Presented by:
Jimmy Lyznicki
Helen Chung
Lauren Hoye
Traci Kingdon


Introduction to pro sports’ employee benefits:

NFL

MLB

WNBA

NBA

Recap & comparison of benefits

Suggestions to improve benefits

Class activity




Serious disconnect between Player's Union (NFLPA) & retired players
Retired players receive $8 billion in revenue

Higher than all other sports, but worst retirement benefits
Former NFLPA Director Gene Upshaw says, “The bottom line is, I don't work for them. They don't hire me and they can't fire me. They can complain about me and have their opinion. But the active players have the vote. That’s who pays my salary.”



The NFL pays the Groom Law Group well to handle disability benefits

It is difficult to get needed disability benefits
 Andre Waters’ brain at age 45 looked like an 85 year olds
Pensions are the only means to live for many retired players

Taking pensions early drives down monthly payments

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
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

1959: First retirement plan
Early 1960‘s: Bert Bell Retirement Plan introduced

Enhanced retirement, disability, and related benefits to explayers
1993: NFL Player Supplemental Disability Plan established
1998: Introduction of $100,000 annuity benefit for 10-year veterans
2006-2007: Current Collective Bargaining Agreement (CBA) finalized

Introduced significant changes and reform to benefits
2010: Next CBA negotiation date


NFL contracts

Overall league minimum contracts based on years of service for
2009:
0 Seasons $310,000
1 Season
3 Seasons
7-9 Seasons
$386,000
$535,000
$745,000

NFL contracts are not guaranteed


401(k) program

$2 for $1 match

Maximum contribution is $22,000 in 2009

Vested after 1 season

Retirement Annuity

Players eligible after playing at least 10 years

Receive a lifetime annuity and other benefits


Pete Roselle Retirement Plan

Defined benefit plan

Retirement age is 55

3-year vesting period

Annual pension payments are between $3,000 and $5,640 for players retiring after 1981

Plan underfunded by $1.034 billion


Life Insurance - Maximum coverage is $800,000

Medical - Annual deductible of $400 per individual or $800 per family

Maximum out-of-pocket expenses - $1600

Variety of co-pays and co-insurance

Maximum lifetime benefits - $2,500,000

Covered only 5 years after retirement at no cost





Main source of public outrage
NFL injury rate is 8 times higher than other sports
Pre-2006, if disabled under Social Security, not automatically disabled under NFL disability
Previously, there was a very expensive and long legal process to get approved disability through
NFLPA

Most retirees cannot afford this process


Gridiron Greats

Co-developed by Mike Ditka

Non-stock, non-profit corporation

“Established to provide financial assistance and coordination of social services to retired players who are in dire need due to a variety of reasons, including disability and/or pensions”

Make a donation and receive choice of cigars, Ditka wine, autographed jerseys, hats, and more


“88 Plan”

Program to help players with dementia

Provides up to $88,000 annually for institutional care or
$50,000 for in-home care

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

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Doubling of minimum post-career non-football total and permanent disability from $20,000-40,000 per year for retired players who become disabled unrelated to football
Players who take their NFL pension early, and therefore are ineligible to apply for and receive disability benefits, will be offered a new one-time opportunity to apply for total and permanent disability
NFL disability awards not offset by any amount paid by SS
Now if disabled under SS, eligible for full disability under
NFLPA


Current players pay into separate fund for retired players (unlikely)

NFL sets aside 1% of league revenue and devote it to injured and disabled former players

$5 surcharge on game tickets for separate fund for injured and disabled former players


Some players from 1947 to 1979 didn't play long enough to be vested.

Old rule required 4 years to be fully vested in both pension and medical benefits

Non-vested players before 1980 were excluded from the new vesting rules (Pension: 43 days, Medical: 1 day)

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


1947: Pension plan began

First pro sports league to set-up a pension plan
1966 and 1981: Reforms to pension program

Became most generous pension program in pro sports
Average annual pension benefits:

$36,700
Fully vested 10-year player

Qualifies for $175,000 pension


Three parts:

Pension Plan

Investment Plan

Health and Welfare Plan


Benefits apply to:

Players, coaches, trainers, managers

Normal retirement age:

65 (Service before 1970)

62 (Service 1970 – 1991)

67 (Service after 1992)

Early retirement age:

45 years old


1968 Agreement

4-year vesting for both pension and medical

1981 Strike

43 days for full pension benefit
 Only applies to players who played after 1980


Defined Benefit Plan

Calculation using predefined numbers based on years of service and age at retirement

