So a friend of the site told me a juicy rumour a few days ago. They said that tonight's starting pitcher - Canadian boy RHP Shawn Hill - has an injury in his foot/ankle area that requires surgery. They also said that Shawn was called up to the Majors with the intention of only pitching a bare minimum number of innings. Apparently this has all been pre arranged between him and the brain trust of your Toronto Blue Jays. My source mentioned there are insurance implications.
Naturally, this news got my attention. So I decided to do some research, starting with the Twitter injury guru.
@injuryexpert is there any benefit for either player or team whether a DL trip and surgery happen in MLB vs MILB, in terms of insurance?
@1bluejaysway Yes, mostly the team.
@injuryexpert Thanks for responding. Do you have a link to some articles that explains it for me? Any help would be appreciated.
@1bluejaysway no sorry
@injuryexpert thanks anyways.
@1bluejaysway Writing about insurance issues isn't very popular.
Having my suspicions confirmed, I then proceeded to try to get some info on the topic. And let me tell you, the @injuryexpert was right. There just isn't a lot of people talking about this subject.
What happened next absolutely blew my mind.
I must say that I do not consider myself an expert as it pertains to MLB player transactions. However, I do think I know more than the average fan.
What I was able to find out on the insurance topic COMPLETELY changed my perspective. It feels like I have been enlightened.
Courtesy of Sports Business Daily:
December 2, 2002
"It's become so expensive that it's a cost item we really have to look at when you put your payroll together. If you're going to insure players, you almost have to include that as part of your payroll." Orioles COO Joe Foss said initial coverage now being restricted to the first three years of a player's contract "is going to have an impact on clubs' appetite for the length of contracts." Chass: "The Tom Glavine negotiations could be a case in point." Expos GM Omar Minaya added, "When you're negotiating a contract, the insurance issue comes up more and more, especially now that it's three years. When you take on a guy in a trade, you always ask what's the insurance situation." D'Backs GM Joe Garagiola Jr.: "The companies are more aggressive in trying to exclude conditions from policies. We don't do a lot of policies. Mostly our insuring is confined to pitchers. But our experience is you can have a policy effectively excluded out from under you. You can have a disability policy on a pitcher, and exclusions can cover injuries to his shoulder and elbow"
Courtesy of CBS Money Watch:
March 1, 2006
Major League Baseball found that it pays to take a team approach to purchasing insurance.
Instead of continuing to purchase insurance separately, Major League Baseball and the organization's 30 clubs decided to band together, set up a captive and develop a collective risk management strategy.
The results? Big cost savings, improved loss control and greater sharing of risk management best practices.
Major League Baseball has saved $40 million over the last three years after forming a captive known as MLB BASES, which stands for MLB Burlington Assurance Exchange Society. The captive is domiciled in Vermont and was launched in January 2003.
"Our strategy is simple. It's take high deductibles and use our captive to finance our retentions on a leaguewide basis," says Anthony Avitabile, the director of risk management at Major League Baseball.
Major League Baseball currently uses its captive for its workers' compensation and general liability programs and might use it eventually for some property risks as well.
"We felt our program should be put in place in the areas where every club is going to be purchasing insurance anyway," Avitabile says.
Courtesy of The Biz Of Baseball:
May 10, 2007
The New York Yankees signing of Roger Clemens to a prorated contract that will pay out $18.5 million and change has brought another aspect of player contracts these days: Insuring the player in case of injury.
With guaranteed contracts, clubs may wish to investigate the use of disability insurance for players to cover the losses they may incur, should a player have a debilitating injury that would end a season or career for the player.
The problem is, the rates to insure a player can be extremely high, and thus, clubs have to weigh taking the gamble of going it without insurance, or paying the premiums.
Courtesy of Sports Business Daily:
May 13, 2008
But MLB and insurance industry sources indicated that policies "often exclude areas of the body that have been seriously injured before." Also, position players are "less expensive to insure than pitchers." ESPN's Steve Phillips said that two events in '01 "changed the baseball insurance" marketplace: the Orioles received a reported $27.3M claim on the remaining $39M of injured LF Albert Belle's contract, and the World Trade Center attacks on September 11 "precipitated large payouts throughout the insurance industry at large"
So what does this all mean as it pertains to Shawn Hill and your Toronto Blue Jays? Well, I certainly don't have all the answers right now but this is what I think.
The Blue Jays must have an insurance policy out on Shawn. That policy no doubt excludes his oft injured right arm, elbow and shoulder. If this rumour of his foot/ankle injury is true, then they would be able to recoup some of his salary from the insurance company if he goes under the knife but only for a surgery that is not on an uninsured part of his body.
Thanks to the @injuryexpert, we know that this benefits the team in some way but only if it's done while he is on the Major League roster. It also benefits the player because he incurs service time while he is in the Majors, even if it's on the DL. For the record: Shawn Hill has 3.153 years of MLB service time according to Cot's Baseball Contracts.
So I guess everyone wins right?
I couldn't help but start wondering: How often has this happened in the past?
A few names came to me right away:
Jesse Litsch (hip)
Dustin McGowan (knee)
If Shawn Hill gets pulled early tonight and subsequently goes on the DL with a foot/ankle injury that requires surgery, you heard it here first.