1) Because most policies are for only 3 years, it’s likely A-Rod’s insurance would reimburse the Yankees for ONLY that period of time. The Yankees would then be liable for 100% of the remaining years of the contract. For example, if the current 3-year period started in 2011, and included that season, and A-Rod never played another game again, then the most the Yankees would be reimbursed would be for 2013 (at 80%) which is the end of that 3-year period. The Yankees would then be responsible for ALL the remaining years of the contract. This of course assumes that they they had that 3-year limitation with A-Rod’s insurance. I think, though, it’s a safe assumption given the recent trends in the insurance industry.

2) The salary is STILL counted toward the luxury tax, whether the insurance or the team pays it. Again,

This is very good. It would be very bad if the Yankees get off the hook for the terrible decision they made in 2007 to extend him for so many years and so many dollars. It’s nice to know that the insurance may be very limited even if he doesn’t play another game in his life.

Here’s that fangraphs article: http://www.fangraphs.com/blogs/index.php/will-insurance-on-a-rods-contract-save-the-yankees/

oh and Donal – thanks for reading!

ARod could sit out 2013 due to the injury and the Yanks could recoop some of that $. He’d have to retire due to a medical condition for the Yanks to put in a claim, and even with that they still pay ARod and cannot guarantee they get the claim paid right away. So if they have $20m paid to ARod in 2014 lets just say, they are still paying that money regardless of the insurance claim.

What I do not know yet because it hasn’t happened is: let’s say he is done. does he have to sit on the 40 man like Belle did? And if so, are the yanks penalized under the luxury tax for his salary since they are still technically paying him? I think people ASSUME they are free of it but I do not think it’s as clear cut as that

My point on Reyes was just a ballpark. I’m merely suggesting an insurer COULD take issue with the potential for hamstring issues/leg issues in the future just as the insurer didn’t trust Brandon Webb’s arm. It’s just something to consider that’s all.

For example, when Webb wasn’t signed it appeared to be a failure by the GM at the time but that doesn’t mean AZ didn’t try to sign him. The same could be said for Reyes – and I’m not saying that IS what happened. I’m just suggesting if the Mets made an offer and then their insurer said “no we won’t cover a leg injury.” and then Mets pull an offer – we’d have people all over the Mets right? But we wouldn’t have the facts

In one of those links I provided, Steve Phillips even suggested that the Albert Belle contract and 9/11 changed the entire business of baseball contracts.

I’m not totally sure I grasp the 9/11 connection yet though to be honest

So you’re basically saying unless say A-Rod retires…the Yankees are screwed?? I mean, they will probably push to settle but still have to eat a giant piece of the contracted money. Man, for the first time all season, I’m glad David Wright didn’t get traded because he would so be a Yankee in 2014.