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The French insurance company AXA who were underwriting the 2002 World Cup finals have pulled out of their deal with football's world governing body, FIFA.
Citing increased security worries following the terrorist attack in the US and American bombing in Afghanistan, the multi-national have given a month's notice that they are to terminate their agreement with FIFA organizers.
AXA are demanding renegotiation of the US$896m deal with higher premiums to cover themselves against any terrorist action.
The unexpected move has left FIFA supremo, Sepp Blatter fuming. FIFA is now left facing the stark choice of paying a higher premium or finding alternative cover at a lower rate. Blatter, however, remained defiant that the competition would go ahead as scheduled.
"I would have expected a company such as AXA to have given us some warning about this but there was absolutely none.
It really boils down to a question of money and they clearly want a bigger premium. They are profiting from the situation.
The deal will have to be renegotiated because the World Cup cannot go ahead without insurance which covers, for example, bank guarantees, marketing rights and also acts of terrorism.
There is no question that this will stop the World Cup which will definitely go ahead, and I have always said that a World Cup in the Far East would be extremely expensive, now it will be even more so."
FIFA have already paid half of the US$17m premium to AXA's German subsidiary AXA Colonia.
AXA spokesperson Ingo Koch stressed the new international security situation meant the previously agreed deal needed to be rethought:
"The situation has completely changed in terms of danger and that is why a new assessment is necessary. We need to put in place a new mechanism for new situations."
AXA insurance portfolio covers a number of large-scale sporting events including the English FA Cup.
The possibility of continued US military action during the World Cup, for which the American national team has just qualified, has heightened security concerns in the host countries.
Japanese organizers have increased their security budget by a quarter to over US$20m, which will include X-ray equipment and metal-detectors at all ten venues.
Takahisa Ishida, head of Japanese security for the World
Cup, said:
"We understand the need to tighten security across the board. There
will be at least 700 security officials at each game to keep an eye out for anything suspicious."
The insurance wrangle is a further blow to FIFA's already troubled preparations for the event following the earlier collapse of its marketing partner, ISL, and the still unresolved issue of TV rights in the UK and other markets.
The Soccerphile World Cup 2002 Archives
Click here to go to the current Soccerphile.com