Playing it safe -- at a price
With so much money at stake, elite high school athletes are starting to follow the college model of taking out personal-risk insurance. But is it worth it?
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<TABLE cellSpacing=0 cellPadding=1 width="100%" border=0><TBODY><TR><TD bgColor=#cccccc><TABLE cellSpacing=0 cellPadding=10 width="100%" border=0><TBODY><TR><TD bgColor=#eeeeee>Related content
• Playing it safe -- at a price
• NCAA offers insurance program
• Oden update
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<TABLE cellSpacing=0 cellPadding=1 width="100%" border=0><TBODY><TR><TD bgColor=#cccccc><TABLE cellSpacing=0 cellPadding=10 width="100%" border=0><TBODY><TR><TD bgColor=#eeeeee>GAME OF HIS LIFE
This report is part of an occasional series on Lawrence North basketball star Greg Oden and the challenges facing today's elite young athletes. Previous stories:
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Nov. 14, 2004: Summer season has become an important proving ground
•
August 1: Shoe companies use teens to drive $2.5-billion industry
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June 13: Oden expected to be top pick in 2006 NBA draft
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July 23: Picking college over NBA backfires
BETTER BE CAREFUL . . .
The official Lloyd's of London insurance form for athletes includes many "exclusions," in which the insurance company wouldn't have to pay on the policy. They include, in the company vernacular:
• Intentionally self-inflicted injuries.
• Suicide while sane; attempted suicide while sane or insane.
• Accident occurring while the insured is in, or on, or boarding or alighting from any aircraft a) in the capacity of pilot or crew member, flight instructor or student pilot; and b) being used for fire fighting, pipe or power line inspection, aerial photography or exploration.
• Commission of or attempt to commit a felonious crime which results in a conviction of the insured.
• The insured being under the influence of an intoxicant or any drugs or narcotics not legally available unless used as prescribed by a physician for a medical condition other than drug addiction.
• Riding or driving in any kind of motorized race.
• Participating in or practicing any occupation/sport, other than the stated occupation/sport, for pay in that occupation or as a member of a professional team or professional association or professional league.
• Death of the insured.
• As Act of Force or Violence, which involves the use, release or escape of pathogenic or poisonous biological or chemical materials or of nuclear materials, or which involves nuclear reaction or radiation or radioactive contamination. </TD></TR></TBODY></TABLE></TD></TR></TBODY></TABLE>
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By Jeff Rabjohns
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[email protected]
February 1, 2005
Zoe Oden worries every time her son takes the basketball court.
She sees the pushes, the shoves, the undercuts, any of which could lead to an injury, potentially career-ending.
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Greg Oden
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"There have been times when it's been several people beating on him," she said. "Someone said to me, 'I know you've got to ice him down when he gets home.'"
While health is a mom's main concern, there is an underlying -- and immense -- financial issue as well.
Should Greg Oden decide to skip college, it's widely projected Lawrence North's 7-foot junior center would be the top pick in the 2006 NBA draft. That would mean a guaranteed three-year contract worth about $15 million with an option for a fourth year that would push the value to the $20 million range. If he's drafted anywhere in the first round, he would receive a guaranteed three-year contract worth several million dollars.
If Oden is permanently injured in high school, those millions are gone for good. Unless . . .
Welcome to a burgeoning yet little-publicized frontier in big-time amateur sports: insurance.
The NCAA has been offering insurance to elite athletes for 15 years, but it was a little-used program until January 2003, when University of Miami football player Willis McGahee suffered a horrific knee injury in the national title game. After seeing such a bright future apparently felled with one blow (though McGahee eventually recovered), interest in the NCAA insurance program spiked; now about 150 athletes a year secure policies, the heavy majority in football and men's basketball.
And interest has seeped into high schools as well.
According to one of the nation's top experts in special-risk insurance, dozens of prep athletes look into policies each year, and a handful buy them -- mostly boys basketball players. As more and more high school basketball players jump straight to the pros -- a record eight were drafted in the first round in June -- the interest figures to increase.
"It's certainly becoming more common now with high school players entering the draft," said Michael Thompson, a special risks underwriter with American Specialty Underwriters International, one of a small number of companies that handles such policies.
"Kids are buying coverage to protect their first NBA contract."
The premiums for such policies range from $6,000 to $17,000 per million dollars of insurance, and the highest amount a prep player could get is about $5 million, insurance industry insiders say.
After that, much about personal-risk insurance remains murky. Employees at insurance companies speak only in generalities, pointing to confidentiality clauses that keep them from identifying clients. A handful of coaches of top prep basketball players around the country contacted either said they didn't know if their players had insurance or didn't want to discuss the topic.
