MOST PLAYERS DON’T need too much extra motivation before heading to a World Cup, but performance-related bonuses certainly add an important extra layer to coax the very best out of those who take to the pitch.
For players from all 20 of the nations involved in the upcoming tournament in Japan, strong performances will result in financial gains, albeit on a very wide scale from minnows to heavyweights.
Making history and memories are likely to be more important to most players, but there is little doubt that the possibility of an extra pay-out motivates some people even more than those things. It takes all sorts to make the world go around.
With potentially big bonus pay-outs in mind, many of the unions involved in the World Cup rely on corporate hedging to cover their potential pay-outs.
Basically, the unions pay a firm like the Dublin-based Airton Risk Management a fee to cover their possible bonus payments at the World Cup, allowing them to offset the financial risk of their team doing well at the tournament.
Five unions have done so with Airton ahead of this World Cup.
One of those nations has paid a fee of £1.75 million [€1.93m] to cover their possible bonus pay-outs of £7 million [€7.7m], underlining how these player payments have risen in the four years since the 2015 World Cup.
Back then, winners New Zealand paid out around £2.5 million to their players for winning the competition outright, while England’s players could have grabbed a pot in the region of £6 million if they had won on home soil.
“The size of the bonuses we are seeing now is much more than we were seeing at the 2015 World Cup,” says Ross Garvey, head of Airton Risk Management, which is a division of Paddy Power Betfair.
“The more money that goes into the game with sponsorship, players having more opportunity to play in different leagues around the world – say the French Top 14 with the money there, guys from the Southern Hemisphere coming up here – all of that is driving the wages up, driving the bonuses up, and in turn driving up what sponsors are willing to pay to be on the jersey or to be associated with a certain team.
“Where we come in is that a lot of the chief financial officers in unions are very financially-prudent people and so we can offer budgeting certainty.
“They want to know, on their balance sheet, that they can put down X amount and that’s it. They know we will be on the hook for any exposure they might have with on-field performance.”
The sponsorship side of rugby has grown in recent years too, with Airton having taken on three or four clients in that sphere to cover possible bonuses at the World Cup.
Those sponsors have engaged unions and players with deals that reward their achievements on the global stage.
“Those bonuses wouldn’t be as big as what the unions are offering themselves,” explains Garvey, “but it’s a good way of offering a union a strong sponsored deal, for example.
“You can reduce the base fee you’re paying the union by inserting significant contingent bonuses as part of your sponsorship deal.”
While teams, coaches and players betting on themselves is illegal in the sport, World Rugby doesn’t have an issue with this kind of hedging of financial risk.
“We’ve never had any dealings with World Rugby,” says Garvey. “Corporate hedging is the service we offer, it has nothing to do with betting.”
Airton has grown hugely since its launch in 2007, with sports teams, unions, and sponsors keen to reduce their risks in the marketplace.
Garvey explains that golf is now a huge sector for Airton, who he estimates have dealt with 100s of clients in the last four years across a range of sports.
Airton themselves rely on the expertise of Paddy Power’s 200-person strong trading floor to more accurately calculate what kind of fees their clients pay them to cover the bigger risk of success in World Cups and many other competitions.
And this is a field that they only see growing.
“Already for the upcoming domestic season, we’ve seen significant inquiries for the various teams in Europe,” says Garvey.
“The numbers we’re seeing quoted are significantly up on last season, particularly in the Top 14. That only bodes well going forward for businesses like ourselves.”
