFA have secured a catastrophe bond to cover the possibility that the World Cup Final cannot be played. Perhaps seeking to have the last word, football clubs themselves see the possibility of turning a profit from insurance. Affinity deals now seem attractive to clubs, and Arsenal Insurance Services will perhaps be the first of many companies to bring the relationship between football and insurance full circle.

Blackburn claimed under their personal accident policy, underwritten by Avon, in respect of the injury to their striker, Martin Dahlin.

Around three months after Dahlin had signed for Blackburn he suffered an injury in training when he fell and over-extended his back. After consulting a number of specialists in a prolonged attempt to return to fitness, he was forced to retire from the professional game. Blackburn made their insurance claim on the basis that the retirement was a result of an injury that had caused total disablement within the meaning of the policy. For the policy to respond there would have to be "accidental bodily injury" which solely and independently of any other cause occasioned the disablement of the injured person. The features of this requirement are as follows:

• the accidental bodily injury must occasion the disablement;

• it must do so solely and independently of any other cause; and

• it must do so within 24 calendar months from the date of the accident.

Avon claimed that Dahlin was suffering from a constitutional degenerative disc disease and that any back pain or disc lesion that he had suffered in training was caused wholly or in part by that disease. They argued that if Dahlin had not already had degenerative disc disease he would not had suffered back pain from the training incident and that, in any event, he had played professional football after the date of the injury and had suffered a further disabling injury before retirement.

The judge accepted that Dahlin had sustained an accidental bodily injury in the training ground incident and that he had suffered permanent total disablement in that he was no longer able to pursue his career as a professional footballer. He had also suffered it within 24 months of the training ground incident. The evidence did not, however, support the contention that the incident itself was so serious that it was the sole and independent cause of the permanent total disablement. The fall was not unusual or different from what was often seen on a football pitch. Further, opinion of medical experts seems to have been that degenerative disc disease was the or at the very least a cause of Dahlin’s disablement. Therefore, Blackburn had failed to show that the injury he sustained on the training ground had occasioned, solely and independently of any other cause, Dahlin’s permanent total disablement within the meaning of the policy. Blackburn’s claim, therefore, failed.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.