Fixed Retirement Benefits

Variable Retirement Benefits

Min. = $1,000/mo

Max = $180,000 annual


Example of fixed monthly payment:

A player had 4 years of service and retired at age 45

$117 - fixed monthly payment


For 1990 and after:

Pension committee determines the amount to contribute

Contribution is allocated to individual accounts

Allocation limitation is the lesser of:

7% of compensation, or

$7,500


Investment:

Members can choose their investments in various funds

Distribution:

Eligible to receive distributions when:
 Inactive for at least a year

Disabled

Retired

Lump-sum payment


A player must qualify through one of the following:
 on the active list for at least 1 day,

60+ days service, or
 in second year of contract, with more than 1 day during the season

Spouse and children are also eligible

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

General Health Plan

Hospital Stays
 Plan pays 100% of costs
 Limit to 120 Days

Outpatient
 $500 deductible

Plan pays 80% up to threshold
(individual $5,000, Family $15,000)

100% afterwards
Optional Comprehensive Health Care
Visions and Dental

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Eligibility:



Active member, 60+ accrued services
Inactive member, 4 years of service
Totally and permanently disabled
Benefits:


Monthly payment = Earned income in prior year
Max. $5,000, Min. $2,500, $300 for each dependent
If eligible and disabled:


 while an active member, within 5 years of becoming inactive, or from active service
Benefit:

$5,000 monthly income, $600 for each dependent


1998: The Women’s National Basketball Players
Association ("WNBPA") was founded

First labor union for professional female athletes

1999: First collective bargaining agreement in women’s professional sports


1 st CBA (1999-2002) made many advances toward equality for women and professional athletes:

75% minimum salary increase for rookies





100% minimum salary increase for veterans over the prior year’s minimums
Year-round health coverage
Retirement plan
Guaranteed contracts
Collective share of licensing income

2 nd CBA ratified on April 25, 2003

Free agency for WNBA players

Re-instated player group licensing rights to WNBA players


Revenue Sharing 10% of Overage Rule

Average Team Ticket Revenue exceeds the target in the regular season
Average Team Ticket Revenue =
Team Ticket Revenues for all Teams in the regular season
# of Teams that generate that revenue
Target Revenue for 2008 regular season: $2.5 million

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


Elective deferrals by each player of a portion of her base salary
25% employer matching employer contributions determined as follows:



2 years of playing service as of the end of that Season = 2% of base salary for that season ;
3 years = 3%
4+ years = 4%
Eligible after 1 playing season

Beginning with the 2008 Season, players receive either:

In-network services:

No annual deductible



No co-insurance
No annual lifetime maximum benefit
Co-payment for certain services

Out-of-network services:

$300 annual deductible per covered individual ($600 per family)


Coverage for 80% of first $5,000 of eligible charges per person in a calendar year, and 100% thereafter
Unlimited lifetime maximum benefit

Players pay 33% of coverage cost for dependents

Worker’s Compensation


In-network services:

No annual deductible



Coverage for 100% of preventive and basic services
Coverage for 50% of major services
No annual or lifetime maximum benefit

Out-of-network services:

$50 annual deductible per covered individual ($150 per family)



Coverage for 80% of preventive and basic services
Coverage for 50% of major services
Annual maximum benefit of $1,000.

If player elected coverage for dependents, player pays for
33% of coverage cost


Premiums cannot exceed last year’s premiums by more than 5%

When premium increases in any season are by less than 5%, the difference is carried forward

WNBA cannot pay premiums that exceed last season’s by more than 10%

WNBA not obligated to pay players, in benefits or other form, any carry forward not used to fund benefit premiums



50% of the base salary for the shorter of:

 the duration of her inability to perform services due to pregnancy, or the remaining term of her Standard Player Contract
Not eligible for team merit bonuses unless on active list for at least one regular season game



Termination While Pregnant:

Player can, if the applicable insurance policies allow, continue to receive the medical benefits

If applicable insurance policies do not allow for continued benefits, but player elects continued coverage pursuant to
COBRA, WNBA pays premiums for the player’s coverage
Player continues to receive coverage until the later of:
 the end of the season in which such contract is terminated, or

3 months after giving birth


Group life insurance policy providing a face policy amount of $100,000 per player



WNBA administers off season player programs that may include:

