MLB sues insurance providers, cites billions in virus losses
Major League Baseball and all 30 of its teams are suing their insurance providers, citing billions of dollars in losses during the 2020 season played almost entirely without fans due to the coronavirus pandemic.
The suit, filed in October in California Superior Court in Alameda County, was obtained Friday by The Associated Press, says providers AIG, Factory Mutual and Interstate Fire and Casualty Company have refused to pay claims made by MLB despite the league’s “all-risk” policy purchases.
The league claims to have lost billions of dollars on unsold tickets, hundreds of millions on concessions, tens of millions on parking and millions more on suites and luxury seat licenses, in-park merchandise sales and corporate sponsorships. It also cites over a billion dollars in local and national media losses, plus tens of millions in missed income for MLB Advanced Media. It says all of those losses should be covered by their policies.
MLB cut short spring training and postponed the start of its regular season in March, then began a truncated schedule in late July during which fans were barred from stadiums. Teams were limited to 60 regular-season games, down from 162.
Most postseason games were played without fans, though there was limited capacity of about 11,000 per game for the National League Championship Series and World Series at Arlington, Texas.
“Due to COVID-19, the Major League Baseball entities, including those of the 30 major league clubs, have incurred significant financial losses as a result of our inability to play games, host fans and otherwise conduct normal business operations during much of the 2020 season,” the league said in a statement to the AP. “We strongly believe these losses are covered in full by our insurance policies, and are confident that the court and jury will agree.”
Messages seeking comment were not immediately returned by the insurance providers.
Over 1,400 lawsuits have been brought against insurance companies regarding business interruptions claims related to the pandemic, according to data compiled by the University of Pennsylvania Carey Law School. That includes several similar suits by minor league baseball teams, whose season was wiped out completely when baseball Commissioner Rob Manfred canceled it.
At least one of those minor league cases, filed in Arizona and led by the Chattanooga Lookouts, has already been dismissed due to a virus exclusion in the policy.
Insurers in many cases have insisted that financial losses caused by the coronavirus do not constitute physical loss or property damage. MLB is claiming the virus has led to both.
“The presence of the coronavirus and COVID-19, including but not limited to coronavirus droplets or nuclei on solid surfaces and in the air at insured property, has caused and will continue to cause direct physical damage to physical property and ambient air at the premises,” the suit says. “Coronavirus, a physical substance, has attached and adhered to Plaintiffs’ property and by doing so, altered that property. Such presence has also directly resulted in loss of use of those facilities.”
Many teams have laid off front office employees in response to the pandemic, and many are predicting a slow offseason for players in free agency. Several clubs have already cut loose high-level players as a way to save money, including when the Cleveland Indians declined a $10 million club option on three-time All-Star Brad Hand and the Chicago Cubs failed to offer a contract to popular slugger Kyle Schwarber, allowing the 2016 World Series champion to become a free agent.
MLB has not said whether 2021 spring training or the season will start on time.