England's rugby bosses are so confident of success at this year's World Cup in New Zealand they have hedged a potential 2.25 million pound bonus payout to their squad.The deal focuses around placing a hedging wager like a bet, reported in the media to be in the region of 250,000 pounds, whereby the English Rugby Football Union receives reimbursement from the semi-final stages of the tournament.
The bonuses triggered by reaching the latter stages would be then paid to players and backroom staff from the winnings.
All eight seeded teams at the tournament, which starts in September, have held discussions with hedging service Hedgehog Cover but England are the first team to take out a policy.
"We go out to the bookmaking and insurance market and cover each level. We take the price on offer and cover the exposure to the full amount," Nick Pocock, the firm's managing director, told Reuters on Thursday.
"Our clients do not want x-amount of millions as a liability on their balance sheet."
England are a best-priced 9-1 with British bookmakers to clinch the tournament, which they won in 2003. The team are 5-6 to make the semi-finals, where they progressed from to lose in the final of the 1991 and 2007 tournaments.
South Africa hedged player bonuses in a similar manner four years ago when they lifted the Webb Ellis Trophy, and it seems this niche market is growing.
"Insurance companies simply go to an odds comparison website and add 50 per cent. This way everyone's happy including me," added Pocock, who said he had secured the RFU a 10 per cent better return than with a regular bookmaker.
"It is something we are hoping to go quite big on during Euro 2012 (soccer championship), and although no one has qualified yet, we are in discussions with several teams. Our work at the Euros will focus on mainly retail work.
"At the football World Cup for instance, a television company offered a 100 per cent refund on their television set if England won the World Cup. We covered that amount for them."
By hedging against success at the World Cup with a hedging service rather than an insurance company, the RFU has not broken any rules set out by the International Rugby Board.
"I am sure that we, as a professional and responsible sports governing body, are not alone in ensuring we minimise our financial risks at all times, including around tournaments such as the Rugby World Cup," an RFU spokesman said.
"We are not directly placing money with bookmakers, but rather hedging our risk with an insurance broker. It is financially prudent."
The bonuses triggered by reaching the latter stages would be then paid to players and backroom staff from the winnings.
All eight seeded teams at the tournament, which starts in September, have held discussions with hedging service Hedgehog Cover but England are the first team to take out a policy.
"We go out to the bookmaking and insurance market and cover each level. We take the price on offer and cover the exposure to the full amount," Nick Pocock, the firm's managing director, told Reuters on Thursday.
"Our clients do not want x-amount of millions as a liability on their balance sheet."
England are a best-priced 9-1 with British bookmakers to clinch the tournament, which they won in 2003. The team are 5-6 to make the semi-finals, where they progressed from to lose in the final of the 1991 and 2007 tournaments.
South Africa hedged player bonuses in a similar manner four years ago when they lifted the Webb Ellis Trophy, and it seems this niche market is growing.
"Insurance companies simply go to an odds comparison website and add 50 per cent. This way everyone's happy including me," added Pocock, who said he had secured the RFU a 10 per cent better return than with a regular bookmaker.
"It is something we are hoping to go quite big on during Euro 2012 (soccer championship), and although no one has qualified yet, we are in discussions with several teams. Our work at the Euros will focus on mainly retail work.
"At the football World Cup for instance, a television company offered a 100 per cent refund on their television set if England won the World Cup. We covered that amount for them."
By hedging against success at the World Cup with a hedging service rather than an insurance company, the RFU has not broken any rules set out by the International Rugby Board.
"I am sure that we, as a professional and responsible sports governing body, are not alone in ensuring we minimise our financial risks at all times, including around tournaments such as the Rugby World Cup," an RFU spokesman said.
"We are not directly placing money with bookmakers, but rather hedging our risk with an insurance broker. It is financially prudent."
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