Insurance and cap relief

[Lith]

I was involved in the placement of one of these policies a couple of years ago.  The one I was involved in was written to only provide proceeds/cap relief in the event of a career ending injury.  It would have paid $15M proceeds to the player who would have returned $15M salary to the team, freeing up cap space.  But it only would have paid in the event of a career ending injury, which Aaron's was not.

The theory behind it was if the player went down in 2022, the team would need to replace him in 2023 and would have needed some extra cap space for the 2023 year.  If a player goes down mid season, the options to replace a frontline starting QB are so limited, that the extra cap space is not going to make a better player available.  It would be useful in the subsequent offseason.

I am not sure how other similar products work, but the one that I know about would not have helped us if we had purchased it.

[bicketybam]

2 hours ago, Asymmetrical said:

Buffum said when he worked for the 49ers from 2014 to 2022, the Niners discussed buying a policy for almost any non-minimum extension, and most of the time, the decision was yes.

The team insured three players who missed a significant amount of time due to injury in 2020: Jimmy Garoppolo (10 games), Dee Ford (15 games) and George Kittle (8 games). Garoppolo's contract insurance language said the team insured up to $15 million, but it did not specify for which years (it was likely for less than that amount in 2020 because he was in Year 3 of his deal), and Ford's playing contract specified up to $8 million of his regular-season salary for that year.

"It was just a windfall of insurance that year," Buffum said.

Each policy is different based on the player's position, age, injury history and career trajectory. Clubs can choose from a range of deductibles and wait time -- some expensive policies start paying cash to clubs after just one game missed, other more affordable policies don't pay until the eighth consecutive game missed.

The Niners declined to comment on the amount of insurance proceeds they received that season, but Roster Management System reports San Francisco earned $11.2 million in end-of-year cap adjustments, a sum that includes insurance credit, along with other forms of credit or expenses, such as unearned incentives. For the 2021 season, San Francisco's adjustment was $5.5 million more than the second-place team. The cap decreased by $15.7 million that year because of the 2020 COVID season losses, and no team besides the 49ers was even close to making up that gap.

That's a game changer? 

I think this is much ado about nothing. The 2021 Niners went 10-7.