By Richard C. Giller, Esq.
Over the past several months a number of legal and business decisions have converged at the intersection of sports and insurance. On June 12, the New York Post reported that insurance giant American International Group, Inc. (AIG) had “stopped insuring NFL players against head injuries as the dangers of concussions became apparent even though it continues to play up its ties to the game”. The Post article came just six weeks after the April 29 court order to lift the stay on discovery that had been in place in the insurance coverage litigation between the NFL and its insurers, like AIG, issued by New York State Supreme Court Justice Jeffrey K. Oing. In that case, which has been pending for over 4 years, AIG and other insurers contend that they do not owe any duty to either defend or indemnify the NFL against claims asserted against the League by retired players claiming the NFL knew about and covered up the dangers of concussions in football. Justice Oing ruled that the NFL must make available to insurance companies its executives and league doctors for depositions as well as producing relevant documents concerning what the NFL knew about concussion risks and for how long those risks were known. Justice Oing is quoted as having said: “I can’t stop this anymore.”
The NFL had previously argued against lifting the discovery stay, claiming that allowing depositions and written discovery to go forward might jeopardize the approximately $900 million settlement between the NFL and thousands of retired players. The timing of Judge Oing’s ruling may not be coincidental because earlier in April, the United States Court of Appeals for the Third Circuit had upheld a lower court ruling that the settlement was fair despite being far from perfect and, in so doing, may have neutered the NFL’s prejudice argument.
Finally, in March 2016, the Pennsylvania-based youth football organization Pop Warner, settled a wrongful death lawsuit filed in Wisconsin by the mother of a man who committed suicide, allegedly as a result of numerous head injuries he suffered playing in a Pop Warner football league as a child. According to the New York Post, the Pop Warner case was settled for less than the $2 million limits of a liability insurance policy issued to the youth football organization by Lexington Insurance Company, an AIG company. The newspaper also reported that AIG stopped insuring Pop Warner “a few years ago as the NFL’s concussion crisis trickled down to the high school level and even younger.” The youth football organization now reportedly maintains liability insurance coverage through K&K Insurance Group with limits of $1 million per player and individual chapters have the option of purchasing an additional $1 million in coverage per player.
On its website, AIG trumpets itself as a “multinational insurance corporation with more than 88 million customers in 130 countries. AIG companies employ over 64,000 people in 90 countries.” In fact, prior to the financial crisis of 2008 and the $182 million federal bailout for AIG, the company had been ranked as the largest insurer in the world. The bailout muted the carrier’s bravado and, in an April 2009 interview, AIG CEO Edward Liddy, acknowledged that “AIG will never again be the world’s largest insurer. Pretty soon you will have a much smaller AIG. And what is left will look a whole lot different than it does today.” While AIG is no longer the largest insurer in the world, in 2014 it still ranked as the 8th largest writer of property and casualty insurance (by direct premiums written), collecting nearly $19 billion dollars in premiums. Among the AIG expenditure areas hardest hit by the 2008 bailout was the amount of money AIG invested in sports sponsorships.
Before the 2008 crisis, one of the most iconic and universally recognized logos in all of sports was the white “AIG” insignia, set out inside a white bordered rectangular box, on the front of the fire engine red soccer jerseys worn by members of the Manchester United Football Club, one of the most valuable sports franchises in the world. The AIG logo on the Red Devils jerseys dwarfed the Nike swoosh and the football club’s gold crest that sat above it. That jersey sponsorship had cost AIG approximately $19 million per season, although it was originally worth nearly $25 million annually, due to the prevailing exchange rate, when the sponsorship deal was first inked in 2006. The Manchester United deal was scheduled to run through 2010 but the partnership changed after the 2008 crisis, when it was announced in 2009 that the four-year deal would not be renewed.
It took AIG several years after the debacle of 2008 to get back into sports sponsorships. In 2012, AIG announced that it had launched an international rugby platform that included multi-year sponsorship deals with USA Rugby and the New Zealand Rugby Union. AIG’s 5-year sponsorship deal with NZRU costs AIG about $15 million per year or $75 million in total. AIG also served as the official global insurance partner of the 2013 Rugby World Cup Sevens held in Moscow.
Perhaps the most well-known rugby team in the world is New Zealand’s All Blacks, known as much for having one of the winningest records in all of sports, as they are for wearing all black uniforms and their world famous pre-game ritual of performing a traditional Haka dance, complete with a throat slashing motion aimed at their opponents. In fact, AIG sponsors Haka 360˚ app which provides a virtual reality Haka for your phone. The recognizable capitalized white AIG logo, set out in the same white bordered rectangular box that once adorned the red Manchester United jerseys, is now plastered across the front of the black Adidas jerseys worn by the All Blacks rugby club, as well as five other NZRU teams. In New Zealand sports, the AIG deal is second in value only to the All Blacks contract with Adidas.
