Do professional sports teams around the world usually insure their players against injury so that if they lose the player's services, their salary is at least partially covered?

If there is no insurance, it would seem that purchasing (as in football) or trading for (as in North American sports) a high-value player is an extremely risky - even if necessary - investment because of the large salaries involved. A single injury can mean the effective loss of millions of dollars due to the player not being available.


It does happen, one famous example is the following: Real Madrid insured C. Ronaldo's legs for £90M ($144M) in his first (or second) season with the team, after a small injury during the pre-season preparations.

Also note that national football associations usually (at least in Europe) have insurance policies with clubs, in case a particular player gets injured in team national team and is unavailable for his club. Here's a very interesting article on the matter from Wall Street Journal: "Who Pays When a Soccer Player Is Hurt?"

It gets even more peculiar than that, NFL star Troy Polamalu decided to insure his hair for $1M back in 2010.

  • Good answer with respect to Cristiano Ronaldo & linked article. The Troy Polamalu part, however, is not relevant. – SigueSigueBen Aug 20 '12 at 15:09
  • @SigueSigueBen it tangentially is, Troy's hair is actually the source of several marketing contracts that he has. – wax eagle Aug 20 '12 at 15:22
  • @waxeagle Exactly. My question is about players getting injured and not being able to play. – SigueSigueBen Aug 20 '12 at 15:35
  • @SigueSigueBen I realize that the Polamalu case is not directly relevant to the question you have asked. On the other hand I find it a bit humorous that a person's legs are insured against injury while there are many other reasons why he may not be able to play (a head injury, or a digestive issue for instance). Amusing and peculiar it may be but some people take it as far as to purchase insurance for their hair. I just wanted to demonstrate that with the note about Polamalu. – posdef Aug 20 '12 at 15:56
  • @posdef Sure, no need to remove it. I just wanted to be clear that this wasn't what I was asking about. – SigueSigueBen Aug 20 '12 at 15:59

Some teams do insure certain contracts, however many contracts are too risky for any insurance writer to issue a policy (A great example is Amare Stoudamire's contract with the Knicks).

The issue that necessitates player insurance in the first place is the idea of guaranteed contracts. These are contracts that require the team to pay out the entire value (or some major percentage) of the contract no matter the status of the player. If the player is hurt or is cut by the team they must pay all of the guaranteed money to the player.

However different leagues have different types of contracts and different levels of guarantees based on (At least in the US) how their collective bargaining agreements are structured. These are the agreements that allow the leagues to exist and play games in the US. In the four major sports here are how contracts work:

  • MLB: Most every free agent contract is guaranteed. Initial contracts are not guaranteed (unless an extension is done) nor are arbitration settlements.

  • NBA: Contracts are mostly guaranteed, although not all are and some contracts are only partially guaranteed.

  • NHL: Not entirely sure about rookie contracts, but free agent contracts are for the most part guaranteed.

  • NFL: Only the signing bonus and first couple of years are guaranteed on NFL contracts (and depending on the contract, those first years may not even be). If a player is cut during the off season they do not have to pay the remainder of the contract (once a certain date hits the player's contract is guaranteed for that league year).

Now to the question of insurance. Premiums for sports players can be very high, as much as "10% of the annual value of the contract." But may be worth it in the case of very high value players. They also typically do not cover areas of previous injury.

So suffice to say that yes, major sports teams do take out insurance for high value players, but those policies are very expensive and can be of limited use if a player aggravates an old injury. And players with extensive injury histories are basically uncoverable.

  • Does this mean that in the past, clubs had the right to annul contracts when a player was injured or does it mean that in the past all contracts were "guaranteeed" for their duration? – SigueSigueBen Aug 20 '12 at 15:12
  • It depends on the league and the current collective bargaining agreement in place for that league. In baseball all free agent contracts are guaranteed for the duration. In the NFL they are only guaranteed for the current league year. "guaranteed" means that the club is on the hook for the money regardless of performance or injury. – wax eagle Aug 20 '12 at 15:14
  • In my comment, I was asking about how the concept of a contract being "guaranteed" was handled in the past (i.e. before the implementation of these collective bargaining agreements). – SigueSigueBen Aug 20 '12 at 15:37
  • MLB and NFL made little change to these rules in their recent CBAs, not sure about prior to this. – wax eagle Aug 20 '12 at 15:49

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