Backstops

Backstop is a term used in several contexts to denote a safety net, guarantee, or fallback intended to prevent an undesirable outcome or ensure a process can proceed.

In sports, the backstop refers to the barrier or netting behind the area where play ends, notably behind home plate in baseball. It serves to contain stray balls, protect spectators, and aid in ball retrieval. The design may include fencing, padding, and crowd-control features, and is sometimes subject to safety regulations.

In finance and corporate finance, a backstop is a commitment by a financial entity to buy any portion of a new issue that is not subscribed by other investors, thereby underwriting the issue and ensuring its completion. Backstop arrangements are common in rights offerings and other equity capital raisings, and may involve fees or contingency-based compensation. A separate use is a backstop facility, where a bank or consortium commits liquidity or funding to prevent a financing shortfall.

In political and policy contexts, a backstop describes a safety mechanism designed to prevent an outcome seen as unacceptable or unstable, often used as a last-resort negotiating tool. The Brexit backstop, for example, was a withdrawal agreement provision intended to prevent a hard border between Ireland and Northern Ireland until a future arrangement could be agreed.

In project management and risk planning, a backstop may refer to a fallback option, reserve resources, or contingency plan that can be activated if the original plan cannot be achieved.