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Tucked away in the lush greenery of the Pacific Northwest, the Seattle Mariners play 81 home games each season at Safeco Field, one of the newest and most beautiful venues in Major League Baseball. When it opened in July 1999, the stadium awed fans, visitors and players alike with its retractable roof.

Located on the shores of the Puget Sound, the field cost more than $500 million.

The Mariners are not only isolated geographically, but are positioned a continent away from other MLB clubs in other ways too. The team refuses specialty disability insurance as a safety net to protect the financial solvency of the franchise.

Yet it also has the ability to field a competitive squad against larger, better-financed rivals in the American League West.

As a small-market, low-revenue team during the 1970s and 1980s, the Mariners weighed the use of disability insurance to safeguard its limited payroll, said Kevin Mather, the team's executive vice president and chief financial officer. Back then, management considered disability insurance unacceptable as the cost of premiums increased beyond what management considered reasonable, he said. The logic was simple, said Mather. Back then, premium costs exceeded the possible loss the team would suffer in the event a ballplayer would be unable to perform on the field.

The rebel philosophy has little to do with the Mariners' foreign ownership, said Mather.

Nintendo Corp.--the Japanese maker of Pokemon and Super Mario video games--played a key role in keeping baseball in the Northwest in 1992 when the game-maker bought the ball club for more than $200 million. Redmond, Wash.-based Nintendo of America raised its percentage of ownership to more than 50 percent in 2004 by investing another $67 million into the franchise.

REFUSING TO BUDGE

Seattle evolved beyond its image as a small-market team in the middle of the last decade. The transformation began in 1995 when the Mariners won their first championship in the American League West. That was also the year voters in King County thought their team deserved to play in a first-class stadium, and agreed to tax themselves to fund construction of Safeco Field.

Safeco Field has not only generated an increase in attendance, but has produced additional revenue the owners have used to sign high-priced free agent ballplayers. During the first two decades of the franchise's history, Seattle rarely offered contracts to players for longer than three years. However, to remain competitive in the free agent feeding frenzy, the Mariners have been forced to nearly double the payroll, now at more than $90 million. The team soon began offering long-term contracts to impact players and this may soon, though evidently not just yet, alter the terms of the Mariners' insurance game.

"The stadium and a competitive team on the field have helped the Mariners become one of the most successful (profitable) franchises in baseball," Mather said. "It would not cripple us financially if an injury cost us the services of one of our marquee players. Faced with the premium cost of disability insurance, management is willing to take what we perceive to be a very small risk."

Even with the investment of more than $120 million in multiyear deals for third baseman Adrian Beltre and first baseman Richie Sexson, the team's owners were still not convinced of the need for disability insurance when they signed the two sluggers in 2004, said Mather. The high premiums, coupled with exemptions, made the decision an obvious choice.

"We found that if an insurance company were willing to underwrite a contract of tens of millions of dollars, they would often include clauses that exempt a pitcher's arm or his elbow, or they will not cover previous injury suffered by a position player," said Mather. "Why else would we consider insurance?"

Good question. "What good is a policy that does not cover a pitcher's arm or his elbow?" added Mather. "It's not his nose or pinky finger that we're worried about."

Beltre was coming off a career year in 2004, but Sexson posed a potential risk to the Mariners because of an injury that ended his previous season in mid-June. Surgeons repaired a partial tear in the first baseman's left shoulder. Despite playing only 23 games, Sexson received his full 2004 season salary of $8.72 million from the Arizona Diamondbacks.

Mather said the Mariners would have jumped at the chance to share the responsibility for the guaranteed five-year, $55 million contract Sexson signed prior to the 2005 season. But every quotation for disability insurance exempted coverage for the first baseman's surgically repaired shoulder.

"Every team handles its exposure differently," said Bill Hubbard, president and CEO at HCC Specialty Underwriters. "Teams want short-term contracts due to an anticipated loss of skill. Players want longer terms for a sense of security with the promise of enhanced performance." Shorter contract terms are more attractive to carriers because it gives them the opportunity to renegotiate terms and conditions.

Pitchers pose a higher risk than position players, and the age of a player is a major factor in underwriting, he also said.

"This is a very small, very volatile group of individuals, and limits are very high. You have players running into walls and pitchers throwing the ball with an unnatural motion," said Hubbard. "At some point, there is a quantum of risk. Some teams will accept that exposure. Others look to us to share the burden. We might take a risk on a player, but with only a caveat for an elbow (or other body part) that has been injured or undergone previous surgery."

According to ESPN, the Houston Astros paid approximately $2.5 million to Connecticut General Life Assurance on the final year of first baseman Jeff Bagwell's $80 million contract. The team filed a claim earlier this year to recoup all or part of Bagwell's $16 million salary for this season when team doctors determined that injuries and subsequent surgery had left the 38-year-old local hero unable to contribute. The insurance company has denied the claim and the case is pending.

Baseball provides guaranteed contracts to its players, but differs from basketball, football and hockey by not including a disability provision for players as part of the collective bargaining agreement.

"It's cruel, but true," said Leigh Ann Rossi, vice president of the sports, entertainment and special risk division at BWD Group LLC, which administers the disability insurance programs for the NBA and NHL.

"Some of the biggest players (owners) in the game will not start the season without reviewing the disability coverage on each of its key players . . . just in case," Rossi said. "Baseball teams in smaller markets who have the majority of payroll wrapped into one or two players look to us as a matter of pure survival."

"It all comes down to a gut-level decision," she added. "Who is willing to roll the dice on a bet of several million dollars?"

DAN AZNOFF, a former insurance editor, lives in Bellevue, Wash.

October 15, 2006

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