Cover. A showdown over player disability insurance nearly upends international soccer. Property/Casualty. by Kate Smith

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1 Property/Casualty Cover A showdown over player disability insurance nearly upends international soccer. by Kate Smith I t was an innocuous play, the type!rjen 2OBBEN HAD EXECUTED COUNTLESS TIMES IN HIS PROFES SIONAL SOCCER CAREER!S HE DRIBBLED TOWARD MIDFIELD THE $UTCH RIGHT WINGER TOOK ONE LONG STRIDE AND ATTEMPTED TO PASS THE 14 BEST S REV)%7 s!5'534 BALL DOWN THE LINE WITH HIS LEFT HEEL )T WAS A MANEUVER WELL WITHIN THE SKILL SET OF ONE OF THE WORLD S PREMIER PLAYERS 9ET AS HE COMPLETED THE PASS 2OBBEN PULLED UP AND BEGAN TO LIMP 4HERE HAD BEEN NO SHOULDER CHARGE NO SLIDE TACKLE NO CONTACT WHATSOEVER WHEN HE BACK HEELED THAT BALL 3TILL THE "AYERN -UNICH STAR HAD RIPPED A FIVE CENTIMETER HOLE IN HIS LEFT HAMSTRING 0LAYER INJURIES ARE PAR FOR THE COURSE FOR PROFESSIONAL SOCCER TEAMS LIKE "AYERN -UNICH "UT 2OBBEN

2 Me Key Points The Kickoff: Professional soccer clubs and FIFA were at odds over who should be liable for players on national team duty. Injury Time: The issue came to a head when a professional club was left to pay the multimillion-euro salary of a player who was sidelined for six months because he got injured while playing for his country s national team. The Final Score: FIFA took out a global insurance policy to cover the salaries of injured players. wasn t playing for the club when he got hurt. He was playing for his country s national team in a friendly match between the Netherlands lay the problem. PLAY ON: When Arjen Robben (in orange) injured his hamstring playing for the Netherlands national soccer team, it touched off a campaign for insurance reform in the sport. In May, FIFA announced it would take out a global insurance policy to cover the salaries of players injured competing for their national team. Coverage began this summer. AP Photo/Bas Czerwinski The injury ultimately sidelined though it occurred on the Netherlands watch, Bayern Munich was left to pay the multimillion-euro salary of a player it could not use while he was healing. Robben s footwork has land- sports pages throughout his career, but his misstep in that World Cup er boy to poster boy. Robben became the face of and case for insurance reform in the world s most popular sport. His injury and the subsequent handling of it was a rallying point for clubs and brought to a head who should be financially responsible for players while they are on national duty. That conflict finally has been international soccer entered into a season of insurance reform as the the way athletes and clubs are pro- tion, the regulatory body of international soccer, announced it would take out a global insurance policy are injured while competing for national teams. This is a major breakthrough, Michele Centenaro, general secre- tion, said. It s a landmark decision. sate professional football clubs up to to offset the salary of a player who BEST S REV 15

3 Property/Casualty Salary Snapshot The top soccer players in the world score big paychecks. Here s a list of the sport s highest earners based on their 2011 base salaries: ( million) Player Club Nationality Salary Cristiano Ronaldo Real Madrid Portugal 12.0 Lionel Messi FC Barcelona Argentina 10.5 Fernando Torres Chelsea Spain 10.0 Yaya Toure Manchester City Ivory Coast 10.0 Wayne Rooney Manchester United England 9.5 Ricardo Kaka Real Madrid Brazil 9.0 Zlatan Ibrahimovic AC Milan Sweden 9.0 Emmanuel Adebayor Real Madrid Togo 8.5 Carlos Tevez Manchester City Argentina 8.5 Samuel Eto o* Internazionale Cameroon 8.0 Franck Ribery Bayern Munich France 8.0 John Terry Chelsea England 7.5 Frank Lampard Chelsea England 7.5 Steven Gerard Liverpool England 7.5 Xavi Hernandez FC Barcelona Spain 7.5 Andres Iniesta FC Barcelona Spain 7.0 David Villa FC Barcelona Spain 7.0 Daniel Alves FC Barcelona Brazil 7.0 Edin Dzeko Manchester City Bosnia 6.5 Rio Ferdinand Manchester United England 6.5 Kolo Toure Manchester City Ivory Coast 6.5 Mario Balotelli Manchester City Italy 6.5 Ashley Cole Chelsea England 6.5 Glenn Johnson Liverpool England 6.5 *Since these rankings were released, Samuel Eto o has signed a contract with Russian club Anzhi Makhachkala that is reported to be worth 20 million per season. Source: Futebol Finance is injured while competing for his national association. The program provides cover for a temporary total disablement that is caused by an accident and lasts more The CPP s maximum payout of 7.5 million per footballer per accident is calculated on a daily rate of up to able for a maximum of 365 days. Payouts are based on the player s ance fees and the like. ance and Munich Reinsurance. extensions were added to include European national teams this past which began in July and continue The CPP will last through Dec. gate limit of million per annum thereafter. In announcing the program at member associations. statement. The discontent between erful professional clubs in the boiling point last winter. points of contention. How It s Played Soccer is structured such that elite players often compete for two national team. Players are employed by and compete for pro clubs (for leagues around the world. Many representing their native country in international events such as the liable for national team players has been a source of conflict between sion between clubs and national was a feeling among clubs that the existing system was lopsided. burden for a player has fallen on ers training or treatment while they are gone. Yet the clubs have remained fully responsibility for their players health care coverage and compensation. the relationship between clubs and when a player returned injured from national team duty and was unable to play for his club. is perfectly fine and accepted. But continuing to pay the salary in full when they couldn t use the player and sometimes they also were obliged to replace the player. 16 BEST S REV

