For instance, Derek Jeter has something like a 20 year contract at about a billion a year but if his stats don’t improve he doesn’t belong in the majors. Everyone says they will improve, so I guess they probably will.
But,…what if they don’t? What if he finishes the year batting .190? Do the Yankees have to keep paying till the contract runs out?
BTW, I know there are provisions made in case of injury, as with Jayson Williams. But I’m asking about a no injury, just can’t hit scenario.
In MLB baseball … yep, the club keeps paying. AFAIK, almost all MLB player contracts have guaranteed salary.
Most NBA players also have guaranteed contracts. The NFL is different – almost no contracts have guaranteed money other than the up-front signing bonus. So if an NFL player begins to fade, the team can release him and owe no future salary.
MLB and NBA have provisions for terminating a player’s contract if he refuses to meet his end of the contract, by failing to keep himself in shape or failing to show up regularly, etc. The players’ union gets involved, but it does happen - the Pirates just terminated Raul Mondesi’s for leaving the team, for instance, and the Celtics terminated Vin Baker’s for failing to comply with his alcoholism treatment program. The Yankees are off the hook for Aaron Boone’s contract, which forbade the usual list of dangerous activities including motorcycle riding, for getting hurt while motorcycle riding.
But, for simply performing below the level the team expected when it offered the contract, the team is on the hook in MLB and NBA, but not in the NFL or NHL unless the contract is guaranteed (which most aren’t). The NHL has a lot of players on “two-way” contracts, so that if they underperform they can be sent to the minors and be paid at a minor-league level while they’re there. I think all the players’ union contracts disallow teams from cutting players who have been injured while playing or practicing, though.
If a team has doubts about a player’s consistency, they will often include performance incentives in the contract, such as starting a certain number of games or having a certain number of at bats. This is often done in the case of an injury-prone or older player. However, a manager could just sit the player for underperformance, and he wouldn’t get the incentive, although he’d still get his base salary. Of course, these provisions vary widely between players.
I think you’ll find most of these big contracts are incentive based. They just prop them up even higher to make them look even better and get publicity.
The full named $$$ they could earn wouldn’t be what the average player earns, so when injured, they probably wouldnt make as much.
Barry Bonds’ has an incentive based contract. He has to have X number of games before his contract is up or he doesn’t get an extension. If he gets it, he gets an automatic extension…
Now, if a player can’t physically play, that’s a different situation altogether. AFAIK, teams take insurance on some of the higher-risk players, so if and when the player is hurt and misses the season, insurance covers his salary, saving the team money. Can anyone confirm?
ive never heard of that before.
Getting an inury prone player is a risk, he might be a bit cheaper, but can break down any time.
Its just part of the risk you take, nothing to do with insurance. Sometimes clubs by midranked players as ‘insurance’ to their superstars, or get multi positional players to cover a few positions that might fall under injury.
For the most part, clubs insure themselves by properly assigning contracts so they can never have a sub par team; but to win that championship, they might need all there stars on deck.
Boone got hurt playing basketball.
The Baltimore Orioles took out a policy on outfielder Albert Belle. When he turned up with a degenerative right hip, the issue of the policy came up:
http://espn.go.com/mlb/news/2001/0303/1125412.html
Like I said, I’m not sure if this is an isolated situation, or if there are many players with policies on them.
Yes. The New York Mets took out an insurance policy on Mo Vaughn (see here Scroll down for the April 4 entry) . When he was injured, the policy kicked in after a certain number of days. He’s been out nearly a year (and will probably never be back), but the team is getting reimbused for most of his salary from the insurance. (I suspect Vaughn is not retiring because by remaining on the roster – even as injured – he still gets paid).
The insurance companies, however, have tightened the issuance of this sort of insurance since Vaughn. Though it’s still done, they won’t insure a player with a history of injuries.
It’s routine for big contracts. Dantheman mentioned Albert Belle, but there are many other instances. The Boston Globe did a detailed article on this practice a couple of weeks ago.
Someone mentioned that football contracts are not guaranteed. That’s only partially true. Players who are injured will be paid for the remainder of the season. Sometimes, a player suffers an injury in training camp who the team was planning to release. They can offer the player an injury settlement – where he agrees to void the contract in exchange for a lump sum (less than the value of the contract). The advantage is that if he gets healthy, he can sign with another team that year. Otherwise, the original team can place him on the injured reserve list, making the player ineligible to play for anyone for the rest of the season.
But if an NFL player signs a 10-year contract, he can be cut after the first season and the remaining 9-years are simply voided. the result is that most players front load their deals with signing bonuses. that’s about all that’s guaranteed.
No, dantheman is right. Injury-prone players get insurance coverage taken out on them so the team doesn’t get left out in the cold if they get hurt. That’s what happened when Juan Gonzalez ended up bouncing back to the Rangers a few years ago. Nobody wanted to take the risk of signing his bad-back ass, so he went and took out a $50 million policy on himself, which was unprecedented. That way, he could prove to prospective buyers that he was worth the risk. The Rangers paid the insurance after he signed with them. Usually, the team just gets the coverage to begin with.
I’m sure it varies from league to league and player to player, but I remember reading that a typical NBA insurance policy pays an injured player about 80% of his salary. The team is still on the hook for the rest of the salary.
Baltimore actually just got done paying off Albert Belle for sitting on his butt the last few years (no doubt surfing the internet like us.)
I’ve read that insurance companies will no longer insure baseball players beyond 3 years, which has led to long-term contracts, ala Rodriguez, becoming more of a rarity.
Oh yeah, you’re right, I was thinking of somebody else who got hurt on a bike and initially lied to cover it up. Basketball is on the usual list too, of course, and so is skiing.
That was probably Jeff Kent.
Yeah, he’s the one who said he hurt his wrist while washing his truck.
I remember back in the early '90s, the Seattle Mariners acquired pitcher Greg Hibbard, who was a pretty big name at the time. I don’t think he ever pitched a single inning for them, because he went on the “60 Day” disabled list shortly after signing a 3- or 4-year contract worth about $4 million per year, and remained on the DL for the entire length of that contract. The Mariners ended up paying the entire contract, if I remember correctly.
As to insurance, aren’t most contracts insured through Lloyd’s of London - the company that will insure anything?
Not always. About 2 years ago the major insurers began limiting insurance policies on pitchers to three years. However there’s room to dicker. ISTR that Kevin Brown’s latest contract got insurance on three non-consecutive years. So he was insured for like year one, year three and year six, IIRC (which I probably don’t…this was an article I read several years ago).
Son of a gun…
A search of ‘insurance’ on Baseballprospectus.com shows 118 results over the life of the site. Most of them falling under the ‘Under the Knife’ column that Will Carroll writes. It’s not a small issue these days. It effects everything. So you want to sign pitcher X to a contract of $Y? Don’t forget that you’ll also have to pay Insurance on him making the total cost to your team $Z. I betcha (with no data) that insurance runs a significant percentage of total player expenses.