The collapse of ITV Digital raises the question of whether the Football League and the television company have insured against claims from players, sponsors and suppliers. By Jason Smith and Matthew Bennett
Should the insurance sector be watching the collapse of ITV Digital as closely as football fans are watching the dramatic finale of the English football season?
As the "last rites" are being administered to ITV Digital, will it be the insurance industry which ultimately absorbs football's losses?
The collapse of the company will clearly have substantial knock-on effects for the Football League and its clubs, many of whom have budgeted and, in particular, contracted to pay player wages based on what they thought was guaranteed income during the life of the television deal.
Already, First Division clubs Sheffield Wednesday and Burnley have released ten and five players respectively. However, with players in English football on fixed-term contracts, such players may be left to seek recourse through the courts for breach of contract rather than making redundancy claims under employment protection policies.
Is there any other area then where insurance claims may be made? The Football League, in its contract, should have required ITV Digital to guarantee it would broadcast a minimum number of matches and at certain peak times. In entering into agreements with the league and clubs, sponsors may have sought contractual assurances of minimum coverage and scheduled times. Unless the league and clubs have made such commitments conditional upon the league contract with ITV Digital they may find their sponsors seeking to reduce the sponsorship fees payable or even terminate, seeking reimbursement where the fees have been paid partly or wholly in advance.
Undoubtedly, football sponsors are primarily concerned with the exposure they obtain through broadcasting, particularly terrestrial.
For international sports events such as the forthcoming Fifa World Cup in Japan and South Korea, undoubtedly insurance will be in place to cover such potential sponsor claims, particularly as a result of any interruption or cessation of the basic feed used by international broadcasters for their territories.
The question here for the insurance industry will be whether the league and clubs have taken out insurance to cover potential sponsor claims and whether in the circumstances insurers will be obliged to pay out.
If the league's insurer does find itself making such a payment, presumably the issue of the guarantees and whether or not they are indeed in place and, if not, why not, will be paramount. Indeed, the past few weeks have already seen much speculation on this in the legal press.
However, it is in the far less high-profile area of third party suppliers that insurers may face most claims. Many, if not all, of the Football League clubs will have contracts with suppliers for kit provision, security, catering, ticketing, publishing, manufacturer of club merchandise and may even have contracts with affinity programme providers enabling fans to purchase club related travel or have club credit cards and bank accounts. Recently, clubs will also have entered into contracts relating to the setting up, hosting, maintenance and development of their club websites. If, as speculated, some clubs will become insolvent there may be hundreds of such third party suppliers examining their commercial insurance policies to see if they are able to claim.
Life-cycle of a digital channel