Presented by: Jimmy Lyznicki

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Presented by: Jimmy Lyznicki - Description

Helen Chung. Lauren Hoye. Traci Kingdon. Employee Benefits for Pro Sports. Agenda. Introduction to pro sports’ employee benefits:. NFL. MLB. WNBA. NBA. Recap & comparison of benefits. Suggestions to improve benefits. ID: 638195 Download Presentation

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Presented by: Jimmy Lyznicki




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Presented by:Jimmy LyznickiHelen ChungLauren HoyeTraci Kingdon

Employee Benefits for Pro Sports

Slide2

AgendaIntroduction to pro sports’ employee benefits:NFLMLBWNBANBARecap & comparison of benefitsSuggestions to improve benefits

Class activity

Slide3

NFL

Slide4

NFL: Issues with Benefits

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.”

Slide5

NFL: Issues with Benefits (cont.)

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

Slide6

NFL: History of Benefits

1959: First retirement plan

Early 1960‘s: Bert Bell Retirement Plan introduced

Enhanced retirement, disability, and related benefits to ex-players

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

Slide7

NFL: Financial Benefits

NFL contracts

Overall league minimum contracts based on years of service for 2009:

0 Seasons $310,000

1 Season $386,000

3 Seasons $535,000

7-9 Seasons $745,000

NFL contracts are not guaranteed

Slide8

NFL: Defined Contribution Benefits

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

Slide9

NFL: Pension 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

Slide10

NFL: Medical Benefits

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

Slide11

NFL: Disability Benefits

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

Slide12

NFL: Miscellaneous Benefits

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

Slide13

NFL: Miscellaneous Benefits (cont.)

“88 Plan”

Program to help players with dementia

Provides up to $88,000 annually for institutional care or $50,000 for in-home care

Slide14

NFL: Benefit Reform

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

Slide15

NFL: Proposed Changes to Benefits

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

Slide16

MLB: Issues with BenefitsSome 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 benefitsNon-vested players before 1980 were excluded from the new vesting rules (Pension: 43 days, Medical: 1 day)

Slide17

MLB: History of Benefits1947: Pension plan beganFirst pro sports league to set-up a pension plan1966 and 1981: Reforms to pension programBecame most generous pension program in pro sports

Average annual pension benefits:$36,700

Fully vested 10-year playerQualifies for $175,000 pension

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MLB: Summary of BenefitsThree parts:Pension PlanInvestment PlanHealth and Welfare Plan

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MLB: Eligibility for BenefitsBenefits apply to:Players, coaches, trainers, managersNormal retirement age:65 (Service before 1970)62 (Service 1970 – 1991)67 (Service after 1992)Early retirement age:

45 years old

Slide20

MLB: Vesting of Benefits1968 Agreement 4-year vesting for both pension and medical1981 Strike 43 days for full pension benefitOnly applies to players who played after 1980

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MLB: Pension BenefitsDefined Benefit PlanCalculation using predefined numbers based on years of service and age at retirementFixed Retirement BenefitsVariable Retirement BenefitsMin. = $1,000/moMax = $180,000 annual

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MLB: Pension Benefits (cont.)Example of fixed monthly payment: A player had 4 years of service and retired at age 45

$117 - fixed monthly payment

Slide23

MLB: Investment PlanFor 1990 and after:Pension committee determines the amount to contributeContribution is allocated to individual accountsAllocation limitation is the lesser of:7% of compensation, or

$7,500

Slide24

MLB: Investment Plan (cont.)Investment:Members can choose their investments in various fundsDistribution:Eligible to receive distributions when:Inactive for at least a yearDisabledRetired

Lump-sum payment

Slide25

MLB: Medical BenefitsA player must qualify through one of the following:on the active list for at least 1 day,60+ days service, orin second year of contract, with more than 1 day during the seasonSpouse and children are also eligible

Slide26

MLB: Medical Benefits (cont.)General Health PlanHospital Stays

Plan pays 100% of costs

Limit to 120 DaysOutpatient

$500 deductiblePlan pays 80% up to threshold(individual $5,000, Family $15,000)

100% afterwards

Optional Comprehensive Health Care

Visions and Dental

Slide27

MLB: Disability BenefitsEligibility:Active member, 60+ accrued services

Inactive member, 4 years of service

Totally and permanently disabledBenefits:

Monthly payment = Earned income in prior yearMax. $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

Slide28

WNBA: History of Benefits1998: The Women’s National Basketball Players Association ("WNBPA") was foundedFirst labor union for professional female athletes1999: First collective bargaining agreement in women’s professional sports

