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By MATTHEW BRODSKY, senior editor/Web editor of Risk & Insurance®

Houston Texans Tight End Anthony Hill was hospitalized two weeks ago with the NFL's first confirmed case of H1N1. Though Hill returned to practice this past Wednesday, another Texan, Safety Eugene Wilson, was unable to play last Sunday--and barely able to walk supposedly--with unidentified flu-like symptoms, and Linebacker Brian Cushing was at home with, yes, flu-like symptoms.

Yet if the behind-the-scenes actions of NFL teams, and many other sports and entertainment companies are any indication, the general fear is that the H1N1 flu pandemic won't stop.

"I get 100 calls a day on this," said Bob Murphy, managing director with Marsh's Philadelphia office and one of the leading sports industry insurance brokers in the country. "I think that certainly there's probably no issue in my opinion that potentially has more relevance right now for potential for disruption for the sports industry,"

Financial executives at NFL teams and other sports franchises are asking how they can protect their teams.

Brokers like Murphy can help with insurance solutions. Within the last 30 days, reported Murphy, Marsh has helped at least five clients--venues, stadiums and arenas--purchase event cancellation policies that included pandemic coverage for concerts and other touring big events. These are the types of events that have a show in Denver one night, Phoenix the next, and rescheduling is not an option. You have the show, or you cancel it. So one-time event cancellation coverage works well here.

For the NFL and other sports organizations, a more suitable solution would be a catastrophic coverage--say, if more than three games this season have to be cancelled, or if a pandemic-related quarantine lasts more than two weeks, then it would kick in.

Murphy said he's in ongoing talks with underwriters to come up with such a product that would satisfy sports teams' need for financial protection while at the same time protect the underwriters' loss ratios.

Typically, sports organizations do not seek such event cancellation coverages unless it is for high-profile events, according to Murphy. But in this case, they are seeking an answer, any answer. Business interruption coverage would not work, by the way, because no property damage would occur during a pandemic, and property damage triggers most BI policies.

WHAT'S OUT THERE

Paul Vogelgesang, vice president of risk management for H&S Ventures LLC, the company that operates the Honda Center, has purchased a flu-related events cancellation coverage. Not for a hockey game (H&S operates the Anaheim Ducks NHL franchise). Vogelgesang explained that H&S was the promoter of a concert last week, which, had it not happened as planned, could have cost them as much as $1 million.

Through its Fort Wayne, Ind.-based wholesale broker, K&K Insurance Group, H&S purchased an event cancellation policy from HCC Insurance that had an optional line item for influenza outbreak or infectious disease.

"We decided to check that box and pay the extra money," said Vogelgesang, who estimated the "extra money" as 25 percent to 30 percent more.

"We could not risk it," he said.

It was the first time that H&S had put on this concert, so HCC based the policy trigger and payout on expenses. Had this been the third or fourth time H&S held the event, said Vogelgesang, HCC might have been willing to base the trigger and payout on revenue.

THE WHAT-IFS

Sports franchises are being driven to find any and all solutions to the pandemic problem because the what-ifs and what-could-be's are mind-boggling, if not a bit terrifying. They are not the stuff of science fiction or media hype.

What would happen, for instance, if come late October, both of the World Series teams is decimated by swine flu and three games cannot be played as scheduled? Or let's say just a handful of stars on one of the teams are in the hospital with H1N1. Should the game still go on?

What happens if, for the Nov. 1 game between the Philadelphia Eagles and the New York Giants, half of the security and concession staffs at Lincoln Financial Field are unable to come to work that day because of the flu? You couldn't expect the Eagles to allow 60,000 riled-up fans to flood that undermanned stadium, could you? Can they postpone the game until Wednesday, or will the TV networks not go for that?

Or even worse, what happens if, come January and the Eagles and the Giants meet in the NFC Championship Game ... yet the whole City of Brotherly Love is under a government quarantine? Will they play the game to an empty stadium--without the $6.75 beers and $10 cheese steaks flying off the proverbial shelves and the hundred-dollar seats being filled?

"I think there are more questions than there are answers," said Murphy, because this is a "potential interruption that we haven't seen before."

The potential revenue hit for teams, colleges and leagues is "absolutely huge," said Murphy, and "nobody can quantify it."

But the sports franchises and organizations that keep asking questions, and updating their contingency plans as answers continue to trickle in, will be the ones that survive best.

WHAT ELSE IS BEING DONE NOW

Besides seeking answers from insurance brokers like Murphy, sports clubs are also implementing other measures to try to mitigate, or at least slow down, the pandemic in their locker rooms.

The Houston Texans, for instance, do not allow players to return to practice until they are fever-free for 48 hours. They are "fairly generous" with anti-virals for the players, according to team internist Dr. James Muntz, quoted in media reports. And the team reminds players of "preventative measures," such as washing their hands and covering their mouths when sneezing.

As to whether these measures work or are just window-dressing ...

"The basic premise that I've heard is, you can't prevent it," said Murphy.

Another measure was offered by NFL Commissioner Roger Goodell, who announced last Friday a leaguewide measure for H1N1, allowing teams' exemptions for up to eight sick players per game. These ill players could be replaced by (lesser) teammates from the practice squad.

Whether that's fair for that wounded team to play against a full-strength opponent is one question. Another question is if eight is enough.

The NFL exemption "doesn't mean anything if 20 of your guys are out," Murphy said.

October 8, 2009

Copyright 2009© LRP Publications