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Major League Baseball and all 30 teams sue insurers

| Apr 7, 2021 | Insurance Recovery |

As the 2021 baseball season begins, we baseball fans cannot help but feel the excitement for a new season and the prospect of attending games, sharing new baseball memories with friends and loved ones.  Last season the youthful Padres staged come from behind wins throughout the 60-game season and made it to the playoffs for the first time in 14 years. But, for the first time in nearly 40 years, it was the Los Angeles Dodgers that would win the World Series.

However, the Padres, the Dodgers, and the other 28 major league baseball teams played the season almost entirely without any fans in attendance due to the coronavirus. Now Major League Baseball and its teams have filed an insurance recovery lawsuit in northern California against their insurance providers.

The suit alleges that insurers AIG, Factory Mutual and Interstate Fire and Casualty Company have refused to pay claims on MLB’s all-risk policies.

Billions in lost revenue

MLB and team owners say that because they were unable to sell tickets, they lost billions of dollars. And because no one attended the games, they lost hundreds of millions of dollars more on concessions. They also claim lost millions because they were unable to sell luxury seat licenses and suites. They were also unable to reap revenue from parking, in-stadium merchandise sales and corporate sponsorships.

MLB says it also lost more than a billion dollars in sales of local and national media, and tens of millions more in missed revenue for MLB Advanced Media.

All-risk insurance policies

MLB and its 30 teams say that all those losses should be covered by the all-risk policies they purchased.

Teams played only 60 games each this year, down from the usual 162. Fans were not allowed into the regular season games, though about 11,000 fans could attend each of the games in the National League Championship Series and World Series.

Strong belief and confidence

In a press release, MLB said, “We strongly believe these losses are covered in full by our insurance policies and are confident that the court and jury will agree.”

The insurers will presumably argue that MLB’s financial losses due to the pandemic do not constitute property damage or physical loss. These are the very arguments cited by insurers when denying claims to insureds across the country and in many types of industries today. While a number of courts have ruled in the insurer’s favor in different types of cases for different types of insureds, some insureds have succeeded. Much depends on the insured’s experiences, the policies purchased and the application of different rules for construing policies. While we wait with interest for future developments in this particular suit, I personally am much more excited about attending a game and enjoying good food, pricey beers and time with friends and loved ones.