Graduate school tuition reimbursement

Career apprenticeship programs

Substance abuse education programs

Educational programs for individual financial management
WNBA contributes at least $75,000 per year toward such programs in the aggregate

Lodging Benefits -


During regular season and playoffs, players can either:
 stay in housing provided by the team, or
 receive a monthly housing stipend equal to the average monthly cost of a furnished one bedroom apartment in the market where the team plays its home games
During training camp, the team can decide between a monthly housing stipend or hotel accommodations

When “on the road,” players receive first class hotel accommodations:

Players with 5+ years of service have individual hotel rooms

Players with 4 or less years share a hotel room


NBA offers guaranteed salary contracts

Currently, the economy is affecting ticket sales
 Commissioner David Stern says “the league will cut staff in anticipation of the downturn…the figure will be about 9 percent of the American work force.”

Creates funding and expense issues for the NBA

Differences in eligibility & benefit payouts between pre and post-1965 players

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


1954: NBPA (National Basketball Player’s Association) is formed
1965: First employee benefits plan and collective bargaining agreement established
2005: Current collective bargaining agreement ratified
2007: Lower eligibility requirements and a 50% increase in benefits for pre-1965 players introduced


The NBA uses a salary cap to maintain competitive and fair trading:

Salary caps limit the amount teams can spend on player contracts

Salary caps allow the NBA to have a lower correlation between salaries and wins as opposed to other leagues, like the MLB





Season Defined percentage of BRI
2005-06 49.5%*
2006-07 51%
2007-08 51%
2008-09 51%
Actual salary cap
$49.5 million
$53.135 million
$55.63 million
$58.68 million


401(k):

Teams match 140% of contributions

3-year vesting

Eligible if play after 1999-2000 season

Negative election: players must opt out




Monthly benefit per year of service

In the past: Pre-1965 players received $200 per month and post-1965 players received $285 per month


2004: for post-1965 players, monthly benefits increased to
~$357
2007: for pre-1965 players, monthly benefits increased to
$300
3-year vesting

Since 2007, covers both pre and post-1965 players
Retirement age is 45-65

Disbursement methods: lump-sum, annuity for lifetime or set period, and pre-retirement survivor annuity


Medical & Dental

Insured by Prudential Insurance

Covers 80% of first $5,000 and 100% thereafter per family per year; co-insurance set at maximum of $3,000/yr. per family

Annual deductible of $300 per player and family member; limit of a $1,200 deductible per year for 4-person household

Life & Vision Insurance available

Disability & Worker’s Comp also available


The Education Trust

HIV/AIDS education program

Education & career counselling programs

Player’s Association High School Basketball Camp

Anti-Drug Program

Playoff Pool – increases with the number of teams participating in the playoffs

2004-2005: $8.5 million



Current collective bargaining agreement valid through the
2010-2011 season
The league can extend the agreement through the 2011-2012 season or negotiate a new agreement

Normal
Retirement Age
Vesting
WNBA
N/A
N/A
NBA
45
3 playing seasons
NFL
55
3 playing seasons
MLB
65 - 67
43 days

Vesting
Matching
WNBA
1 playing season
25%
NBA
3 playing seasons
140%
NFL
1 playing season
200%
MLB
N/A
N/A

Medical
Optical
Dental
Deductible
Co-insurance
WNBA
X
X
X
X
X
X
X
NBA
X
X
NFL
X
X
X
X
X
X
X
MLB
X
X

Life Insurance
Disability
Worker’s Comp
WNBA
X
X
X
NBA
X
X
X
NFL
X
X
X
MLB
X
X
X

WNBA
Graduate School
Tuition Reimbursement
Career
Apprenticeship
Programs
Substance Abuse
Programs
Financial
Management
Education
NBA
HIV/AIDS Education
Program
Player’s Association
High School
Basketball Camp
NFL
88-Plan
Retirement
Annuity
Tuition Assistance
Financial
Management
Assistance
MLB
College Scholarship
Plan
Draft eligibility at 18
Spanish Translation and ESL Courses

WNBA NBA NFL MLB
Defined benefit plan; increase 401(k) matching
Decrease coverage costs for dependents
Survivor annuity
Post-retirement medical benefits
Congruency between pre and post-1965 players’ benefits
Financial management education
Access to disability benefits
Financial management education incentives
401(k) Plan
Guaranteed contracts Improve retirement benefits to former
Negro league players
Post-retirement medical benefits
More congruency between pre and post-1980 players’ benefits