Ken Medlin

Winston's insurance deal a "game-changer"

Posted August 6, 2014

Florida State Seminoles quarterback Jameis Winston (5) looks for an open man. Florida State and Duke University face each other in the ACC Football Championship on December 7, 2013 at Bank of America Stadium. Duke could not keep pace with Florida State's offense falling by a score of 45 to 7. Photo by CHRIS BAIRD

Jameis Winston is getting paid.

OK, the money’s not technically going into his checking account, but for all intents and purposes Florida State has found a way to pay the Seminoles’ star player to play football.

And it’s perfectly legal. Or, to use the NCAA’s parlance, it’s permissible.

Here’s what’s happening: Winston took out an insurance package valued at $10 million to protect himself in the event of an injury this season. The package covers permanent disability and loss of value, and it's a fairly common thing for elite athletes.

What's not common is for the athlete's university to foot the bill. Florida State is reportedly picking up the tab for Winston's loss of value policy, estimated at $60,000.

So, they're paying him. OK, technically, they're guaranteeing that he gets paid, but still...

The Seminoles are tapping into the mother of all loopholes, using money from the NCAA's Student Assistance Fund to pay for the insurance policy. Here's a brief description of the fund's intended use from the NCAA's website: "As a guiding principle, the fund shall be used to assist student-athletes in meeting financial needs that arise in conjunction with participation in intercollegiate athletics, enrollment in an academic curriculum or that recognize academic achievement."

Basically, we're talking about things like airfare to get home during an emergency, or a new suit to wear to an awards banquet. That's what the rule intends to cover, but one can make an argument that insuring a young person's ability to make a (lucrative) living can fall under "needs" - especially when the athlete's family doesn't have the resources to pay for the policy.

That's what Florida State is doing, and they're not even the first to come up with the idea. Texas A&M subsidized a similar policy for offensive lineman Cedric Ogbuehi this year. The difference is that Ogbuehi was considering a jump to the NFL, while Winston still has another year remaining before he can declare for the draft.

In truth, I don't think this is a bad thing. By protecting the athletes' earnings potential, universities are making it more feasible for them to actually stay in school and finish their degrees, and they're taking action to make sure these players are not simply "used up" by the system,

But does anyone actually think FSU and A&M were concerned about degrees when they shelled out the cash for these insurance policies? Of course not, their actions essentially amount to recruiting tactics designed to keep star players on their teams. And I suspect this will not be the end of it - why shouldn't Duke, State or Carolina do this for star basketball players? It's an option, for sure - one that might discourage a few one-and-done's.

As one administrator explains, "it's a game changer."

You got that right.

Of course, not all schools have such deep pockets as FSU and A&M. We may very well see the "have's" further distancing themselves from the "have not's" by insurance their elite players. And what of the rank-and-file athletes? This only refers to the best of the best.

Regardless, Florida State has found the Holy Grail of college athletics: a way to pay players legally. And that's impressive.


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  • Objective Scientist Aug 12, 2014

    View quoted thread

    Agree... should have stated it as;

    "Yet another step down a slippery slope... momentum building rapidly!"

  • Ken D. Aug 8, 2014

    View quoted thread

    Yes. But this is hardly our first step onto that slope.

  • Jeanne Gunn Aug 8, 2014
    user avatar

    "Now that this loophole has been exposed, I will be surprised if it isn't closed. However, I also expect that the now autonomous P5 will find a way to fund this sort of thing legally through some fund other than the Student Assistance Fund." Ken D.

    This is the scenario I expect to see, Ken - the P5 will find a way to fund the insurance. It will be another carrot to dangle in front of prospective athletes.

  • Objective Scientist Aug 7, 2014

    Down a very slippery slope we go...

  • lewiskr45 Aug 7, 2014

    View quoted thread

    Winston actually has value as a top 10 draft pick right now, a high school senior does not.

  • uBnice Aug 7, 2014

    View quoted thread

    Good points that I had not thought about. Thank you.

    From an insurance company point of view, the actuary people will figure it out. :-)

    The insurance companies are only going to take on risk that can yield a profit. For example, I would imagine that an elite athlete with a history of knee problems will not be able to get the coverage as someone who has been without any major problems.

    It will be used as a recruiting tool. I don't think the money will be a problem for the P5.

  • Ken D. Aug 7, 2014

    The significance of the policy for Winston being approved is that it extends this beyond just players who actually have an impending decision - that is, who are eligible to enter the draft.

    If it can be done for Winston, why can't it be done for a highly rated recruit right out of high school? I'm sure the insurance companies would love to have the extra business, but it would make the problem of calculating premiums a lot dicier.

    Who can tell how much in future earnings is at risk for a kid who has never played a down in college?

    A bigger problem than that is who is going to be the gate keeper deciding which athletes should get to be covered and which don't? I could see that big pot of money shrinking awfully fast.

  • uBnice Aug 7, 2014

    View quoted thread

    I understand. I was talking about the NCAA loan program to protect elite athletes.

    This from a website:

    The program was started in 1990 for college football players projected to be selected early in the NFL draft. Later expanded to cover men's and women's basketball, baseball and hockey, it offers low-interest loans to purchase up to $5 million in insurance coverage.

    Premiums for such policies are costly -- $20,000 to $30,000 a year for the high-end coverage, $5,000 to $8,000 on the low end. To pay for it, the NCAA offers a loan program at 1½ percent above prime, although balances must be repaid regardless of when a player gets drafted -- or if drafted at all. Any player with remaining college eligibility can participate in the program, though most wait until after their sophomore seasons.

  • Ken D. Aug 7, 2014

    View quoted thread

    My understanding is that this is not a loan program. There does not appear to be a requirement for anything to be paid back, even if the athlete subsequently cashes in big.

    It was conceived as a compassionate program, providing funds for athletes to fly home for funerals or other family emergencies, or to enable a poor kid to buy a nice suit if he is invited to some awards banquet.

    So, while $73 million sounds like a lot of money, it was intended to be equally available to athletes at all levels of the NCAA, not just scholarship athletes. The expectation, I think, was that it would be spent in hundreds or thousands of small chunks, not in $60K chunks just to elite athletes.

    Now that this loophole has been exposed, I will be surprised if it isn't closed. However, I also expect that the now autonomous P5 will find a way to fund this sort of thing legally through some fund other than the Student Assistance Fund.

  • uBnice Aug 7, 2014

    View quoted thread

    Yes, the loan program from the NCAA has been around for a while. But it was just that, a loan for which someone had to pay because insurance companies get their money. Ideally it would be paid by the athletes parents. But probably for most it was being paid for by an agent or someone else other than the family because they could not afford it. That type of insurance is a luxury for most.

    Winston is worth a lot of money and insurance companies do not do this unless there is money to be made.

    If he gets critically hurt, he gets $10 million. If he doesn't, then it means FSU has probably done well and made a lot of money. And the insurance company makes $60 thousand profit.

    If I am an insurance company and can get 10 or more of those types of deals, then the Winstons of college football make me money!




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