By Erin Ayers, Advisen
Over a dozen minor league baseball teams and their owners have sued their insurers for “catastrophic” financial losses tied to the COVID-19 pandemic, stating that virus exclusions in their business interruption policies are “void, unenforceable, and inapplicable.”
Several of the ball clubs that have signed on as plaintiffs have already had claims denied, while other anticipate denials, according to a complaint filed in a Philadelphia federal court. The insurers named in the suit are Philadelphia Indemnity Insurance, Acadia Insurance, Scottsdale Insurance, Scottsdale Indemnity, and National Casualty Company.
Minor league baseball had a “stellar year” in 2019, the complaint states, adding, “This year, however, there are no games and no fans. As such, the Teams’ primary income streams have come to a halt.”
In addition to the civil authority shutdowns, minor league teams have also been hampered by the fact that they are dependent upon Major League Baseball for providing contract players.
“As a result of the virus, the governmental response, and Major League Baseball’s failure to provide baseball players, the Teams have been deprived of their primary source of revenue—fans coming to the ballpark and paying for game tickets, merchandise, food and beverage, and partaking in other amenities. Though some MiLB teams have limited revenue from advertising and sponsorships, this revenue is largely tied to the number of fans the team can attract to the ballpark in a given year,” the plaintiffs said.
It costs more than $2 million on average for minor league teams to operate and pay stadium leases and payroll during a year, even without an interruption of business. Many teams already paid out marketing and advertising expenses for the 2020 season before the pandemic shut it down, according to the complaint.
“Most MiLB team owners are small business owners or family businesses rooted in the community in which they own a team, the teams have little prospect for economic survival if the operation of their businesses is interrupted for any significant period of time within a season,” the complaint states.
The teams’ all-risk property policies contain exclusions for viruses, according to the complaint. However, Andy Sandler, an attorney for the baseball teams, told Advisen that the exclusions “are against public policy” or do not apply to the losses.
In the complaint, plaintiffs argue that in addition to the fact that it is statistically certain that the coronavirus is present in the ballparks, claims based on loss of use should succeed, because the facilities “are incapable of their intended function – serving as a venue for ball games attended by fans.”
The teams suing include the Chattanooga Lookouts, the Columbia Fireflies, Eugene Emeralds, Binghamton Rumble Ponies, Fort Wayne TinCaps, Fredericksburg Nationals, Amarillo Sod Poodles, Delmarva Shorebirds, San Antonio Missions, Idaho Falls Chukars, Stockton Ports, and the Inland Empire 66ers, along with their owners.