With the lofty contract expectations being proposed on SOSH and elsewhere for Shohei Ohtani's next signing, it raises huge issues for what sized contract would be insurable. Virtually all large MLB contracts are insured to some degree by the team. It may well prove to be a major factor in limiting the size of contracts.
Carlos Correa's initial proposed contract with SF never came to pass because it was deemed uninsurable due to prior injury history. Most likely, the same thing happened with the Mets contract proposal. Kershaw didn't pitch in the WBC because he couldn't get insurance against injury during the tournament and the Dodgers wouldn't take the chance and give him permissiontoplayuninsured.
The talk of contracts north of $700 million for Ohtani may not come to fruition unless the insurance companies are willing to insure that contract. A team typically pays about 10% of the contract for insurance. The policies generally don't cover 100% but more likely 80% of the annual contract. And as a rule, an insured contract policy is written for no longer than 5 years. So that leaves the second half of a 10 year contract potentially uninsured. And in Ohtani 's special case, should he sustain an injury that kept him from pitching but allowed him to DH, what would that mean from a policy payout point of view? Nobody pays $70 million + AAV for a DH!
Maybe there's a team that will take the risks of a huge contract and hope that Ohtani's rotator cuff and ulnar collateral ligament stand the rigors of time. But I strongly suspect that contract insurance limitations will come into play with the immense payouts that may come to reality.
Carlos Correa's initial proposed contract with SF never came to pass because it was deemed uninsurable due to prior injury history. Most likely, the same thing happened with the Mets contract proposal. Kershaw didn't pitch in the WBC because he couldn't get insurance against injury during the tournament and the Dodgers wouldn't take the chance and give him permissiontoplayuninsured.
The talk of contracts north of $700 million for Ohtani may not come to fruition unless the insurance companies are willing to insure that contract. A team typically pays about 10% of the contract for insurance. The policies generally don't cover 100% but more likely 80% of the annual contract. And as a rule, an insured contract policy is written for no longer than 5 years. So that leaves the second half of a 10 year contract potentially uninsured. And in Ohtani 's special case, should he sustain an injury that kept him from pitching but allowed him to DH, what would that mean from a policy payout point of view? Nobody pays $70 million + AAV for a DH!
Maybe there's a team that will take the risks of a huge contract and hope that Ohtani's rotator cuff and ulnar collateral ligament stand the rigors of time. But I strongly suspect that contract insurance limitations will come into play with the immense payouts that may come to reality.