4 So there was a sort of triple effect. It was felt that, at least, this is the bare minimum to have an insurance policy where the moment he goes to a national team, he is fully covered for salary. David Partner, an accident and health specialist for London-based broker Miller Insurance Services, said clubs often insure a player s transfer value the fee paid to the player s previous team but are unlikely to insure all salaries. The top five players are likely and 75 million in transfer value, in say the top five teams in the league, he said. So they re going to look to insure those guys, and they will take a hit on the guys who are worth only two or three million. They re more likely to take the gamble on lower value players because insurance is more expensive for a footballer than for individuals in other industries, for example white collar workers. Other Coverage While insuring a player s salary is at the discretion of each club, providing health coverage for released players is not. In its Regulations on the Status and Transfer of Players, ity on the clubs, stating: The club with which the player concerned is registered shall be responsible for his insurance cover against illness and accident during the entire period of his release. This cover must also extend to any injuries sustained by the player during the international match(es) for which he was released. Though national associations have not been obligated to provide 18 BEST S REV The introduction of this insurance has relaxed everybody much more. The clubs are satisfied with this agreement. Michele Centenaro, The European Club Association insurance, many have offered some level as a gesture of good will. That coverage has varied greatly, however. Italy, for example, fully covers all medical expenses related to an injury suffered while on national duty, but it does not cover the player s salary while he is recuperating. Togo covers health insurance for and limits that coverage to on-field injuries. Ireland, meanwhile, offers neither health coverage nor salary compensation in any instance. England, however, has been hailed as the ideal. In a study released last summer, the Swiss- Sports Studies suggested clubs, best practice model. We have never been obliged spokesman Scott Field said. We ensure all provisions are in place to insure all of our players. To that extent, England offers full health cover and salary compensation for any player injured injured player returns to his club, expenses while he recuperates. In this country, the national team takes an insurance on the player for the period during which they are on national team duty, for the value of each player, said Partner, whose firm does a large amount of sports business. The national team is taking the player. It s possible that the player could miss half of a season because he got injured on national team duty, but the club team is still paying the player. So the national team has a duty to make sure the player s wages are covered. Otherwise the club is paying the player for an injury he sustained while playing for another team, which would be unfair. That was the argument Bayern Munich made when Robben was ing Robben 5 million per year highest paid player in the world at the time, and yet he was sitting on the sidelines. The circumstances immediately following Robben s injury added to the discord. Rather than being evaluated by Bayern Munich s medical staff, the Dutchman was evaluated by a doctor in his home country, who after a week of therapy cleared Robben helped the Netherlands July, but when it came to Bayern Munich s season he was of little help. During preseason training in up. Bayern Munich s club doctor examined the injury and found the hamstring was torn. In what became a well-publicized case, Bayern Munich accused the Dutch national association of misdiagnosing Robben and allowing him to play injured. The tension escalated Clubs often insure a player s transfer value (the fee paid to the player s previous team), but are unlikely to insure all salaries. David Partner, Miller Insurance Services

