Teams are taking out insurance to lower the cost of bonus clauses
Shortly after the Bruins' regular season ended, Boston's
parsimonious general manager, Harry Sinden, engaged in an
unusual conversation with center Jason Allison. Sinden joined
Allison in lamenting that the player had finished the season
with 76 points, four points shy of the 80 he needed to earn a $1
million bonus. "Too bad," Sinden said. "I guess I wasted my
Sinden isn't the only team executive who has started taking out
insurance to cover players' performance bonuses. American
Specialty Underwriters, a company that began insuring against
the payout of such bonuses in 1992, held about a dozen policies
with seven teams, including the Bruins, last season. "It saved
us a chunk of change," says Sharks general manager Dean
Lombardi, who insured bonuses in the three-year,
incentive-clause-laden deal signed by center Patrick Marleau
before the 1997-98 season. When Marleau, who had a base salary
of $925,000, finished the '98-99 season with 21 goals, 24
assists and a +10 rating, he earned an additional $2.4 million
in bonus payments. San Jose spent only $230,000 to insure his
"We paid out more than we took in this year," admits Bill
Hubbard, the president of American Speciality Underwriters.
"Overall, though, we expect to get a 20 percent return from
these policies in the long term." That means that big payouts
such as the one to Marleau are likely to jack up the cost of
premiums, which are set on a player-by-player basis. Still, some
teams will continue to find insurance appealing because premiums
can be a fixed part of a club's budget, while large bonus
payments are a significant X factor in a team's finances.
The insurance policies offer another benefit as well.
Traditionally, when a player approaches a lucrative milestone
late in a season, a conflict can arise over whether his team is
giving him sufficient ice time to gain the bonus. "If a bonus is
insured, we can root for a player more than if we're paying it
ourselves," says Bruins assistant general manager Mike
O'Connell. "Insurance helps create goodwill."
FEW SIGNED IN THESE TIMES
For many of the 272 players drafted last Saturday, being
selected will end up as the highlight of their careers. Most
will never get an NHL contract. "Ten years ago you would sign
all your picks," says Capitals general manager George McPhee.
"Now if you draft nine guys, you'll sign maybe two or three."
The reason, not surprisingly, is money. Because NHL payrolls are
skyrocketing, many teams are unable, or unwilling, to invest in
most of their draft picks. Under league rules, teams can hold
the signing rights to a player for two years, watch him play in
college or juniors and then decide if he's worth a contract. In
most cases the answer ends up being no.
Some nonsignees are top prospects, such as defenseman Nick
Boynton, whom the Caps selected ninth in 1997. Boynton refused
Washington's contract offer, which included a $1 million signing
bonus, and elected to reenter this year's draft, an option
available to all draftees who aren't signed within two years. On
Saturday, Boynton was selected 21st by the Bruins. While he
slipped from his original position, he fared better than most
players who reenter the draft: Of the 109 players who did so in
'97 and '98, only 15 were redrafted and only three moved up.
Unlike Boynton, most draftees never even get the chance to turn
down a contract offer. "It's sad," says Mighty Ducks general
manager Pierre Gauthier. "Kids are there with their parents,
their name gets called, and it's the biggest day of their lives.
A year or two later it's just a business."
TELL US YOUR DREAMS
Each year before the draft, the Central Scouting Service
provides NHL teams with the responses from hundreds of potential
draft picks to a set of non-hockey-related questions. The
responses give teams a small measure of insight into the
prospects, at least in theory. SI obtained copies of this year's
completed questionnaires, which revealed--don't be shocked
now--that many of the draftees are single-minded about hockey.
For instance, when asked what ambitions he had outside the game,
defenseman Jeff Finger, who was drafted in the eighth round by
the Avalanche last Saturday, wrote, "None, really."
Other players aimed a little higher. Undrafted defenseman Josh
Legge said that he aspires to "own a Dodge/Chrysler dealership,"
and forward Kyle Anderson, who also was not selected, wrote that
the person he would most like to meet is "Wayne Gretzky or God,
because there are a lot of questions to ask them both."
Then there was undrafted forward Andrew Bogle, who wants to be
introduced to "the inventor of the Porsche 959," and defenseman
Eric Braff, also not picked, who would like to talk with
Nostradamus so he could "see what the future held." That's a
sentiment many teams might share, particularly before draft day.
COLOR PHOTO: ROCKY WIDNER Insurance kept the Sharks off the hook for most of Marleau's $2.4 million bonus.
COLOR PHOTO: LOU CAPOZZOLA Lindros
COLOR PHOTO: DAVID E. KLUTHO Forsberg
First but not Best
The Thrashers, who selected 6'1 1/2", 205-pound center Patrik
Stefan with the No. 1 pick in last Saturday's entry draft, hope
to reverse a 1990s trend that has seen the top pick fail to
emerge as the best NHL player of his draft class. Here are the
No. 1 selections from '90 through '95 and the player chosen
later in that draft who became the better NHL player. (It's too
soon to assess players selected in the past three years.)
Year Top Pick Best Player (Pick)
1995 D Bryan Berard C Peter Sykora (18)
Berard flashy but flawed; Sykora was Devils' top scorer in '98-99
1994 D Ed Jovanovski LW Jeff Friesen (11)
Following outstanding rookie season Jovanovski has regressed;
Friesen is a franchise player for the Sharks
1993 RW Alexandre Daigle LW Paul Kariya (4)
Daigle's the bust of the decade; Kariya's the steal
1992 D Roman Hamrlik C Alexei Yashin (2)
Hamrlik hasn't harnessed his numerous skills; last season Yashin
was second in league in goals with 44
1991 C Eric Lindros C Peter Forsberg (6)
Lindros has produced more controversy than Cups (0); Forsberg is
world's best all-around player
1990 RW Owen Nolan LW Jaromir Jagr (5)
After getting 42 goals in '91-92, Nolan has faltered; Jagr is
world's top offensive performer