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The Business of Hockey Discuss the financial and business aspects of the NHL. Topics may include the CBA, work stoppages, broadcast contracts, franchise sales, and NHL revenues.

The cost of insurance

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Old
10-30-2012, 06:41 PM
  #1
ottawah
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The cost of insurance

http://slam.canoe.ca/Slam/Hockey/NHL.../20318551.html


Exactly why players are not doing barn storming games, etc. Crosby is of course the exceptional case, but maybe these type of situations will remind players what owners are risking in signing them sometimes.

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10-30-2012, 06:47 PM
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unions are blissfully ignorant about things like that.... they just don't care.

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10-30-2012, 06:51 PM
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kdb's post:

http://hfboards.hockeysfuture.com/sh...9&postcount=18



Quote:
Originally Posted by kdb209
Quote:
Originally Posted by Piffle
Pretty sure that insurance for player contracts already doesn't go past about 7 years, and that the team covers anything past that. Anyone confirm?
Yup - insurance through the league covers at most 7 years. Private insurance is prohibitively expensive.

http://www.sportsbusinessdaily.com/article/123913

Quote:
NHL Insurance Plan Covers Player Contracts For Seven Years

The NHL's insurance plan insures player contracts for seven years, and "beyond that, if the player gets hurt, the team is on the hook for the full amount of his contract," according to Luke DeCock of the Raleigh NEWS & OBSERVER. As part of the plan, which the NHL purchases through New York-based insurance broker BWD Group, NHL teams are "required to insure a handful of players through a 'temporary total disability' program administered by the league." Each team "pays a premium based on the salaries of its five highest-paid players, but is free to allocate that coverage how it wishes." NHL Deputy Commissioner Bill Daly said that "typically, a team will extend coverage to as many as seven players."
...
DeCock noted individual teams "are free to pursue additional coverage, but the heavy premiums make it a losing proposition." Rutherford said that "seeking private insurance to cover a longer deal is prohibitively expensive."
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Originally Posted by Wetcoaster View Post
After the maximum period covered by NHL disability insurance for example the Isles on the Dipietro contract would have to buy supplementary insurance for the remaining eight years which can be prohibitive or self-insure.

Also it does not cover all the players on the roster. This was written during Eric Staal's contract negotiations and focuses on contract length and insurance issues:

Quote:
The league purchases its disability insurance through the BWD Group, a Long Island, N.Y., insurance broker that also obtains coverage for the NBA, WNBA and Major League Baseball. (One underwriter, the Chubb Corporation, touted its relationship with the NHL in its 2001 annual report.)

Each team pays a premium based on the salaries of its five highest-paid players, but is free to allocate that coverage how it wishes. Typically, a team will extend coverage to as many as seven players, Daly said. Coverage kicks in when a player misses at least 30 games.

Beyond that, individual teams are free to pursue additional coverage, but the heavy premiums make it a losing proposition. To insure a player under the league program, it costs about 5 percent of his salary. To insure additional players, it would cost substantially more.

“Usually it works out that we have five players under the league program,” Rutherford said. “When you get to a certain dollar amount, the premiums keep skyrocketing. I wish it was easier to get each [player] insured, but we can’t do that. …

“If you wanted, you could insure all the contracts, but it would be very expensive.”
http://proathletesonly.com/news/feat...nhl-contracts/
[/QUOTE]

Most of this info came from a piece originally in the News & Observer. That article seems to be no longer available at the N & O website - but this link a copy of the article:

http://insurancenewsnet.com/article....7b000000c1027a

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10-30-2012, 06:53 PM
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Quote:
Originally Posted by ottawah View Post
http://slam.canoe.ca/Slam/Hockey/NHL.../20318551.html


Exactly why players are not doing barn storming games, etc. Crosby is of course the exceptional case, but maybe these type of situations will remind players what owners are risking in signing them sometimes.

How exactly, ottawah?


