employee benefits for pro sports
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Employee Benefits for Pro Sports. Presented by: Jimmy Lyznicki Helen Chung Lauren Hoye Traci Kingdon. Agenda. Introduction to pro sports’ employee benefits: NFL MLB WNBA NBA Recap & comparison of benefits Suggestions to improve benefits Class activity. NFL. - PowerPoint PPT PresentationTRANSCRIPT
Presented by:Jimmy LyznickiHelen ChungLauren HoyeTraci 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 Class activity
NFL
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.”
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
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
NFL: Financial Benefits NFL contracts
Overall league minimum contracts based on years of service for 2009:
0 Seasons $310,0001 Season $386,000
3 Seasons $535,0007-9 Seasons $745,000 NFL contracts are not guaranteed
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
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
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
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
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
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
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
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
MLB: Issues with Benefits
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)
MLB: History of Benefits 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
MLB: Summary of Benefits Three parts:
Pension Plan Investment Plan Health and Welfare Plan
MLB: Eligibility for Benefits 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
MLB: Vesting of Benefits 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
MLB: Pension Benefits 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
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
MLB: Investment Plan 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
MLB: Investment Plan (cont.) 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
MLB: Medical Benefits 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
MLB: Medical Benefits (cont.) 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
MLB: Disability Benefits 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
WNBA: History of Benefits 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
WNBA: Summary of Benefits 1st 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
2nd CBA ratified on April 25, 2003 Free agency for WNBA players Re-instated player group licensing rights to WNBA players
WNBA: Financial Benefits 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
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
WNBA: Medical BenefitsBeginning 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
WNBA: Dental Benefits 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
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
WNBA: Pregnancy/Disability Benefits
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
WNBA: Pregnancy/Disability Benefits 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
WNBA: Life Insurance Benefits Group life insurance policy providing a
face policy amount of $100,000 per player
WNBA: Miscellaneous Benefits
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
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 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: 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
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
NBA: Financial Benefits 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 Actual salary cap 2005-06 49.5%* $49.5 million 2006-07 51% $53.135 million 2007-08 51% $55.63 million 2008-09 51% $58.68 million
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
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
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
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
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
Pension BenefitsWNBA NBA NFL MLB
Normal Retirement Age
N/A 45 55 65 - 67
Vesting N/A 3 playing seasons
3 playing seasons
43 days
401(k)WNBA NBA NFL MLB
Vesting 1 playing season
3 playing seasons
1 playing season
N/A
Matching 25% 140% 200% N/A
Medical BenefitsWNBA NBA NFL MLB
Medical X X X XOptical X XDental X X X XDeductible X X X XCo-insurance X X X X
Life Ins., Disability, & Worker’s Comp
WNBA NBA NFL MLBLife Insurance
X X X X
Disability X X X XWorker’s Comp
X X X X
Other BenefitsWNBA NBA NFL MLB
Graduate SchoolTuition
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 CoursesFinancial
Management Education
Financial Management Assistance
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