Golf has been on an unsteady path for a while, with the landscape and future of golf being hard to predict. The last few months brought news that nobody expected with the PGA Tour and DP World Tour announcing a ‘merger’ with the PIF (LIV Golf) to create a new future for the game. Who knows what’s next but one thing is for certain, financial liabilities still exist and will continue to rear their heads as athletes perform at the highest level and trigger bonus thresholds in their contracts.
Our job here at McClarrons Sport remains the same – to help mitigate the financial exposure of sponsors involved with players.
How does Contractual Bonus insurance work?
Many of the professional players on the golf circuit will have performance bonuses in their contracts with their various sponsors. For example, if X player were to win a Major Event, the sponsor would reward the player with $1m.
To shake this off their (the sponsor’s) balance sheet and allow them to enjoy the success of their brand being stamped on a Major winner, they can cover this liability through Contractual Bonus Insurance. Using a specialist insurance broker who understands the sports liability market, a rate % would be agreed with a sports underwriter and the sponsor. For example, if the player was 10% likely to win a Major in 2023, then it could cost the sponsor just $100k to cover the full $1m if he/she were to win a Major event in that time period.
Jordan Spieth as an example of Contractual Bonus Insurance
One of the most well-known examples of this is Jordan Spieth and global brand Under Armour. They entered a deal where they would reward Spieth with millions of dollars if he were to win a Major tournament in a season, and a further incentive if he were to win two in a season. Bang! In 2015 he bags two and Under Armour reward Spieth with not just a healthy bank lift but also a new, ten-year contract.
What else can be insured?
Looking for something slightly different? It’s not just the standard and generic win bonuses that can be insured through McClarrons Sport, we can also assist with the below:
- Outright wins
- Cuts made
- Top 5’s / 10’s
- Race to Dubai / Fed Ex rankings / LIV Rankings
- Team finishing
Our collective creativity is really the limit.
These type of performance bonuses are not only available in golf either; they range across all global sports and are popular not just for player/team incentives but also for allowing brands and sponsors to create huge brand awareness promotions to sell their products.
For example, a World Cup-related insured promotion could be ‘If England win the World Cup and you buy your television before date X, receive a full refund’ – here, the company will insure the liability to account for the television sales made. We have managed various exposures across the world for businesses and brands to latch on to their national teams or a player’s performance and we can do the same for you.
Ready to get started?
If you are a player, sponsor or federation and want to explore your own opportunities, please do not hesitate to get in touch with McClarrons Sport, we are ready to help you build your brand. Call us on 01653 697055 or email info@mcclarronssport.com.
Sources:
- https://www.espn.com/golf/story/_/id/12205320/jordan-spieth-armour-sign-10-year-endorsement-deal
- https://uk.finance.yahoo.com/news/under-armour-ripped-jordan-spieths-181200413.html?guce_referrer=aHR0cHM6Ly93d3cuZ29vZ2xlLmNvbS8&guce_referrer_sig=AQAAAFpTwJmGYJK0Fk2KIorMUvOnMF2hrrvwpGTTekpU7r_ntcsf4mf7mE8VdnWFdIP5Xt8UrNPJBksVomEk4yN0o-ZDCpb2JJN-gv8D2ZdhRJIeI0Qr2zNnceTgsiqqYAm3sNMNTUXCjaKEQw8uyVH05ySwB6Vzv6B7UBT2oAxITd-W
