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John Henry: ‘We generally don’t use insurance’

FORT MYERS, Fla. — Red Sox [1] principal owner John Henry has his eyes wide open when it comes to handing out long-term contracts to free agents, calling the process of extending such offers as “very complicated.” And, has been surfaced in some of the Sox’ recent negotiations, part of that complexity centers around the issue of the team taking insurance.

“We generally don’t use insurance,” Henry said. “Not to say we won’t use it in the future, but I don’t think we have. I had a bad experience trying to get paid on a player. You pay the premium, but it isn’t always easy to get paid.”

The way Henry chooses to approach insurance has been shaped by a case he spent years in court haggling over, in which Lloyd’s of London refused to pay when former Marlins pitcher Alex Fernandez was injured. Sox CEO/president Larry Lucchino [2] also had an unappetizing experience when he was with the Padres and the insurance company was withholding payment in regards to Randy Myers’ case.

The philosophy would seem to explain the Red Sox’ desire in some case to protect themselves without the use of insurance when it came to some free agent contracts, such as J.D. Drew, John Lackey [3], and what was attempted in the case of Jason Bay [4]. The the thinking is if there is some problems with a pre-existing ailment in the latter years of the contract than the financial structure would change.

According to Bay, the approached factored in two-fold when the Red Sox’ final offer was made. The outfielder said that not only did the Sox’ want to have the final year of the four-year contract proposal contingent on health, but he also relayed that the Sox would agree to get insurance but only if the player paid half (which would have come out to a total of $2 million).

“If the circumstances were right we would take insurance, but that adds another big level of complexity because you have deductibles,” Henry said. “You have arguments about what caused it.”

It is all part of a process in which free agents and the teams chasing them are searching for long-term security.

“The problem is that there have so many long-term contracts have been given to free agents that the expectations are now high and long. It’s an issue,” Henry said. “You know if you study these things, giving free agents long, long deals, you don’t necessarily get what you pay for in the back end. So it’s a concern.”