The Insurance “Conspiracy” Facing A-Rod and the Yankees

Alex Rodriguez is widely considered one of the greatest baseball players of his generation, but much of his career is filled with controversy. The most recent debate concerns A-Rod’s receipt of a hefty salary from the Yankees although he has not played a single game this year. Reportedly, the 12-time All Star is now grumbling that the Yankees are intent on keeping him off of the field so as to trigger insurance dollars. In December 2007, Rodriguez and the Yankees agreed to a 10-year, $275 million contract; at the time, the richest contract in baseball history. Following his underwhelming performance in the 2012 playoffs, and his off-season surgery which may not heal this year, A-Rod is reportedly questioning whether the Yankees are conspiring to keep him on the disabled list so as to trigger an insurance clause to cover his albatross-like contract.

Reportedly, A-Rod believes that the Yankees would prefer to dig itself out from under his massive contract.  So the theory goes, a possibility presented itself when A-Rod underwent hip surgery that very well could prevent him from playing at all in 2013.  Of particular import, Rodriguez’s contract is partially insured, meaning that if he misses the entire season due to injury, insurance will cover 80 percent of the $28 million he’s due this year ($86 million is due from 2014-2017). So, despite reports (from A-Rod’s own Twitter account) that he has been cleared to return to the Yankees’ line-up, A-Rod “thinks it’s all about the insurance” and that he has been effectively black-listed from joining the team this year. A-Rod makes a good point.

These reports are interesting from the perspective of a baseball fan and a member of the professional liability community.  Insurance products are designed to manage risk.  The Yankees took a major risk when they agreed to compensate A-Rod more than the Astros paid their entire team. However, to their credit, the Yankees managed that risk by insuring certain aspects of the contract.  Even the baseball purists realize that the sport is a business with associated risk, strategy, and unknowns that occur outside the lines. Like all businesses, those tasked with managing risk would be foolish not to consider the use of insurance products as a safety net and, as here, as a potential means to overcome a financial obstacle.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.


  1. Managing risks by way of insurance is not to be argued about, whether its a pharmaceutical company or a baseball club. I would be very surprised, however, if the insurance carrier would not go out of its way and leave no stone unturned to find out whether the Yankee organization would intenionally blacklist A-Rod. So, Mr. Rodirguez should be careful of what he is saying. Could be a backlash.

  2. Of course, the Yankees could also be thinking about the next few years of A-Rod’s contract, and are holding him out to allow for full recovery prior to 2014 season. Hard to say what’s happening behind the scenes, but I don’t think A-Rod is making a “good” point, he’s expressing agreement with one doctor’s medical opinion. The Yankees have their side to the story too, which they haven’t tweeted like A-Rod has.

  3. A-rod may be eager to prove that he is done and fly off into the sunset. He has had enough grief. I believe that was the reason for his tweet that he was cleared. It would only take a few feeble swings in Triple AAA for both sides to say that he is done, A Rod gets paid, the yankees collect on their big mistake and the world keeps spinning.

  4. Reportedly, A-Rod’s recovery may have been aided by a Florida physician using substances banned by MLB. If accurate, A-Rod faces a suspension without pay (one year if memory serves). While the Yankees’ “financial obstacle” is of their own making, the player (whose credibility leaves a lot to be desired) may have already mooted the point. Moreover, a prudent insurer will undertake a careful investigation before accepting liability, so A-Rod’s speculation is irrelevant.

Next ArticleWanna be Starting Something? Michael Jackson’s Publicist files Legal Mal. Suit