Skip to content

NFLPA paid $50 million for lockout insurance

bank-safety-getty Getty Images

Several weeks ago, as the labor talks moved toward a conclusion, a report emerged that the NFLPA had secured lockout insurance in the amount of $200,000 per player, in the event that the entire season were canceled.

I was skeptical, in large part due to the fact that the initial report was very light on details, including how it was obtained and how much it cost.

As it turns out, the lockout insurance was real, and it was spectacularly expensive.

Multiple sources have advised PFT that the insurance was purchased from a company known as Swiss Re, at a premium of nearly $50 million.

Now that players not involved in the leadership of the NFLPA are learning about the lockout insurance and the price tag paid for it, there is some griping about the expenditure of money for which nothing was obtained in return.  But that’s the nature of insurance — every year, billions if not trillions are paid for insurance premiums and the purchaser gets nothing in return other than the knowledge that the insurance existed.

In this case, we’re told that the NFLPA Executive Committee approved the transaction, and that NFLPA leadership believed it would help beat back the owners if unveiled at the right time.  Though it’s impossible to know with any certainty whether the lockout insurance helped get the deal done (especially since none of the money would have been paid unless and until the entire season was canceled), it was one of the leverage points that made the NFLPA feel more confident about taking a stand in crunch time of the negotiations.

Actually, the premium was a lot less than it could have been.  With more than 1,900 players in the NFL, the total payout would have exceeded $380 million.

Besides, the successful efforts of the NFLPA to keep the owners from pushing the players’ share of the revenues all the way down to 40 percent will result in the recovery of that $50 million more than 100 times over, over the next 10 years.

Permalink 23 Comments Feed for comments Latest Stories in: Rumor Mill, Sprint Football Live - Rumors, Top Stories, Union
23 Responses to “NFLPA paid $50 million for lockout insurance”
  1. flyerscup2010 says: Aug 7, 2011 7:59 AM

    hate the game, not the player. insurance = legal ponzi scheme.

  2. traevin says: Aug 7, 2011 8:14 AM

    Still seems pricy.

  3. cowboysfan18 says: Aug 7, 2011 8:22 AM

    Other than rookies, if players couldn’t manage their money when they make 300,000 plus, the 200,000 wouldn’t have lasted them too long. Players who can’t manage their money should find out what its like to suffer a little. If you aren’t Manning, Brady etc. then you should be smart enough to know you will not make enough in your football career to sustain a high level lifestyle without some other form of income or investing what you have. The idiots that make a million a year and go buy million dollar houses plus a Ferrari and/or a Maybach for each day of the week will probably run out of funds.

  4. whatsafairway says: Aug 7, 2011 8:28 AM

    Maybe the government should take the hint and buy 14 trillion of balanced budget insurance.

  5. lawyermalloy says: Aug 7, 2011 8:30 AM

    What an easy 50 mill for the company; i never believed for a min. the entire season would be lost!

  6. nceaglesfan says: Aug 7, 2011 9:30 AM

    Don’t know about anyone else, but if I can bypass the opportunity of seeing the letters NFLPA (or NFLPA*) for the next 10 years, if happy for that.

    Let’s move on to Football…..

  7. jw731 says: Aug 7, 2011 9:48 AM

    200 g’s per player is not nearly enough to make it rain for a year…..

  8. camdenyard says: Aug 7, 2011 10:01 AM

    I don’t understand. A $50 million policy that would have paid 1,900 players $200K each. That’s a $38 million payout.

    I’m sure there is more to it than this, because insuring $38 Million with $50 million makes no sense.

  9. zinn22 says: Aug 7, 2011 10:19 AM

    The NLPA made money on the lockout insurance. Before it was unveiled the players offered, in March, the same deal to the owners that was eventually accepted in July.

    In march the players starter offer was 50% of total revenue. The owners laughed at the offer, calling it ridiculous, and walked out of the mediation. In June after the players revealed they had lockout insurance the owners started negotiating in good faith and eventually accepted the offer they had laughed at in March.

    On its face it may appear the players got nothing for the $50 million. But that $50 million paid for itself plus it helped make an agreement that otherwise may not have been made.

  10. skoobyfl says: Aug 7, 2011 10:48 AM

    The money was well spent, it made the owners realize that they did not have the financial leverage needed to force the players / employees hand.

