A potential front-office crisis occurs when a prolonged injury to a high-priced player evolves from the training room to the disabled list and eventually to a disability claim. This proposition can be costly for both insurance carrier and team. As a result, the economics of sports are now shaped by insurance markets as much as TV contracts and ticket sales.
The big risk for insurers is
moral hazard. Players insured against a career-ending injury, having already received a payout, may have little incentive to make a comeback. While teams with disability policies have an incentive to keep a player sidelined until he is fully healthy.
