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The Red Sox don't need an insurance company; they ARE an insurance company

Feb 26, 2010, 8:26 AM EDT

Interesting story about Red Sox owner John Henry’s
approach to insurance on player contracts. Seems that back when he
owned the Marlins Henry had a really bad experience dealing with an
insurance company while trying to make a claim on an Alex Fernandez. 
So he’s now eschewing insurance on player contracts and is doing two
things. First:

The philosophy would seem to explain the Red Sox’ desire in some case
to protect themselves without the use of insurance when it came to some
free agent contracts, such as J.D. Drew, John Lackey, and what was
attempted in the case of Jason Bay. The the thinking is if there is
some problems with a pre-existing ailment in the latter years of the
contract than the financial structure would change.

Second:

According to Bay, the approached factored in two-fold when the Red Sox’
final offer was made. The outfielder said that not only did the Sox’
want to have the final year of the four-year contract proposal
contingent on health, but he also relayed that the Sox would agree to
get insurance but only if the player paid half (which would have come
out to a total of $2 million).

To
sum up: Henry’s bad experience with an insurance company has caused him
to (1) take a hard line on pre-existing conditions; and (2) demand
large deductibles. In light of this, it would seem that in the case of the Red Sox anything an insurance company could do would be redundant.

  1. Kyle - Feb 26, 2010 at 8:58 AM

    Nice.

  2. larry - Feb 26, 2010 at 9:30 AM

    Now that this policy is out in the open, lets see how it affects FA signings. Give Lackey credit for taking the deal, Give Bay credit for not taking the deal. Me, myself would never sign off on the deal lackey signed.

  3. Charles Gates - Feb 26, 2010 at 9:52 AM

    It’s a risk-reward tradeoff. The Bosox mitigate risk by having an injury related out clause. To counter this, the players will demand more money because the contract isn’t as ‘guaranteed.’

  4. Charles Gates - Feb 26, 2010 at 9:57 AM

    It’s a risk-reward tradeoff. The Bosox mitigate risk by having an injury related out clause. To counter this, the players will demand more money because the contract isn’t as ‘guaranteed.’

  5. Ryan - Feb 26, 2010 at 10:29 AM

    Based on what I’ve read, I think that this is probably going to become more prevalent. Now, the PA could always step in and say “F this,” but really, I think the players only have themselves to thank for this shift in payment structures – they can go yell at the Russ Ortiz and Mike Hamptons of the world who got paid outrageously for DL service. I just don’t see the owners returning to those mistakes, now that the purse strings have been tightened across the board. That is, assuming Mike Illich doesn’t have something to say about it first.

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