FIFA sets aside £400 million for World Cup collapse

World football governing body FIFA has been forced to build a £400 million contingency fund to cater for the possible collapse of the 2010 World Cup.

Insurers are holding off on a decision to provide coverage for the event in South Africa amid fears that the stadiums will not be ready in time. Assessors for Munich Re, the German insurance giant which insured the 2006 tournament in Germany, are concerned about progress.

"The situation is quite difficult and fluid," said a spokesman for Munich Re. "The problem is they need ten stadiums and some of these are rugby grounds that are run-down and in a very bad condition."

Although FIFA is prepared to cover its commercial obligations for the 2010 tournament, future bids (such as Australia's potential 2018 bid) must provide evidence of adequate insurance support.

In the event of South Africa being unable to stage the event, Australia (which is also making plans to host the Asian Cup) is understood to be well-placed to host the event at short notice.

Image shows FIFA's headquarters in the Swiss city of Zurich.