The Sports Professor Rick Horrow, in conjunction with promotional partner Northern Trust, reviews the business of the Kentucky Derby, as well as some of the most recent issues on “insurability of superstars” – inspired by Tiger Woods recent “adventure trip” to New Zealand.
Which is easier – picking a NFL rookie who will lift your team out of the cellar, or choosing that special horse who just might win the Kentucky Derby?
Just ask Bob McNair. Last Saturday, the Houston Texan owner stunned the sports world when he and Texan GM Charley Casserly chose North Carolina State Defensive End Mario Williams over Heisman Trophy winner Reggie Bush as the top pick of the 2006 NFL Draft.
This Saturday, McNair’s horse Bob and John is one of the favorites to win the 132nd Run for the Roses. The three-year-old won the Wood Memorial, one of the six major Kentucky Derby prep races, under trainer Bob Baffert, who has two other Derby contestants under his charge this year.
McNair has stated that he thinks luck plays more strongly into horse racing than player picking – but like most sports, it’s really all about walking that fine line of risk and reward.
This week we’ll look at investing in athletes (both human and equine); risk on and off the field; and the unfinished business of the 132nd Kentucky Derby.
Insuring Athletes Really Benefits…Teams
As evidenced by the player stats with which NFL Draft junkies were bombarded last week, NFL rookies are physically getting bigger every year. Their size is also creating more potential for serious injury and a career cut short. To protect themselves from not getting full service from players they sign to multimillion dollar contracts, NFL teams are now taking action and requiring high-profile picks to take out their own liability policies – with the team as beneficiary.
Last year, San Francisco 49er top pick Alex Smith purchased a policy that insures him for up to $9.32 million if he is injured or dies on or off the field, with the 49ers collecting. Eli Manning and last year’s number three pick Braylon Edwards have similar policies covering the New York Giants and Cleveland Browns respectively, for non-football- related death, illness, or injury. Such policies typically cost the players anywhere from $600,000 to $1 million in premiums; secondary policies specifically covering only non football related events are about one-third as much. The insurance is factored into their NFL contracts like every other negotiable issue.
Perhaps Tiger Woods should investigate a similar policy. The world’s Number One ranked golfer has been getting more headlines for his bungee jumping and stock car racing than he has for his putting lately, and such key sponsors as Buick, American Express, and Nike can’t be too happy.
While Woods insisted that his insurance was “taken care of,” and pointed out that fellow tour pro Kenny Perry is a drag racer, PGA Tour pros typically carry standard policies such as The Links Disability Insurance offered by Petersen International Underwriters (a Lloyds of London affiliate), which exclude “any practice or activities excluded by the Insured’s professional sports contact,” or, more pertinent, “self-destruction…while sane or insane; conditions of psychotic origin.” It could be argued that jumping 440 feet at the end of a giant rubber band could fall under one of the latter.
Also at issue is the huge loss to the sport should a top draw and role model like Woods die during a freak recreational accident. While a Links-type policy protects the athlete from loss of future earnings and loss of endorsements, it doesn’t guarantee continued interest in the tournaments he would miss.
