Many NHL team officials, hockey agents and others who depend on the NHL for their livelihood have been trying unsuccessfully to buy "strike insurance" for the last several months, say hockey sources and top sports insurers.
The perceived likelihood of a work stoppage when the NHL collective-bargaining agreement expires next year, coupled with the insurance industry's memory of massive losses on strike insurance during Major League Baseball's 1981 strike, has eliminated any market for NHL businesses, insurers said.
"Right now, the sports strike insurance market is a pariah no one wants to get involved with," said Michael Wright, executive vice president for the sports and entertainment practice of Willis Group, an insurance brokerage firm.
Many people in the industry believe that, to get a salary structure it's willing to live with, the NHL will have to lock out its players when their labor deal ends on Sept. 15, 2004.
Mark Idelson, senior vice president of ASU International, which provides insurance to athletes and teams, said he has been getting calls for three years from hockey agents, NHL teams and even NHL sponsors about insurance to cover losses from an NHL work stoppage. But the number of calls has picked up recently, he said, adding he has had about 10 calls in the last month.
"I had one today, as a matter of fact, on the team side," Idelson said last week. "Everyone is expecting they are going to lose a season."
Agents who represent NHL players echoed that sentiment, and many were bracing last week for a flooded free-agent player market this summer as teams try to dump payroll. The free agency period commences July 1.
Marc Blumencranz, executive vice president of BWD Group, an insurance broker specializing in sports and entertainment that counts the NHL as one of its clients, said he also has been approached about strike insurance for an NHL work stoppage.
"Many different sources have inquired over the last year or so," he said. "I can tell you pretty safely there really isn't a market for that kind of insurance."
The market, insurers say, was wiped out after Major League Baseball collected on a $50 million strike insurance policy brokered through Lloyd's of London in 1981. That 50-day strike was settled four days before the strike insurance policy was set to expire. Insurers said there has not been any strike insurance available to leagues since then.
"What happened was MLB purchased the insurance and it was good for them and terrible for the insurance industry," said Pete Eshelman, CEO of American Specialty, which provides risk management and insurance to the sports and entertainment industry. "As soon as their coverage ran out, they settled the labor dispute."
As a result of that incident, the insurance industry is unlikely to provide strike insurance to people or groups who can control whether there is a work stoppage, Eshelman said. There may, however, be a possibility that third parties, such as hotels used by traveling NHL players, could get such insurance, he said.
Insurers said that most of the calls they have been getting about strike insurance have been from teams and agents, but a few have been from sponsors and other businesses not directly involved in the league.
Insurer Wright believes even third parties might have a tough time getting strike insurance. Wright tried to get such insurance about two years ago for a facility concessionaire that did business in MLB stadiums. "I made half a dozen calls and none of them panned out," he said.
Jim Edgeworth, a Houston-based sports insurance broker who has worked for professional athletes and teams for 25 years, said that if an insurance company did issue such insurance, the premium could be more expensive than the coverage.
"If a contingency underwriter thinks there is a 95 percent chance there is going to be a work stoppage, he is going to charge 95 percent [of the coverage] plus fees and commission," he said.
Don Meehan, owner of Newport Sports, which represents more than 100 NHL players, said he looked into strike insurance about a year ago and talked to his insurance broker about it.
"They kind of guesstimated what the premium would be and that put an end to our discussion," he said.