For teams that hand out lifetime contracts and players with a history of certain kinds of injuries, well the risk is greater, but is it worth it? In the case of the Pens, Crosby has probably returned a doubling, if not more of the franchise value in just the past five years. If he continues to play, how much higher can that go?

In fact, some have said that Crosby is foolish to keep playing given that a potential loss of functionality and quality of life is something no amount of money can replace.

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10-30-2012, 07:23 PM
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Quote:
Originally Posted by Fugu View Post
How exactly, ottawah?


For teams that hand out lifetime contracts and players with a history of certain kinds of injuries, well the risk is greater, but is it worth it? In the case of the Pens, Crosby has probably returned a doubling, if not more of the franchise value in just the past five years. If he continues to play, how much higher can that go?

In fact, some have said that Crosby is foolish to keep playing given that a potential loss of functionality and quality of life is something no amount of money can replace.
Oh, worth it yes I agree, but these are the type of costs players do not see that do eat up a chunk of revenues. Not pretty when they have to pay it out of pocket.

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10-30-2012, 07:25 PM
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Quote:
Originally Posted by ottawah View Post
Oh, worth it yes I agree, but these are the type of costs players do not see that do eat up a chunk of revenues. Not pretty when they have to pay it out of pocket.
Are insurance premiums teams pay considered a player cost in determining the player share of HRR?

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10-30-2012, 07:50 PM
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Quote:
Originally Posted by Fugu View Post
How exactly, ottawah?


For teams that hand out lifetime contracts and players with a history of certain kinds of injuries, well the risk is greater, but is it worth it? In the case of the Pens, Crosby has probably returned a doubling, if not more of the franchise value in just the past five years. If he continues to play, how much higher can that go?

In fact, some have said that Crosby is foolish to keep playing given that a potential loss of functionality and quality of life is something no amount of money can replace.
The original N&O piece mentions that the League's group plan allows BWD to exclude coverage for certain injuries if a player has an injury history - ie for a player coming back after two knee injuries, he was not covered for any future knee injuries.

It was also mentioned after Crosby signed that he was likely uninsurable for future head injuries.

Quote:
Originally Posted by Fugu View Post
Are insurance premiums teams pay considered a player cost in determining the player share of HRR?
The cost of group insurance plans is covered under benefits and is included in the 57% Players Share - the 57% includes both salary and benefits costs.

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10-30-2012, 07:59 PM
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The cost of group insurance plans is covered under benefits and is included in the 57% Players Share - the 57% includes both salary and benefits costs.

Thank you, sir.


I rest my case, ottawah, as we see that most players are paying for their own insurance.

As for Crosby, we can only wonder if the Pens made a wise business decision or not, in terms of return on that particular 'investment.'

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10-31-2012, 06:27 AM
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Thank you, sir.


I rest my case, ottawah, as we see that most players are paying for their own insurance.

As for Crosby, we can only wonder if the Pens made a wise business decision or not, in terms of return on that particular 'investment.'
My point is there are a lot of costs the players do not exactly see. They seem to think everything that does not end up in their pocket is pure profit, and its not the case.

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10-31-2012, 09:21 AM
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Quote:
Originally Posted by ottawah View Post
My point is there are a lot of costs the players do not exactly see. They seem to think everything that does not end up in their pocket is pure profit, and its not the case.
Of course insurance is a cost the players see -- they're paying for it out of their share.

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10-31-2012, 11:25 AM
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Quote:
Originally Posted by ottawah View Post
My point is there are a lot of costs the players do not exactly see. They seem to think everything that does not end up in their pocket is pure profit, and its not the case.

I'm not sure how you can make this claim though.

They must be aware that Player Costs include benefits and insurance, for example, since the very definition of hockey-related revenues is often a topic. There are three cost control mechanisms in play: linkage itself that sets the rate, definition of 'revenue', and then what constitutes a player cost.

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10-31-2012, 11:37 AM
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I believe Doug Maclean said his sources told him Spezza's insurance cost $53K a month and many players playing overseas are simply playing for insurance converage and not earning any actual salary.

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