Two years into the pandemic, the Big East received its second insurance payout—this time collecting $4.5 million for the nearly fan-less 2021 men’s basketball tournament held last March in Madison Square Garden thanks to a curtailment clause in its event cancellation policy. That brings the conference’s total COVID-19 insurance haul to a whopping $15 million after recouping a $10.5 million payout in 2020 to cover that year’s cancelled tournament.
This year’s collection covers lost ticketing and reduced sponsor revenues, among other ancillary losses, on account of the 2021 event operating at a very limited capacity because of New York City’s large-gathering and events restrictions. The conference incurred additional costs in COVID-19 safety measures (on-site testing, additional transportation and hotel space to ensure for social distancing, etc…), but commissioner Val Ackerman said the Big East was able to mitigate most of its losses with the payouts.
“We were able to capitalize on a policy that I don’t know many sports organizations were able to get,” Ackerman said in a phone interview. “We feel very grateful that we got some good counsel here on what to get covered, because we were essentially made whole. And the same in 2020.”
The kicker? The event-cancellation coverage, the conference’s saving grace for two consecutive years, was initially signed in 2017 as a three-year policy that covered the Big East tournaments from 2018 through 2020. Ackerman said given the tournament’s location in the heart of New York City, the conference has always had comprehensive coverage for the event, to guard against threats of terrorism or another similar disruption. Communicable diseases were also covered under the policy—which was extended in January of 2020 for another two tournaments, fortuitously carrying the Big East through its 2021 and 2022 tournaments.
The Big East tournament is one of the biggest sources of revenue for the conference alongside media money and the NCAA payouts, which were slashed in 2020 due to the pandemic but largely recovered last year, according to Sportico’s intercollegiate finances database.
“I don’t know of another conference that actually had event cancellation [insurance],” Marc Blumencranz, managing director of insurance broker NFP Sports and Entertainment, said in an interview. “The fact that they had communicable disease—in our minds, it was an unlikely event, but it was inexpensive enough as part of the overall premium to justify buying and [the Big East] agreed that it made sense to include that coverage.”
Blumencranz has helped set up insurance programs for properties including the NBA and NHL. The Big East is one of nine current college conferences NFP represents alongside the NCAA. The NCAA’s event-cancellation policies helped it recover $270 million when March Madness was canceled in 2020, around 25% of what the men’s postseason basketball tournament usually brings in. Both of the Big East’s communicable-disease related payouts have mitigated almost all of its conference tournament losses.
The timing was exceptionally prudent, given that communicable-disease coverage is no longer offered by most providers in the aftermath of COVID-19 payouts.
“Nobody had coverage anywhere that they could look to, to protect their lost revenue, unless you had event-cancellation insurance,” Leigh Ann Rossi, NFP’s COO, said. “Now, the rates are up, and they’re not offering communicable disease on a typical [policy]. I’m reminded of after 9/11, they didn’t offer terrorism coverage for a while. And then they started to offer it back again, with a surcharge.”
As Blumencranz put it: “When the building’s still burning, so to speak, it’s hard to buy fire insurance. That’s the same thing with communicable disease insurance. It’s tough right now to have a discussion with an underwriter while they’re still paying out billions in claims based on policies they wrote two years ago.”
The Big East’s men’s basketball tournament typically generates nearly a fifth of the conference’s annual revenue, which totaled just over $64 million during the 2019 fiscal year (the last fiscal year uninterrupted by the pandemic). According to tax filings, the conference reported $5.9 million in income directly tied to its championships—mostly from the men’s basketball tournament—that year. A portion of the Big East’s $36 million annual media deal with Fox reflects the value of those tournament games, which bring in significant corporate sponsorship revenue as well.
During FY20, which captured the canceled 2020 Big East tournament, the conference’s media payout dipped slightly to just under $33 million, but championship revenue was crushed, dropping to just $215,419, according to that year’s tax documents. Nearly $1.4 million was lost in corporate sponsor income.
While 2021’s losses were not as severe—TV revenue remained intact and the conference brought back some sponsor dollars—they were still significant for the Big East, which relies on basketball as its biggest moneymaker. Its attempts to mitigate the losses and New York City’s government mandates strengthened its claim, putting the Big East in a rare financial position amid the pandemic.