THE BOOK--Playing The Percentages In Baseball

Monday, September 17, 2007

Have heart surgery, will suspend

It seems that some NHL teams choose not to insure some of their player contracts. 

It makes sense.  This is basically called “self-insurance”.  Let’s say you are a bookseller like Amazon, and you can have an insurance company insure each book shipped for 2 cents on the dollar.  But, you come to realize, that less than 1 percent of all books don’t reach their destination.  What do you do?  Well, you don’t bother going with an insurance company, and if a book is lost, you simply resend from your inventory.  That’s self-insurance.  It works for companies with big volume and even pricing, as there’s little day-to-day risk.  With sports contracts, a limited number per team, and not all in the same range, it becomes dangerous to self-insure.  But, teams still do it.  And, as we see here, some teams don’t even bother self-insuring, but rather, suspend the player outright:

“There’s a clause explicitly in the contract that states the player must pass the physical and be fit to play,” Regier said. “It’s the collective bargaining agreement, and in no way is it personal to Teppo.  “I had the conversation with Teppo. He understands it’s business. It has a lot of implications on the salary side, on the cap side.”

Some teams have alot of class:

Saku Koivu was diagnosed with cancer four days before the start of training camp in 2001, but the Montreal Canadiens honored their captain’s $3.4 million salary while he underwent treatment and missed the first 79 games. Steve Konowalchuk learned during his preseason physical last summer he had long QT syndrome, a rare hereditary disorder of the heart’s electrical system. The veteran forward retired two weeks later, but the Colorado Avalanche paid his $1.9 million salary anyway and gave him a position in the front office. The Edmonton Oilers have declined to suspend winger Fernando Pisani since the team announced Sept. 4 he would be sidelined indefinitely with ulcerative colitis, a potentially debilitating intestinal disorder. Pisani is making $2.5 million.

In the NHL, I usually find NHL management tries to do the right thing.  Unlike in MLB, where they hold the young players feet over the fire to keep non-free agent costs low (forcing free agent costs high… way to go, geniuses), the NHL actually pays more than market would dictate for non-free agent players, simply because it’s the right thing to do, and it doesn’t put a disparity between arb and free agent players.  Some teams give more than the minimum for young players, even if they don’t have to.  And, I have to believe, that the Sabres probably have some understanding with Teppo that they’ll take care of him later, just so that they can have some maneuvering room with cap.  We’ll see in a few months if this is true.