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Message: [QUOTE="The Yakk, post: 4981248, member: 9988"] Lol tons of crazy speculation going on in this discussion. I won't reply directly to some of the nuttier ideas, because I think some of you are just joking around. 1. No reputable institution--not UConn and not any insurance company--is hedging any risk with a sports book. It's a nice idea in theory--because the prices at the sports books are much lower--but they simply do not have big enough balance sheets to be creditworthy partners given the size of these deals. If an insurer wants to lay this risk off then they will buy reinsurance; someone did mention that. 2. This is a fairly well-established business, and there are several insurance companies involved. UConn's "win" this year is a normal outcome in the course of that business; it is not some kind of shocking catastrophe that will change an insurer's strategy. UConn can continue to buy this coverage as long as they want it. Maybe the price goes up a little because our coaching staff's proficiency gets more weight in the analysis. 3. No matter how these deals are structured--hedging all the bonuses as UConn did this year; or some kind of stop loss structure where UConn hedges only the excess amounts (easily doable in the insurance market)--the fact is, the profit component for the insurer is huge and there is no getting around it. It is simply not a good financial decision in the long run. The insurers will not let you structure them into a better-priced deal. The whole point of these bonuses is they are funded out of the massive financial returns that accrue to teams that win championships. UConn's financial situation improves when we win a title, and the bonuses allow us to reward the coaches with a small part of that windfall. It should not be necessary to insure those bonuses; they are self-funding. The fact that DB played a hunch this year and it paid off is nice, but we should not be doing this as a matter of routine. Unless enriching the insurance market is part of UConn's mission. [/QUOTE]

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