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Star players in search of mega-deals in the upcoming major league sports drafts really don’t want to get injured – it could cost them millions of dollars.
With the NBA and MLB drafts coming up next month, potential high school and college draftees will likely be looking for some protection – if they get injured, they could lose big money.
That’s where insurance comes in to play.
Colin Caldwell, executive vice president at Midlands Management, said most potential sports draftees – particularly those expected to get drafted early – will take out insurance policies. Midlands principally focuses on NFL draftees.
“We see a lot of Division 1 athletes who would be projected as first-rounders, and I’m talking football specifically,” he said. “We look at it as a great opportunity for them to protect themselves. We offer them 24hr off-field coverage.
“If you’re a top-five projected pick, you could buy coverage probably up to $10 million. If you’re closer to top-25, the maximum you can get is $25 million.”
The coverage Midlands offers, through Lloyd’s on the London market, is for injury cover from the time a player signs on to the draft until they sign their professional contract. A $10 million coverage would cost about $60,000 up front, he said.
Other drafts take insurance too, and the offerings can differ.
As was documented in the media last month, Michigan tight-end Jake Butt took out draft protection insurance ahead of the NFL draft. Butt then tore knee ligaments in his final game of the season and was drafted many places below where he might otherwise have expected to go.
According to CBS Sports, Butt was to receive as much as $500,000 due to his lower draft placing. The policy, a source told CBS, kicked in about half-way through the third round of selections and Butt received $10,000 for every place below that he was selected. He eventually went to the Denver Broncos, picked 145th overall.
Corey Cash, sports and entertainment program director at Safehold Special Risks, which writes insurance for large sporting events, said draft protection can be a big deal for players.
Speaking with knowledge about a draft insurance deal – about draft protection for young players generally – Cash spoke about Buffalo Sabres hockey star Jack Eichel.
“There was a guy from Boston University [in 2015] who was a huge draft pick in the NHL: Jack Eichel,” he explained. “It was him and Connor McDavid who were the big people who were going to be drafted. And this kid at BU, he went out and bought a significant policy, because if he got hurt and blew out his knee his freshman year, his draft stock would go down.
“I mean, this is a kid that was going to sign for a [big money] signing bonus. And that’s just something these athletes can do to say, hey, if I go blow my knee or do this, this, or this, I want to make sure that I’m compensated for any revenue I’m going to lose as a result of this injury. That’s just one example of how a player, looking out for themselves, can procure a policy.”
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