The Jets didn’t insure Aaron Rodgers, costing them cap savings. The Eagles and 49ers used insurance to help achieve contender status.
The CBA labels insurance proceeds as a “refund from the player,” which qualifies the amount as a cap credit for the club for the following season. In the simplest terms, if a player who eats up a significant portion of a club’s salary cap misses significant time with injury or illness, a club doesn’t have to take it as a total loss, but can recover space for the following year. Plus, insurance premium payments don’t count against the salary cap.
I was curious about how this works. If you’re interested in the business of the game this is an interesting read.
I understand that it’s not my money, but I’m struggling to understand why all teams don’t go crazy buying insurance.
There’s a hard cap each year ($255 million) and each team shares revenue from tv and merch (~$400 million).
For a 53 man roster, you could pay an extra $75 mil at the most to get several million in extra available cap space the following year. That could mean the difference in being able to upgrade a couple crucial positions and making a run at the Super Bowl.
Once again, it’s not my money, but if you wanted to win at all costs, this would be a pretty effective way to do it.
You got to wonder why these insurance companies are insuring some of these people. I mean they won’t insure house in Florida and California, but they’ll insure people that smash their heads into other people for a living?
It’s because the premiums are stupid high. The article mentioned somewhere in the neighborhood of $1m to $4m on insuring $22m of a contract.
Many of these owners are billionaires, too. They wouldn’t bother insuring if it weren’t for the salary cap. Being able to get that money off the cap is actually more important than getting the money back.