It's unclear how old an athlete must be to acquire insurance. Zoe Oden said she's been looking into it since Greg was a freshman, but was told by Lawrence North administrators and coaches that policies were available only to high school seniors. Lawrence North athletic director Grant Nesbit said the school had preliminary discussions this summer with people in the insurance industry who indicated policies were available to prep seniors.
Jennifer McRoberts, mother of Carmel forward Josh McRoberts, a Duke recruit considered one of the top players in the senior class, said the family looked into getting insurance but was told it wasn't available to prep players.
Yet Thompson said select juniors could get policies, that it was more a question of potential talent than age. And LeBron James' agent said James (last year's NBA Rookie of the Year) had insurance as a high school junior.
How it's paid for also raises questions. The NCAA has a special program that provides loans to pay for premiums, but no such mechanism exists for high school athletes. Thompson said he knows of cases where banks have lent money to a prep player's family with the only collateral being future earnings. Blake Ress, head of the Indiana High School Athletic Association, said that could void a player's eligibility.
"The issue is in the form of who's paying and why," Ress said. "A family can do it, but I don't think outside entities can buy insurance. Otherwise, how is that any different from payment for future benefits, almost like signing a contract?"
One element that's clear: Interest is growing.
"For a million dollars in insurance, that's a wise investment," said Scott Grooms, a former Notre Dame quarterback who specializes in insuring athletes.
Said Ryan Blake, assistant director of scouting for the NBA: "If they can get it, why not?"
Others aren't so sure.
Lost opportunity
Western Kentucky's Chris Marcus is the poster child for a guaranteed NBA contract disappearing due to injury.
The 7-1, 285-pound center averaged 16.7 points and 12.1 rebounds his second season in college, 2000-01, and was projected by some as a top-five draft pick. Instead of leaving for the NBA, he decided to return to college, a decision lauded by many college basketball commentators.
But Marcus suffered a severe ankle injury five games into his junior season, tried to return, and later left school after it was determined more surgery was needed. He was never drafted and isn't currently on an NBA roster. He's been in and out of camp with the Denver Nuggets.
Marcus didn't have an insurance policy, but it isn't at all clear that he could have collected even if he did. The policies are generally for injuries that end a career, not ones that cause a player's draft status to drop. A blank policy from Lloyd's of London, which underwrites most of the special-risk insurance, states, "Total disability or totally disabled means solely and directly as a result of injury or sickness the insured is certified by a physician as being wholly and continuously prevented from engaging in the Occupation/Sport stated. . . ."
With so many medical advances, it's rare for an injury to be so severe that it prevents an athlete from ever playing again. As bad as McGahee's injury was, he's now playing with the Buffalo Bills; he slid down in the draft, which meant a smaller initial contract. If a player collected insurance, then returned to his sport, he would have to pay back the insurance collected.
Aaron Goodwin, James' agent, said he would not advise a prep star to take out a policy. Indeed, there is no record of a player collecting on a special-risk policy bought in high school. Only four college players have collected on their policies, all in football, Thompson said.
The highest payout on a policy involving a professional athlete is believed to be $36 million in the case of Baltimore Orioles outfielder Albert Belle.
"At 17, I can't think of an injury that would be career-ending," Goodwin said. "If LeBron tears a medial collateral ligament, it's not career-ending, so the policy isn't going to pay out. I think a lot of kids and families are being ripped off and end up paying $30,000 for a policy they don't need."
Thompson said insurance companies also view it as a risk, which is why no company actively markets personal-risk insurance.
"When you have that big of a claim," Thompson said, pointing to Belle's $36 million payout, "it's hard to produce premiums to make up that loss, even if you only have a few like that per year."
To insure or not
For his part, Oden said he's simply working on his skills, trying not to pay attention to off-court matters.
When the topic of insurance came up in a recent conversation, he grinned and shook his head as he sat on the bleachers at his high school.
"It's probably something I wouldn't know anything about. I'm just out there playing," he said, calling the rough play he faces something that "comes with the territory. I've got to play my game and get stronger. The stronger (opponents) get, the stronger I've got to get."
Oden's AAU coach, Mike Conley, has some knowledge of the process at the collegiate level. Conley said he bought insurance for his brother, Steven Conley, prior to Steven's senior season at Arkansas. Steven had a school-record 14 sacks and was a third-round draft pick of the Pittsburgh Steelers in 1996 as a linebacker.
"Going into the year you're picked to be drafted would be a good time to think about it," Conley said.
Lawrence North coach Jack Keefer said he's never heard of a high school player getting insurance. On the other hand, no Indiana high school basketball player has been drafted straight into the NBA.
"I think he'd be wise to get it," Nesbit said. "It's expensive, but certainly worth it when you're talking about the potential income that could be made."
Call Star reporter Jeff Rabjohns at (317) 444-6183.
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