Slide29

WNBA: Summary of Benefits1st 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 coverageRetirement

planGuaranteed contracts

C

ollective

share of licensing income

2

nd

CBA ratified on April 25, 2003

F

ree

agency for WNBA players

Re-instated

player group licensing rights to WNBA players

Slide30

WNBA: Financial BenefitsRevenue 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

Slide31

WNBA: 401(k) Program 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

Slide32

WNBA: Medical BenefitsBeginning with the 2008 Season, players receive either:In-network services:No annual deductible

No co-insurance

No annual lifetime maximum benefitCo-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

Slide33

WNBA: Dental BenefitsIn-network services: No annual deductibleCoverage for 100% of preventive and basic servicesCoverage 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 servicesCoverage for 50% of major servicesAnnual maximum benefit of $1,000.

If player elected coverage for dependents, player pays for 33% of coverage cost

Slide34

WNBA: Medical/Dental Limitations

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

Slide35

WNBA: Pregnancy/Disability Benefits 50% of the base salary for the shorter of: the duration of her inability to perform services due to pregnancy, orthe remaining term of her Standard Player Contract

Not eligible for team merit bonuses unless on active list for at least one regular season game

Slide36

WNBA: Pregnancy/Disability Benefits Termination While Pregnant:Player can, if the applicable insurance policies allow, continue to receive the medical benefitsIf 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, or3 months after giving birth

Slide37

WNBA: Life Insurance BenefitsGroup life insurance policy providing a face policy amount of $100,000 per player

Slide38

WNBA: Miscellaneous BenefitsWNBA administers off season player programs that may include:

Graduate

school tuition reimbursementCareer

apprenticeship programsSubstance abuse education

programs Educational

programs for individual financial

management

WNBA contributes at least $75,000 per year toward such programs in the

aggregate

Slide39

WNBA: Miscellaneous Benefits (cont.)

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 accommodationsWhen “on the road,” players receive first class hotel accommodations:

Players with 5+ years of service have individual hotel roomsPlayers with 4 or less years share a hotel room

Slide40

NBA: Issues with Benefits

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

Slide41

NBA: History of Benefits

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

Slide42

NBA: Financial BenefitsThe NBA uses a salary cap to maintain competitive and fair trading:Salary caps limit the amount teams can spend on player contractsSalary 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 Actual salary cap

2005-06 49.5%* $49.5 million 2006-07 51% $53.135 million2007-08 51% $55.63 million

2008-09 51% $58.68 million

Slide43

NBA: Defined Contribution Benefits

401(k):

Teams match 140% of contributions

3-year vesting

Eligible if play after 1999-2000 season

Negative election: players must opt out

Slide44

NBA: Pension Benefits

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

Slide45

NBA: Medical & Disability Benefits

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

Slide46

NBA: Miscellaneous Benefits

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

Slide47

NBA: Benefit Reform

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

Slide48

Pension Benefits

WNBA

NBA

NFL

MLB

Normal Retirement Age

N/A

45

55

65 - 67

Vesting

N/A

3 playing seasons

3 playing seasons

43 days

Slide49

401(k)

WNBA

NBA

NFL

MLB

Vesting

1 playing season

3 playing seasons

1 playing season

N/A

Matching

25%

140%

200%

N/A

Slide50

Medical Benefits

WNBA

NBA

NFL

MLB

Medical

X

X

X

X

Optical

X

X

Dental

X

X

X

X

Deductible

X

X

X

X

Co-insurance

X

X

X

X

Slide51

Life Ins., Disability, & Worker’s Comp

WNBA

NBA

NFL

MLB

Life Insurance

X

X

X

X

Disability

X

X

X

X

Worker’s Comp

X

X

X

X

Slide52

Other Benefits

WNBA

NBA

NFL

MLB

Graduate School

Tuition Reimbursement

HIV/AIDS Education Program

88-Plan

College Scholarship Plan

Career Apprenticeship Programs

Player’s Association High School Basketball Camp

Retirement

Annuity

Draft eligibility

at 18

Substance Abuse Programs

Tuition Assistance

Spanish Translation and ESL Courses

Financial Management Education

Financial Management Assistance

Slide53

Suggestions to Improve Benefits

WNBA

NBA

NFL

MLB

Defined benefit plan; increase 401(k) matching

Congruency between pre and post-1965 players’ benefits

Access to disability benefits

More congruency between pre and post-1980 players’ benefits

Decrease coverage costs for dependents

Financial management education

Financial management education incentives

401(k) Plan

Survivor annuity

Guaranteed contracts

Improve retirement benefits to former Negro league players

Post-retirement medical benefits

Post-retirement medical benefits

Slide54


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