While Rugby is one of the fastest-growing sports in the world, it is also one of the more violent sports where concussions are all too prevalent. According to a 2015 Bloomberg article, concussions were the most common injury at rugby premiership clubs for a third year in a row, accounting for 12.5 percent of all injuries. English clubs reported a 59 percent increase from the previous year. Because of the increasing frequency of head trauma in rugby, including a May 2015 coroner’s inquest in Dublin that concluded that a former amateur rugby player had died at the age of 57 from repeated head blows while playing for the Landsdowne rugby club, the sport may be at risk of lawsuits similar to the NFL. Last January a famous New Zealand rugby player was forced to retire at the age of 33 after suffering at least 20 concussions and blackouts during his playing career.
In November 2013 AIG also announced its arrival as the sponsor of the Dublin County Board of the Gaelic Athletic Association (GAA) in Ireland. The Dublin GAA is one of the 32 county boards of the GAA in Ireland and is responsible for Gaelic games in the Dublin Region and the Dublin inter-county teams. The AIG logo appears on the front of the powder blue Dublin GAA jerseys. AIG’s resurgence in sports sponsorships culminated earlier this year in AIG winning the award for the Best Rugby Union Sponsorship of the Decade at the United Kingdom Sponsorship Awards. AIG also won the 2016 award as the best Business to Business Sponsorship for their partnership with New Zealand Rugby.
Danny Glantz, the AIG Global Head of Sponsorship, recently shared his views on the value of jersey sponsorships with the website Repucom, noting that “a jersey sponsorship offers a brand the ability to differentiate itself in a busy advertising and sponsorship environment and maintain visibility as ad-blocking technology grows. Exposure goes well beyond a match or game, with the brand featuring in sports highlight videos and photographs in traditional and social media. If done well, jersey sponsorships can grow brand awareness, loyalty, equity and recall. They can also help reach targeted markets.” Mr. Glantz also noted that “because of jersey sponsorships, our AIG logo has received exposure in some unexpected places. A Dublin GAA fan wearing a jersey with our logo was brought up on stage at a U2 concert at Madison Square Garden. A journalist who was kidnapped and held hostage for more than two years in Somalia was repeatedly photographed and videotaped wearing a Manchester United jersey with the AIG logo front and center. A safety video for Air New Zealand … currently features the All Blacks in business suits and an adorable dog “Frank the Pug” wearing the AIG branded jersey. Most recently the Reserve Bank of New Zealand, in association with New Zealand Post, produced the world’s first jersey shaped coin and All Blacks Stamp.”
In addition to its NZRU and Dublin GAA sponsorships, AIG is also currently listed as an “event sponsor” for USA Football, which is the fourth highest level of sponsorship offered by that youth football organization. According to the recent New York Post article, AIG is also one of the chief sponsors of USA Football’s 2016 Protection Tour which travels around the country teaching kids ages 7 to 14 proper tackling techniques, correct helmet fit and use and other safety-related issues. The USA Football website publicizes AIG’s “aHead of the Game advocacy campaign” which is described as helping to “reduce the risks of concussions and other head injuries in youth sports through greater awareness and education.” For AIG’s part, its website describes aHead of the Game® as “an initiative to raise awareness on the risks of concussions and other head injuries in youth sports.” On that same page, AIG also notes that “in 2012 there were 163,760 young athletes seen in the emergency department for a concussion, which is more than 8 percent of the 1.35 million youth sports-related injuries reported to the emergency department. This means that every three minutes a child is seen in the emergency department for a sports-related concussion.”
A number of commentators have criticized AIG’s decision to stop insuring NFL players for head trauma as hypocritical or misleading. One risk management expert is quoted as describing the decision as “false advertising” noting that AIG is “putting [its] name on something [it] will not insure.” This author agrees. It appears that AIG wants it both ways; it gladly accepts the benefits of brand awareness and recognition from jersey sponsorships, hoping that a new generation of fans will wear jerseys with the AIG logo plastered across the front, and loudly touts is concussion initiatives like aHead of the Game® and its event sponsorship of USA Football, while simultaneously seeking to avoid any defense or indemnity obligations for “claims related to bodily injury allegedly suffered by individuals due to brain injuries that occurred while playing football” under numerous policies of insurance it issued to the NFL over the course of a dozen years. And, if that hypocrisy were not enough, AIG canceled its insurance coverages for the very youth football leagues the aHead of the Game® initiative is aimed at protecting and now refuses to provide insurance protection to NFL players against the damages caused by head trauma.
Giller is a partner at Polsinelli. More can be found on him here: http://www.polsinelli.com/professionals/rgiller