5 Property/Casualty Karl-Heinz Rummenigge threatened to sue the Dutch for the salary costs it incurred during the six months it took Robben to recuperate. It became a rallying point for clubs. The frustration had been there for a long time, Centenaro said, but that case made the headlines in the press and really clearly made the was something wrong. High Payrolls Rummenigge, campaigned for insurance reform. More than any other est in restructuring the system. The organization includes the most wellknown teams and some of the highest-paid athletes in the world. English Premier League), Real Madrid, the highest payrolls in the sport. When Forbes released its list of the Beckham of Major League Soccer s Though Beckham grossed more than any other player, pulling in $46 million a year, the bulk of his earnings came off the pitch through endorsement deals. The 37-year-old English striker earned just $5 mil- counterparts. company that tracks the economics of soccer worldwide, compiles an annual list of the sport s top-paid athletes based on fixed club salary. In the most recent rankings, which Portugal s Cristiano Ronaldo, a forward for Real Madrid, topped Big Spenders Of the top 11 highest-paying franchises in the world, eight are soccer clubs. Here s a look at the biggest spenders in all of sports, based on average player salary. (US$ million) Team Sport League Average Salary FC Barcelona Soccer La Liga 8.7 Real Madrid Soccer La Liga 7.8 Manchester City Soccer English Premier League 7.4 Chelsea Soccer English Premier League 6.8 Los Angeles Lakers Basketball NBA 6.3 New York Yankees Baseball MLB 6.2 Milan Soccer Series A 6.1 Bayern Munich Soccer Bundesliga 5.9 Philadelphia Phillies Baseball MLB 5.8 Internazionale Soccer Series A 5.7 Manchester United Soccer English Premier League 5.5 Source: Sporting Intelligence the list with a salary of per year. Lionel Messi, the super- home nando Torres, a striker for reigning Champions League titlist Chelsea, ter City, both earned brought home ary last year. With such hefty payrolls, clubs time a player steps on the pitch. pitch for another team and gets injured, it can become problematic, as it did with Robben. This wasn t just a problem for clubs, Centenaro said of the old system. This put the national associations in a difficult situation because they were confronted with clubs that were complaining that they didn t do their work properly or complaining that they were not compensated back for this big loss. So there was a degree of tension. A Solution Last spring, with the Robben case still fresh in its memory, the about the prospect of insurance national teams for games listed on dar it felt encroached on players club duties and with the issue of join a March meeting regarding the release of players for national team meeting prompted speculation announced that clubs must release players for the London Olympics, which were not listed on the international match calendar and which announced plans for a global insurance policy. BEST S REV 19

6 Property/Casualty The policy would be voted on at its May conference in Budapest. On the closing day of its annual Protection Programme. cooperation for the benefit of the entire football family in a spirit of at $75 million. But with that insurance policy, it also ensured a new level of harmony in the sport. The introduction of this insurance has relaxed everybody much The clubs are satisfied with are pretty satisfied with this agreement. This is a huge success. This always seemed to be something unreachable, but in fact, it came about. This new agreement is really a milestone. BR Protecting Their (Financial) Goal D Soccer s most iconic figure may not have had the salary to justify such a mammoth personal policy, but earns more off the field than he does on it. The most recognizable player in the world s most popu- - sung and Burger King, as well and a line of body wear available through retailer H&M. Last year soccer player and eighth-highest-paid athlete in the world, according to Forbes. It s not just the coverage for your salary; now you also have multimillion-dollar endorsements, said Bob a year, maybe insurance is not that big of an issue. But Barcelona s Lionel Messi came close last year with vate insurance policies. David Partner, an accident and health specialist at Miller Insurance Services in London, said players have become increasingly savvy about protecting their future. on themselves because they ve seen their colleagues get injured, and they realize now more than ever, the importance of having some sort of insurance in place 20 BEST S REV Bob Allen game, he said. These guys who have nothing else to do, because football has been their life, then need some income to maintain the standard of living they ve been used to for the past however many years. eight are soccer clubs. The average salary in the Eng- on average. Because contracts are often guaranteed, player injuries can directly impact a club s or busi- Andrew Duxbury sors, therefore, also have a finan- ing coverage for the London Olympics and is one to cover the salaries of players injured on national team duty, said the overlap of policies can create a complex web for insurers. to any one team, said Duxbury, contingency under- Similarly, for very high-profile individuals, they may effectively be named on a number of different any one time and what your financial exposure is to that, he said. It s quite an administrative headache, but it s exposure you are assuming. What you don t want is a very high profile player suffering a career-ending injury and you realize you have four policies that you were participating on and a size of financial loss that you weren t expecting.