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Yankees could receive insurance funds if Alex Rodriguez can’t play

Dec 4, 2012, 2:21 PM EDT

Alex Rodriguez AP

So, the best thing A-Rod can do for the Yankees now is not play?

CBSSports.com’s Jon Heyman reports that the Yankees have insurance on Alex Rodriguez‘s contract that would cover 75-80 percent of his salary if he proves unable to play due to injuries.

Rodriguez is currently expected to miss 4-6 months following hip surgery in January, potentially leaving him sidelined until June or July.

The way insurance on baseball contracts typically works is that it doesn’t kick in unless a player misses the entire season. Whether that’s the case here is unknown, but it’s a pretty good case there won’t be any immediate windfall for the team.

Rodriguez is signed for five more seasons at a total of $114 million. If his body continues to break down, then perhaps the Yankees will recover big portions of his salary in future years. It might also have luxury-tax ramifications. Technically, A-Rod’s salary would still count against the tax even if he were injured and insurance was covering it, but if the Yankees dropped him from the 40-man roster, it no longer would.

That’s what happened with disappointing import Kei Igawa before his contract expired. Since he was no longer on the 40-man, his salary didn’t figure in for tax purposes. However, the Yankees also couldn’t pay someone to take him — which would have had luxury tax ramifications — and they essentially held him hostage in the minors until his contract was up.

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