The Critical 'I'

Read. React. Repeat.

Wednesday, January 21, 2004

full coverage
Pro sports is a rough business. You sacrifice your body on just about every play, and hope that the dings and scratches don't suddenly conspire to put you out of commission. Yet you know they eventually will, and the real challenge becomes staying in the game for as many years as possible, and end up with satisfying career when it's all over.

In the meantime, for those instances when injury puts a player on the shelf, insurance money comes in to take care of both the employer (the team) and the employee (the player). Despite the critical role insurance coverage plays in sports like hockey, and the increasing complexity involved in securing it, it's a little-heard-of factor.

Even a lot of non-injury situations, that a lot of fans presume are paid by the team, actually are taken care of through insurance:

In what has become a high-risk poker game, teams have to decide if they'll insure rookie contracts and their lucrative bonuses. This practise, according to hockey insiders, was pioneered by former San Jose Sharks general manager Dean Lombardi, who insured two of the years on Brad Stuart's and Patrick Marleau's contracts.

Lombardi's move saved the Sharks millions of dollars when Stuart and Marleau both achieved $2.4-million-US bonuses.

At that time, policies were relatively affordable. But William F. Sutton doesn't offer insurance on rookie bonuses anymore and the companies that do charge an exorbitant fee.

The Columbus Blue Jackets paid $700,000 to insure Rick Nash's rookie contract this year.

Nash has scored 27 goals after 45 games, which makes him a virtual lock to collect $3 million in bonuses and the Blue Jackets' investment worthwhile.

People really need to keep things like this in mind when they ooh and ah over team payrolls. The fact is that no matter what the base reported contract numbers are, thanks to insurance packages, roster moves, demotions, etc., a team is never actually paying that entire amount.

Against this backdrop, insurance companies, teams and players have difficult decisions to make and agreements between the three entities are sometimes more complicated than contract negotiations between players and teams.

As Sutton mentioned, more companies were writing policies five years ago and rates were considerably more affordable.

That's changed -- the 9/11 tragedy had a huge effect on the insurance business -- and now some older players who have done well in the game are declining insurance altogether because of its cost.

For that reason alone, some agents feel there won't be a mass exodus of NHL players to Europe in the event of a work stoppage next season.

"Rates are so much higher," says player agent Pat Morris. "It's really a difficult decision for some players to buy insurance."

This is very illustrative of the impact the financial/insurance angle of the sport has on what happens on the ice. The general assumption has been that players would find alternative playing options in the event of a lockout; obviously, this assumption was reached without all the facts.

Beyond hockey, this article brought to my mind the situation with now-retired NBA player Alonzo Mourning, whose contract is being paid in full by the New Jersey Nets because his existing health condition made him uninsurable.