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Players’ lockout insurance fund may have broken the ice on Thursday, or not

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So what prompted the owners to make significant concessions on the rookie wage scale Thursday?  Some have said it was the threat of the filing of a motion to lift the lockout as to players not under contract.  Jim Trotter of SI.com reports that the dam may have broken once the players unveiled a plan to fund the lockout during the season with $200,000 per player.

Specifically, Trotter reports that NFLPA* executive director DeMaurice Smith “secure[d] insurance” in the amount of roughly $200,000 per player in the event that the lockout wipes out the full 2011 season.  Trotter also reports, citing only an unnamed source close to an owner, that the maneuver got the league’s attention.

This raises plenty of questions, and the balance of the report contains scant details.

First, where did the insurance come from?  It’s hard to imagine many insurance companies underwriting a risk that is tied to the whims and will of 32 human beings, especially when the total payout would have exceeded $300 million.

Second, how much did the premiums cost, and who paid for them?

Third, who would have been covered?  Plenty of players don’t need it.  Rookies do, especially the guys who weren’t drafted.

Fourth, would it have mattered?  When the league contains plenty of guys who make $2 million per year but live like they earn twice that amount, $200,000 won’t do much to finance the balance of 2011 and the first seven non-football months of 2012.

That’s the thing that everyone has overlooked.  If the season had been scrapped, the players would have had to get through the football season without game checks, and then they would have had to make it to the next football season without having received game checks during the prior season.

So while it’s an intriguing detail, its impact on the owners possibly is being overstated, especially when considering the assumption that the $200,000 per player would have been coupled with, as Trotter explains it, “a large financial award from U.S. District Judge David Doty, who previously ruled the owners had illegally created a $4.3 billion lockout fund for themselves by renegotiating their TV deals at the expense of the players.”

Any award from Doty would have been subject to appeal to the U.S. Court of Appeals for the Eighth Circuit.  Given its conservative composition, the players’ ability to secure victory before that court would have been a toss-up, at best.  Moreover, it’s highly unlikely that the appeals court would have resolved the issue during the 2011 season.  Though the Eighth Circuit expedited the appeal of the ruling to lift the lockout, courts rarely if ever speed up the process of considering cases in which the only question is whether and to what extent money will change hands.

In other words, the players would have seen none of the money when they needed it the most.  (That said, it could have helped them get through part of the 2012 offseason.)

Still, if the players think they pulled a rabbit out of the hat with the owners and scored one final coup, so be it.  At the end of the day, the players need to feel good about their work, and in many respects they should.  (Also, given that De Smith is up for re-election in March 2012, he needs the players to feel good about their leader.)  The owners surely expected to finagle a much better deal than the deal that eventually will be done.  To the extent, however, that the prospect of the players getting $200,000 each to tide them over until September 2012 scared the owners into bridging the fairly small gap that remained on the rookie wage scale, we’ll choose to be skeptical, for now.

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24 Responses to “Players’ lockout insurance fund may have broken the ice on Thursday, or not”
  1. twitter:Chapman_Jamie says: Jul 15, 2011 1:35 PM

    I love how you can say that the players got an awesome deal when a.) it hasn’t been finalized and b.) it hasn’t been finalized.

  2. hobartbaker says: Jul 15, 2011 1:36 PM

    I think the dam broke when Harrison went postal for a journal. Both sides realized that they were prolonging agony for the image of the game. Either that, or everyone became fearful of DeMo showing up wearing Hines Ward’s cowboy hat.

  3. biggerballz says: Jul 15, 2011 1:37 PM

    wow

  4. gregjennings85 says: Jul 15, 2011 1:44 PM

    Interesting.

  5. birdcrazy911 says: Jul 15, 2011 1:51 PM

    at this point what ever works to get this thing done, works for me!!!

