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By JARED SHELLY, senior editor/web editor of Risk & Insurance®

While the National Basketball Association remains embroiled in a lockout and faces the very real possibility that the entire 2011-2012 season will get cancelled, its stars are playing in exhibition games across the country and some are even signing contracts to play in pro leagues overseas.

In early October, a team captained by Lebron James played against a Dwayne Wade-led squad in a charity match in Florida. The game featured high-priced stars like Carmelo Anthony, Kevin Durant and Chris Paul. (Team Wade beat Team Lebron 141-140). So, who would pick up the liability if today's headlines read "Lebron Tears ACL, Out for the Season"?

"If you took 100 sports lawyers, 50 would say the [NBA] team is liable and 50 would say the player is liable," said one sports disability expert who declined to be named.

The debate is whether NBA stars playing in exhibition games is part of the "exclusionary behavior" clauses in their NBA contracts. There are only a handful of people that know the answer and they're certainly not willing to share it, said the expert. Also, if the Miami Heat wanted to buy a policy protecting themselves against a Lebron James injury, for example, they couldn't do so because they can't bring in James for a physical. Why? Because the lockout forbids teams to have contact with players.

Two sources said that the NBA forces each team to put a few of their highest paid players on the league's disability program, but if one of those players gets hurt during an exhibition game, a legal battle could ensue -- with the NBA Players Association likely claiming that the league's policy should cover the injury, while the league would claim that people are responsible for their own actions -- especially during the lockout.

So agents have been adamant about players getting individual insurance to cover them for accidental medical insurance and disability, said Alex Fairly, executive vice president and leader of the sports and entertainment practice for Willis Global Sports Services. (Players take out similar policies when they're in the last year of their NBA contracts.)

For exhibitions, that coverage is usually paid by the promoter, and can cost so much they can put the event's profitability in danger.

"I've seen these deals and events fall apart because of insurance," said Fairly. "Disability can be very expensive. A couple of promoters have said 'this doesn't make sense.' "

Teams have also inquired about policies protecting them from the money they'd lose if the entire season is cancelled. Andrew Pyle, vice president of Cypress Creek Intermediaries in Heathrow, Fla. said that the Orlando Magic approached his company looking for such coverage. Cypress Creek came back to them with a plan for $10 million in coverage if the season is missed, in exchange for a 32.5 percent fee up front, said Pyle. The team declined the coverage, he said.

Pyle, as well as other experts, said they believe that if the lockout drags on into December, there is a good chance that the entire season is lost.

When it comes to playing overseas, the coverage puzzle again gets murky.

Andrew Bogut, the center for the Milwaukee Bucks, declined to play in Australia's National Basketball League because he couldn't secure insurance to cover his five-year, $14.5 million per year contract with the Bucks, according to the Associated Press.

October 10, 2011

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