|Tuesday, June 18
Terrorism insurance bill could aid sports world
By Darren Rovell
Sports leagues, teams and local stadium authorities received good news Tuesday when the Senate passed the second of two terrorism insurance bills in Congress, each structured to relieve the shortage of terrorism insurance coverage across all areas of American business.
In Minnesota, the Metropolitan Sports Facilities Commission, which manages the Metrodome, nearly doubled its insurance premium costs (from $283,000 to $500,000) to include terrorism coverage for the building. In New Jersey, the New Jersey Sports and Exposition Authority, which runs Giants Stadium and the Continental Airlines Arena, tripled the amount it paid for insurance a year ago ($700,000 to $2.1 million). Erie County, which owns Buffalo's Ralph Wilson Stadium, saw its insurance costs rise 660 percent ($52,000 to $395,000), and the Miller Park Stadium District and the Milwaukee Brewers reportedly will split a $2.25 million bill for complete coverage of Miller Park, site of baseball's All-Star Game in July. Its cost for similar coverage last year was $225,000.
Teams located in Texas, Georgia, Florida, New York and California had terrorism coverage automatically included in their insurance policies. Those states have laws that do not allow insurance companies to exclude terrorism coverage.
Some teams not helped by state law, like the Seattle Mariners, could afford only partial coverage on their stadium or arena, since complete coverage was not available.
The Mariners recently received a scare when a low-flying plane dropped a white powder, later discovered to be the ashes of a deceased fan, on the Safeco Field roof on May 24. Had that incident instead been a terrorist attack and that powder had been anthrax instead of ashes, the $517 million building would have been covered by only a $1 million policy.
The bill is far from becoming law. Though the Senate passed its version by an 84-14 vote, it now is headed for revision before a House-Senate conference committee. After it is approved by both the Senate and House of Representatives, it then must be signed by the President.
Last year, House Bill 3210 stipulated that the government would pay 90 percent of the insurance industry's liability in a major attack. But under Senate Bill 2600 passed Tuesday, the government would cover 90 percent of claims from a major attack after the first $10 billion over a two-year period is paid by insurance companies.
Reconciling a final bill might be tough due to partisan politics. Republicans want to bar the use of taxpayer-subsidized funds to award punitive damages to victims and disallow individuals from suing the owners of buildings that were the target of a terrorist attack. Democrats do not want to apply such limitations.
Republicans say Bush is likely to veto a bill that does not shield companies from punitive damages.
"The president wants this bill, the House wants this bill, we want this bill," said Sen. Harry Reid, D-Nev., Tuesday.
NFL executive vice president Jeff Pash told ESPN.com he felt it "essential that this bill passes," but declined to discuss which teams' stadiums are not adequately insured for a terrorism attack.
"Everyone from the real estate industry to the airline industry is in favor of this bill," NFL spokesman Joe Browne said.
Lack of terrorism insurance has put teams which operate on borrowed money in a tough position, since some lenders now require the recipient to have terrorism insurance or risk defaulting on its loan.
Because insurance companies cannot exclude terrorism insurance from property policies in New York and California, Mair said he was able to secure coverage after Sept. 11 for the Lake Placid Olympic Training Center in Lake Placid, N.Y., and the ARCO Olympic Training Center in Chula Vista, Calif. But he could not find terrorism insurance for the Olympic training center in Colorado Springs, Colo.
The government assistance would help insurance companies avoid catastrophic losses like those suffered in the wake of Sept. 11. But the prices will still be high because of the risk of attack, said Mark Idelson, senior vice president of ASU International, a sports insurance underwriter.
While none of the major-league teams is believed to be involved in self-insuring, 10 Major League Baseball teams -- including the Cleveland Indians, Minnesota Twins Pittsburgh Pirates and San Francisco Giants -- have had an easier time obtaining terrorism insurance for their stadiums by taking out a joint policy, backed by Lloyd's of London.
"The insurance company can charge you less, knowing that it's less likely that you will all get hit at the same time," said Jonathan Mariner, Major League Baseball's chief financial officer.
While it is not clear how much coverage each team is insured for, Paul Yee, the Giants' chief financial officer, said the team's $245 million Pac Bell Park is covered by a $150 million insurance policy.
That's a good thing for San Francisco Giants fans. If a terrorist attack were to occur and damage privately funded Pac Bell Park and the Giants did not have insurance, funding to build a new facility likely would come from a substantial ticket price increase. "Ticket price is about the only revenue stream you can really tinker with," Mair said. "If you can believe what you hear about their books, there aren't a lot of teams that can afford to invest $20, $40 or $200 million in rebuilding their stadium." Although taxpayers ultimately would be responsible for the insurance cost overrun should another large attack occur, Gary Karr, spokesman for the American Insurance Association, a trade group that represents 412 insurance companies that annually collects more than $80 billion in premiums, said "the cost to taxpayers is much higher by not passing this bill than it is by passing it."
Karr said his organization is pushing for the Senate bill to go through in early July.
"As far as the sports world goes, baseball is full into its season and NFL and college football teams will be only a couple months away," Karr said. "It's important that this is done now."
Darren Rovell, who covers sports business for ESPN.com, can be reached at email@example.com