  6. tommyf15 says: Jul 15, 2011 1:52 PM

    Any award from Doty would have been subject to appeal to the U.S. Court of Appeals for the Eighth Circuit. Given its conservative composition, the players’ ability to secure victory before that court was a toss-up, at best. Moreover, it’s highly unlikely that the appeals court would have resolved the issue during the 2011 season. Though the Eighth Circuit expedited the appeal of the ruling to lift the lockout, courts rarely if ever speed up the process of considering cases in which the only question is whether and to what extent money will change hands.

    I think it’s wrong to assume that just because the Eighth Circuit reversed the original ruling on the lockout, they would always side with the owners. In short, the lockout and the TV money issues are completely separate.

    The owner’s attempt to hoard $4.3 Billion in television money that was supposed to be shared with the players looks like a slam-dunk win for the NFLPA if they opt to pursue it.

  7. nfl25 says: Jul 15, 2011 1:55 PM

    There was really never any chance of the season being missed. The players would never let more than one game be missed without panicking. And the owners just wanted the players to think they were willing to wait out a season and that got the players to finally start negotiating. The owners would have never allowed even one game to be missed. The owners probably had next week as the date they wanted to strike a deal. So they are giving in a little to make it happen

  8. tommyf15 says: Jul 15, 2011 2:06 PM

    nfl25 says:
    There was really never any chance of the season being missed. The players would never let more than one game be missed without panicking. And the owners just wanted the players to think they were willing to wait out a season and that got the players to finally start negotiating. The owners would have never allowed even one game to be missed. The owners probably had next week as the date they wanted to strike a deal. So they are giving in a little to make it happen

    There we have it. The minds have been read and the future has been told.

  9. tomsd1 says: Jul 15, 2011 2:14 PM

    To call any future court decision a “slam dunk” is erroneous, at least IMO.

    And pray tell – how would D Finger be able to finance such a mythical insurance policy – paying each of the what – 1,900 players (including taxi squads) – a $200,000 payout in the event there was not a 2011 season?

    Have you done the numbers on the payout total? $380,000,000. So what kind of a premium would that require?

  10. tundey says: Jul 15, 2011 2:14 PM

    If the owners can hoard TV money, why should the players be able to insurance against a lost season? I think it’s BS. $200,000 is nothing to these guys.

  11. crefan says: Jul 15, 2011 2:20 PM

    It may rain today or it may not.

  12. youboettcha says: Jul 15, 2011 2:24 PM

    @tundey

    It depends on which money you’re using. The NFLPA presumably used money from which the owners got their cut to buy insurance. The Lockout insurance case is valid because the owners planned to receive money from TV companies, and gave up actual money to put those provisions in their contracts, and were not going to cut the players in on that money.

  13. nmking26 says: Jul 15, 2011 2:37 PM

    tundey says: Jul 15, 2011 2:14 PM

    If the owners can hoard TV money, why should the players be able to insurance against a lost season? I think it’s BS. $200,000 is nothing to these guys.

    ———

    That’s like saying if your house burns down, why should you get to keep insurance money?

  14. jakek2 says: Jul 15, 2011 2:37 PM

    Actually, whatever firms underwrote the lockout insurance were BRILLIANT. They reaped huge premiums for it with really no risk. Here’s why:

    1) Even if they had to pay out due to a lost season, the players antitrust lawsuit would have proceeded. The owners would have likely settled rather than facing the risk of treble damages and any settlement in favor of the players would have been liened by the lockout ins. cos. (like when medicaid liens a personal injury settlement). The ins. cos. would have been repaid the $200k per player.

    The only way that the ins. cos. would have lost is if the owners won a 3-5 year outright antitrust suit and there is NOOO way the owners would have went that long without football.

    Thats how the lockout insurance companies made out like bandits. True stroke of brilliance.

  15. jakek2 says: Jul 15, 2011 2:41 PM

    Mike – in other words….the lockout insurers made a bet that the owners would not go without football for 5 years.

    Too bad the fans didn’t think of this. We could have formed our own lockout insurance companies made out like bandits!

  16. tommyf15 says: Jul 15, 2011 3:30 PM

    tundey says:
    If the owners can hoard TV money, why should the players be able to insurance against a lost season? I think it’s BS. $200,000 is nothing to these guys.

