Union paid $44 million for lockout insurance

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Last year, in the midst of the lockout, a report emerged that the NFLPA had purchased “lockout insurance.”

It seemed far-fetched at the time, and few with knowledge of the insurance industry believed that the union could have found someone to underwrite a policy that would have paid out, as it turned out, $200,000 per player in the event the full 2011 season were scrapped.

In the aftermath of the lockout, we reported that the lockout insurance cost nearly $50 million.  Daniel Kaplan of SportsBusiness Journal reports that the union’s tax return for the period ending March 31, 2011 reveals an expenditure of $44 million for lockout insurance.

The premiums took the union from a profit of more than $20 million to a loss of more than $20 million for the fiscal year.

Also, NFLPA executive director DeMaurice Smith earned $2.38 million, far less than the amounts the late Gene Upshaw received in the final years of his tenure.  Also, more than $6 million was paid to outside lawyers.

15 responses to “Union paid $44 million for lockout insurance

  1. Wow.
    Those players and union reps sure are a smart bunch huh?

    The owners took complete advantage of the fact that they are much smarter and obtained a very nice CBA.

    So happy those greedy players got the worst of the deal

  2. The Owners’ likely paid for lockout insurance as well. Hence, the game of chicken was played out until the Billions were at serious risk of being lost. No insurance would cover that……

  3. Who wouldn’t underwrite such a policy? There was absolutely 0% chance the full season would be lost. Thus, any ins. co. would take that premium in a heartbeat. There was absolutely zero risk that the insurance co. that posketed $44 million in premiums would ever have to pay out any $$ for a loss. D. Smith and the NFLPA continue to look dumb and dumber.

  4. Tom Brady would be laughing when that check came in the mail. Here you go honey go buy a new pair of shoes.

  5. If anyone recalls, the owners quickly made a deal after the found out about lockout insurance.

  6. $200k is less than the league minimum. That wouldn’t have a made a difference to most players. Seems like an expensive premium for not much upside.

  7. The policy was not completely without riskl for an insurance company because the NFLPA had the ability to decide if games were or were not going to be missed. This was not like a life insurance policy were the insurance company is released from paying if the insured commits suicide. The insurance company could not say the NFLPA has to accept any offer or it will not pay. There are approximately 1900 players in the NFLPA, which would equal a $380 million payout at $200,000/player.

    Also, I seriously doubt the insurance would only pay out if the entire season was cancelled. More likely is that it would pay out for each game missed, which is a total payout of $23.75 million/week. So, after a couple of missed games, the insurance would have more than paid for itself. While most did not believe the entire season would be cancelled, there was significant risk that 1 or 2 games would be missed.

    So I am not going to be the “D is Dumb” drum over the lockout insurance. I would rather learn more about the initial CBA, which was rejected, that at least seemingly provided for a greater salary cap.

  8. anyone know what would happen to a player that played a game when he was suppose to be suspended?

  9. smacklayer says:
    Apr 3, 2012 3:26 PM
    $200k is less than the league minimum. That wouldn’t have a made a difference to most players. Seems like an expensive premium for not much upside.

    Yeah, just like unemployment insurance has no value because it doesn’t pay exactly what you were making at your job before the layoff.

    Do you really think these things through?

    Anyone on the league minimum is most likely to be unable to comfortably deal with absolutely no pay for the season, while they would be able to deal with $200k for the year.

  10. bigjdve says:
    Apr 3, 2012 4:34 PM
    I find it ironic that the NFLPA got this insurance, after they sued the owners for having the same type of insurance.

    They sued the league for shuffling payments from networks on the TV contract to put money in their pockets when it wouldn’t necessarily be contributing to players, in an effort to keep salaries down and insure an influx of revenue even without a season going on.

    If they had to go to the specialty insurance equivalent of Geico to get a policy covering them for a work stoppage with their own damn money, the NFLPA wouldn’t have had anything to sue over.

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