A View From The Press Box

***First Run In NU On May 22***

Anthony Avitabile will never hit a home run, strike out a batter or make a spectacular catch to win a game, yet he may be the MVP—most valuable person—in major league baseball today.

The national pastime’s director of risk management, in outlining the demands of his “dream job,” was no doubt the envy of everyone in the room as he described his work during a speech this past April in Honolulu at the Risk and Insurance Management Society’s annual conference.

Yet even though a life in baseball sounds like fun and games, when you come right down to it, insurance and risk management are no different in professional sports than in any other field, Mr. Avitabile made clear. A risk manager must deal with an insurance industry few outsiders understand, and coax everyone to deal with worst-case scenarios they would rather not think about.

The challenge was daunting for Mr. Avitabile and his colleagues, as they tried to convince 30 autonomous clubs to boost risk management and save money by working together to control losses. “Some member clubs didn’t want a league-wide program,” he recalled. “A few had corporate parents with sophisticated risk management systems in place, and their own local broker they were comfortable with.”

After the market hardened considerably for property, workers’ compensation, umbrella liability and terrorism coverage following the Sept. 11, 2001 terrorist attacks, the MLB office was able to convince club CFOs to get on board. The results were impressive.

“It was the proverbial grand slam,” said Mr. Avitabile. “Negotiating on behalf of all as a service center for the individual clubs, we were able to improve terms and coverage, implement a formal risk identification and control process, as well as save $40 million.”

To accomplish this, MLB put league-wide standard operating procedures in place. “We created best practices and incentivized good behavior,” he noted. “We even used peer pressure by ranking clubs on the basis of their workers’ comp and general liability losses. They’re so competitive by nature that you saw quick action by the clubs at the bottom.”

Formalized loss control was the critical element, according to Mr. Avitabile. “You must relentlessly manage the process,” he said, citing the formation of a Workers’ Compensation Quality Council.

Beyond asking teams to carefully investigate any off-season health woes blamed on baseball-related injuries, clubs were encouraged to set up rehabilitation facilities year-round in their stadium or spring-training center so they could actively direct and monitor a player’s recovery.

The improvement was dramatic, he noted, as workers’ comp costs fell from $25 million to $14 million annually.

Sometimes the unique culture of the business of baseball got in the way, he admitted.

“We did a seminar on commercial auto, and suggested one way for the clubs to cut their exposure and insurance costs was to stop giving out company cars and substitute a car allowance,” he noted. “There was resistance from clubs that wanted to know if this would be mandatory. They were afraid if they followed our advice and the other clubs didn’t, they would lose their best scouts, for whom a company car is an important perk.”

However, one of the biggest and most controversial reputational risks facing the game today—the use of steroids by players to artificially boost their strength and production—is beyond his purview. “That’s labor relations,” he said. “I’m not involved with that at all.”

Still, about the only coverage he cannot provide, he conceded, is for those hard-to-get insurance runs.

***

As for my World Series pick...

First of all, I'm heartbroken over the Mets' loss last night! I went into this postseason hoping for a Subway Series, but I ended up with St. Louis vs. Detroit! The Mets certainly had their chances--loading the bases twice, but unable to get the big hit either time. That was the story of the entire National League Championship Series. While I would like to blame the absence of Pedro Martinez and El Duque for their loss, the truth is their pitching--except for blowing the game last Friday night--was terrific. It was their mighty bats that too often failed to deliver. As they say here in Brooklyn, Wait 'til next year!

As for this World Series, the teams are well-matched, and both managers are outstanding. I'm inclined to give the Cards a bit of an edge for the same reason I think they beat the Mets--they are gritty, fundamentally sound and very well coached. They also have the best slugger in the series in Big Albert.

But the Tigers are plenty gritty themselves--that's how they came back to beat the mighty Yankees--and I think their superior starting staff will triumph in the end.

I say, Tigers in 6.

What's your pick?