    $50 Million for ace in a $100 Billion card game, is worth every dime.

  11. qdog112 says: Aug 7, 2011 11:00 AM

    Very smart move for the NFLPA. Money well spent.

  12. voiceofrealism says: Aug 7, 2011 11:16 AM

    camdenyard says: Aug 7, 2011 10:01 AM

    I don’t understand. A $50 million policy that would have paid 1,900 players $200K each. That’s a $38 million payout.
    ————————
    You’re right, you don’t understand.
    5 players would be 1mil
    50 players would be 10 mil
    500 players would be 100 mil
    1900 players would be 380 mil

  13. thefiesty1 says: Aug 7, 2011 11:31 AM

    They could have saved lots of money if DeMo hadn’t walked out back in March. Dumb ass!

  14. a1gd1ramsfan says: Aug 7, 2011 11:37 AM

    I think they should make 200k as regular season pay for all pro sports

  15. gitlin1 says: Aug 7, 2011 12:04 PM

    Camden yard. When you purchase car insurance for your 30k car it doesn’t cost 30k. It costs more like 1k a year. Hence the whole concept of insurance!!

  16. jaxjoe says: Aug 7, 2011 12:09 PM

    First off, with all the tough talk from the NFLPA, no company would even consider the $50M risk of shelling out $380M. Maybe it was for two years and the risk would have been $760M? So, it’s highly plausible that the NFLPA made some assurances to Swiss RE that they would negotiate before the season started, or somewhere near the $50M payoff point which equates very coincidentally to two games lost (16 games ÷ $200,000 per player per year = $12,500 per game per player. Now, $12.5K x 1,900 players = $23.75M per game. $50M ÷ $23.75M ~ 2 games).

    So, if the legal battle was still ongoing and the NFL caught wind of this, the contract subpoenaed, and language in the contract stated a ‘missed-games’ or ‘pay-off’ clause (typically found in the ‘termination’ or ‘exceptions and deviations’ area of a contract), the NFLPA tent would have collapsed immediately.

  17. blchaney69 says: Aug 7, 2011 12:42 PM

    How is this any different than what the Owners did with the Television contract to make sure they got paid in the event of the Lockout? I’m asking because I dont know..But it seems to be basically the same thing..Both sides covering their own butts!! But the Owners caught a ton of grief for it!!

  18. zinn22 says: Aug 7, 2011 12:52 PM

    blchaney69 says: Aug 7, 2011 12:42 PM

    How is this any different than what the Owners did with the Television contract to make sure they got paid in the event of the Lockout? I’m asking because I dont know..But it seems to be basically the same thing..Both sides covering their own butts!! But the Owners caught a ton of grief for it!!

    ————————————————————-

    It is slightly different than TV case. In the TV case the owners per their agreement with the players had to maximize their revenue on the TV deal as the players were entitled to a % of the revenue. The owners took less money from the networks in exchange for being paid with no revenue. The players were sued for breach of contract and won. The court had not issued a damage amount before the two sides settled but the players would have been entitled to a very large sum.

    The two are slightly different in that the players paid for their lockout insurance with their own money while the owners bought the TV revenue with both sides money and if the lockout continued they were going to have to share some of that money with the players.

    But your right the original intention of the TV deal made by the owners was a form of lockout insurance. It just backfired on them as the players were a bit smarter than the owners thought.

  19. blchaney69 says: Aug 7, 2011 1:58 PM

    Gotcha, LOL… But lets not get Carried away, the “PLAYERS” were not smarter than the Owners..The NFLPA’s Lawyers were smarter than the Owners Lawyers!! I think the players confirm on a daily basis that they are not that sharp!!

  20. tomsd1 says: Aug 7, 2011 2:04 PM

    I am still very dubious that such a policy was truly obtained, but even if not – I think the sabre rattling did help move the negotiatons along.

    And if the NFLPA did spend the $50 million – it was chicken feed compared to how much the players would have caved in half way through no season.

  21. contract says: Aug 8, 2011 6:32 AM

    Spending $50m just to agree to a worse deal than you had? Nice job.

  22. getitdoneplz says: Aug 8, 2011 1:20 PM

    Who received the $7M commission…. De’s brother?

  23. jetsetfred says: Aug 9, 2011 11:28 PM

    It’s like gambling!

Leave a Reply

You must be logged in to leave a comment. Not a member? Register now!