    Simply put, the owners bought the insurance with money they were supposed to be sharing with the players.

  17. anpsteel says: Jul 15, 2011 3:32 PM

    jakek2 says: Jul 15, 2011 2:37 PM

    Actually, whatever firms underwrote the lockout insurance were BRILLIANT. They reaped huge premiums for it with really no risk. Here’s why:

    1) Even if they had to pay out due to a lost season, the players antitrust lawsuit would have proceeded. The owners would have likely settled rather than facing the risk of treble damages and any settlement in favor of the players would have been liened by the lockout ins. cos. (like when medicaid liens a personal injury settlement). The ins. cos. would have been repaid the $200k per player.

    The only way that the ins. cos. would have lost is if the owners won a 3-5 year outright antitrust suit and there is NOOO way the owners would have went that long without football.

    Thats how the lockout insurance companies made out like bandits. True stroke of brilliance.
    ————————————————
    I think you are on the money.

    When thinking about “who” would underwrite such a policy-

    “who” stands to lose more money as a whole if there is a lock-out??

    The television networks- that’s who. If I was a big-wig in the media industry, I would have found a way to push this- and /or put the ground work together to form another league in efforts to protect my investment.

    Follow the money.

  18. endzonezombie says: Jul 15, 2011 3:45 PM

    It’s very probable that the NFLPA made this arangement awhile ago ( when a lockout was a long shot and the premium reasonable) , and the owners realize that. The NFLPA didn’t pay all those legal fees to idiots – they considered their options before the 2010 season ended. The owners had to make concessions because they miscalulated the wrath of fans, businesses and community leaders – and prehaps some congressmen – due to the trickle down economic and social impact of the lockout.

  19. childressrulz says: Jul 15, 2011 4:07 PM

    Way to go players.

  20. hsatpft says: Jul 15, 2011 4:09 PM

    Lloyds of London is said to issue insurance policies for all kinds of crazy stuff (at real high premiums) but I think “insurance” in this case is a metaphor. It’s probably not an actual insurance policy but a loan(s) to be repaid out of future earnings. Somebody promised to loan money to the union for as long as the lock-out lasts at a fixed interest rate.
    What will $200K a year cover? Income taxes make it complicated. I came up with the mortgage on a $1.5M home & $50K for everything else.
    Sure, the players make a lot more than that but all or nearly all of them grew up living on a lot less.

  21. brownsince64 says: Jul 15, 2011 4:34 PM

    umm one problem. if this pays people if the whole season is lost, the owners could just wait until most of the season is wiped out before feeling any pressure, and the players would not get any money until the season is gone anyway. Doesn’t sound like this would put a lot of pressure on the owners to me.

  22. Chris Guest says: Jul 15, 2011 5:01 PM

    Couple of issues. There is no guarantee the players “insurance” case will be resolved in their favor on appeal. In fact, the evidence demonstrates that Appeals court could find for the owners – particularly in light of this insurance tidbit.

    I’d be curious to see who actually took that premium because the payout would be $384 million (60 players on a team x 32 teams x 200K) and wondering if there even was a such a premium paid.

    Negotiations are all about making the other person believe what cards you are holding not what you actually hold.

    The more I read about it the less I am convinced this had any real impact on the owner’s decision. He can say what he wants but having 200K for every player is nice but it probably wasn’t due until the cancellation of the entire season not the first game so players would like still need mortgage money until that cancellation.

    Thus, I’d say the owners were fine with the deal as situated.

    Lastly, the best thing I heard a couple of weeks ago was saying the owners are going to win because of how the money will be split (umm isn’t like 52-48 now instead of 48-52) but there will be some “issue” that will come out and provide some false view the players won. The owners knowing the truth will just sit back and count their extra money.

  23. chatham10 says: Jul 15, 2011 5:07 PM

    $200K, that would not pay for the rings, cars etc for a month for most of these guys.

  24. kane337 says: Jul 15, 2011 5:09 PM

    That $200k didn’t phase the owners at all. They know most of the players have been saving up in case there was no football.

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