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Wednesday, March 12
NBA extends its disability insurance three more years

By Darren Rovell

Grant Hill, the Orlando Magic's often-injured forward, has collected most of his $32.6 million salary over the past three seasons while sitting on the bench. He has played in only 47 games since signing a seven-year, $93 million contract before the 2000-01 season, and the nagging stress fracture in his left ankle has him on the injured list yet again for the remainder of this season.

Grant Hill
Grant Hill has been hobbled for three years by an ankle injury he suffered during the 2000 playoffs, when he was a Detroit Piston.
All of which makes Hill the poster child for supporters of the NBA's slightly controversial extension of a costly disability insurance policy.

By season's end, the Magic will have collected at least $15 million from games missed by Hill over the three seasons. With the possibility that he could undergo a fourth operation on his injured ankle, the team would continue to recoup 80 percent of Hill's salary for each game he misses should he continue to be sidelined into next season.

Other teams have cashed in on the policy as well.

The New York Knicks will collect $5.4 million because Antonio McDyess was sidelined for the entire season, and the Minnesota Timberwolves will recover approximately $4.5 million of Terrell Brandon's $10.2 million salary this season. Brandon has missed the entire season with a knee injury and reportedly is contemplating retirement at the end of the season.

Though the insurance industry is still knee-buckled by claims related to the Sept. 11 terrorist attacks, the NBA's insurance providers have continued to pay off on the mounting claims by professional sports teams who have watched their high-priced players go down with injury in recent seasons. When NBA owners feared they could find themselves without player disability insurance after their current five-year deal with Trustmark Insurance expires after the 2003-04 season, they acted quickly in January to extend the policy for another three years.

But it came at the price of higher insurance premiums, something that does not sit well with some NBA owners.

"This is no longer really about insurance, but rather a financial management tool, and we can get better returns by either self-insuring or revamping how we pay for or replace players who are no longer able to play," Dallas Mavericks owner Mark Cuban said. The Mavericks were one of several teams that voted against extending the insurance coverage if it came with higher premiums.

Although the vast majority of player contracts are guaranteed, approximately 10 percent are not. Guaranteed contracts are not mandated under the league's collective bargaining agreement.

Soothing the pain
Breakdown of Grant Hill's seven-year, $93 million contract with the Magic, and how much the Magic receive in insurance coverage for games Hill may miss due to his ankle injury.
Season Salary Coverage
2000-01  $9,660,000  $94,243
2001-02 $10,865,250 $106,002
2002-03 $12,072,500 $117,780
2003-04 $13,279,750 $129,559
2004-05** $14,487,000 $141,336
2005-06 $15,694,250 $153,115
2006-07*** $16,901,500 $164,892
* -- Hill will have earned $32,597,750 through the end of this season
** -- Hill can exercise option to end contract
*** -- Hill can exercise option to extend contract
The Atlanta Hawks also voted against the extension, but team president Stan Kasten declined to elaborate on his team's dissent.

"The deal is not going to be the absolute best for everyone," NBA deputy commissioner Russ Granik said. "But overall, as a group of teams, this was determined to be the best option. With the extension, if somehow the market dries up over the next couple of years, all the teams will know that they will have their players covered."

Before each season, Trustmark will calculate the past season's claims as part of a formula that will determine the rate for the following season, said Dave Meyer, who is responsible for the company's program. Each team must insure its top five money earners, down from six under the previous agreement.

Disability insurance kicks in after an insured athlete has missed 41 consecutive games from the same injury and then pays the team 80 percent of the player's salary for each additional game he misses. The coverage continues for missed games until the athlete returns to play in 41 consecutive games.

That has allowed Hill to make several attempts to return to action over the past two seasons, playing 14 games last season and another 29 games this season, while the Magic continued to collect on games that he sat out.

Magic general manager John Gabriel declined to discuss the specifics of collecting the NBA's disabled player insurance policy, and Meyer and Granik declined to reveal what teams pay in premiums.

The NHL also has a disability insurance program that is purchased by the league's teams. Major League Baseball -- whose teams currently purchase insurance individually -- has hired the NBA's long-time broker, BWD Group, and another firm to seek a league-wide disability insurance policy, said Marc Blumencranz, executive vice president of BWD Group.

As for the Magic, the true financial relief might be clearing some cap room should Hill be unsuccessful at another return. Orlando will have to wait for that, too, as the earliest his salary won't count against the cap would be mid-January 2005 -- two years from his last game, if he never plays again.

Darren Rovell, who covers sports business for, can be reached at

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