1. The $5 billion moving bill:
Reports last week that the U.S. had agreed with Japan to transfer 9,000 of its 19,000 troops out of Okinawa stated matter-of-factly that the move will cost $8.6 billion – that’s billion, or $955,000 per service member. Even with Japan paying $3.1 billion of the bill, that leaves the U.S. with $5.5 billion of the tab.
Someone please explain to us taxpayers how moving even that many troops can cost us $5.5 billion, which is more than the entire appropriation for President Obama’s much-celebrated four-year Race to the Top education reform program? (It’s also close to the cost being argued over this week for cutting all student loan interest rates in half.) And what are the profit margins of the defense contractors that are going to get the work involved?
2. Can you insure against a bad arm?
When the New York Yankees traded in the off-season for Michael Pineda, Seattle’s rookie fireballing pitcher, it seemed like a good deal even though they had to give up their most promising minor league hitting prospect, Jesus Montero. Now, one month into the season, the deal has become a disaster: Pineda, who showed up for spring training mysteriously bereft of his fastball, has had to undergo shoulder surgery and will be out for the season if not forever.
But is this the Yankees’ loss, or is some insurance company holding the bag? A quick Internet search yields this 2008 article from Sports Business Daily, generally summarizing the availability of insurance for teams wanting to hedge these kinds of bets on their superstars. However, the story refers to insurance that would cover losses from an injury that sidelines a player who had a long-term, multimillion-dollar contract – in this case Albert Belle of the Baltimore Orioles. Here the Yankees’ loss isn’t big dollars paid to Pineda while he sits on the sidelines but the loss of swapping the prized Montero for someone who turns out to be lame.
How about a story examining how or if teams can insure against these kinds of disasters? Does the market differ across the various sports? And how do insurers set their rates? Do they examine the players? In the case of a pitcher, do they have experts look at how he throws to see if his delivery might carry extra risks of elbow or shoulder injury?