How UConn saved nearly $3 million on postseason bonuses for Dan Hurley, Geno Auriemma and staffs (Mike Anthony)

[UConnJim]

DB played a hunch and got lucky, but he should not be doing that routinely.

Hopefully DB is just a smart farmer, and doesn't waste UConn's money on this every year.

You buy insurance to cap your potential expenses. I think he should still take out insurance every year, but he can lower the limit to reduce the premium. So, instead of buying a $6.25 million limit like he did this year, he might buy a $4.5 million limit for next season.

 

[The Yakk]

You buy insurance to cap your potential expenses. I think he should still take out insurance every year, but he can lower the limit to reduce the premium. So, instead of buying a $6.25 million limit like he did this year, he might buy a $4.5 million limit for next season.

Lol no. A bad deal is still a bad deal, even if you only buy 70% of it.

Also, UConn should not be thinking of these bonuses as unexpected expenses. They only come in the years when we win championships--and gain unbudgeted financial windfalls--and we should be happy to pay them.

 

[husky8273]

I'm surprised this arrangement was discovered

 

[Stinger92860]

Bet the Women next year to go to the F4 AND win it all.

 

[UConnJim]

Lol no. A bad deal is still a bad deal, even if you only buy 70% of it.

Also, UConn should not be thinking of these bonuses as unexpected expenses. They only come in the years when we win championships--and gain unbudgeted financial windfalls--and we should be happy to pay them.

I guess you haven’t been watching the intense scrutiny on the AD P&L. Dave has to continue to show a declining deficit so understanding your potential expenses before the year starts is very important. There can be no more Ollie financial surprises.

 

[DCHuskyFan]

Not sure if mentioned, but the insurer could have hedged its UConn bet by insuring 10 other preseason contenders. Insurance salesman are going to sell, and the house always wins.

 

[Rich]

That’s the first time I’ve ever heard of something like this. That insurance company will probably never do business with us again lmao

Some poor nebbish actuary probably got canned for this.

 

[NEforceUConn]

“What happens in Storrs…..”

Oh wait, that doesn’t quite work.

 

[The Yakk]

I guess you haven’t been watching the intense scrutiny on the AD P&L. Dave has to continue to show a declining deficit so understanding your potential expenses before the year starts is very important. There can be no more Ollie financial surprises.

Fully aware of that scrutiny, and the financial stress on UConn.

That's exactly why these deals are a bad idea in the long run.

And to be clear, winning a championship and triggering these bonuses is a positive financial surprise for UConn. I guess you are not able to comprehend that.

 

[giddyup]

I get that it worked out, but $2.8 mil for a policy with a cap of $6.25 mil is insane. Figure a policy like this is typically a specialty thing like Lloyds of London. I’m really curious what the expected loss ratio was on this (health insurance is typically around 80-85 percent, certain life insurance policies are around 50-60 percent, etc - how much of the premium is expected to be paid out in claims).
This looks like it had a number of basic bonuses that would be paid fairly frequently - maybe $1.5 million or so - and then the roulette wheel strikes for the big stuff.

Now, policies like this are often underwritten with a stop loss. So the insurance carrier self-insures for a certain amount - say up to $2 million, and they buy reinsurance to cover the rest.

It’s about as close to gambling as you can get. Insurance is supposed to be about pooled risk, but somebody 2-1 odds.

 

[temery]

I get that it worked out, but $2.8 mil for a policy with a cap of $6.25 mil is insane.

Crappy pot odds.

 

[August_West]

I'm surprised this arrangement was discovered

I think it was trumpeted.

 

[CTpessimist]

Fully aware of that scrutiny, and the financial stress on UConn.

That's exactly why these deals are a bad idea in the long run.

And to be clear, winning a championship and triggering these bonuses is a positive financial surprise for UConn. I guess you are not able to comprehend that.

Partially disagree on positive financial surprise. It’s a future positive value. In the current year, the school doesn’t make anymore money? So i think it’s an expense on the current balance sheet that will be reported on when some media does a freedom of information act. And will show a bigger deficit by paying out the bonuses. If you buy this “insurance” every year you’re reducing the volatility of the budget, Even if it’s for a bad price. Maybe losing money in the long run (all insurance is expected to lose money or else the company wouldn’t have a profit built in and a desire to sell it) but knowing exactly how much you need to pay to do so rather than any surprises. And then UConn makes money on the back end from increased ticket sales and tournament shares over the next several years.

 

[The Yakk]

Partially disagree on positive financial surprise. It’s a future positive value. In the current year, the school doesn’t make anymore money? So i think it’s an expense on the current balance sheet that will be reported on when some media does a freedom of information act. And will show a bigger deficit by paying out the bonuses. If you buy this “insurance” every year you’re reducing the volatility of the budget, Even if it’s for a bad price. Maybe losing money in the long run (all insurance is expected to lose money or else the company wouldn’t have a profit built in and a desire to sell it) but knowing exactly how much you need to pay to do so rather than any surprises. And then UConn makes money on the back end from increased ticket sales and tournament shares over the next several years.

Lol sorry, but no way.

Almost no schools buy this kind of coverage for their own benefit. The class exists because the lion's share of deals are marketing promotions, where the buyer is trying to juice sales among local sports fans but does not want the exposure to the team actually winning.

If reduction in volatility were actually worth the long-term cost of a deal like this, then you would see more schools buying this product. But it simply doesn't happen.

DB played a hunch this year and won. Honestly, I wouldn't be bragging about it if I were him. If he ever buys a deal like this again, then he is a mark. Full stop.

Ask UConn's trustees if they would prefer that Dan and Geno stop winning championships so they wouldn't have to pay these "unexpected" bonuses.

Yeesh.

 

[UC15]

I'm surprised this arrangement was discovered

DB is trying to pat himself on the back lol ... it's how the news works.

 

[JMick]

Lol sorry, but no way.

Almost no schools buy this kind of coverage for their own benefit. The class exists because the lion's share of deals are marketing promotions, where the buyer is trying to juice sales among local sports fans but does not want the exposure to the team actually winning.

If reduction in volatility were actually worth the long-term cost of a deal like this, then you would see more schools buying this product. But it simply doesn't happen.

DB played a hunch this year and won. Honestly, I wouldn't be bragging about it if I were him. If he ever buys a deal like this again, then he is a mark. Full stop.

Ask UConn's trustees if they would prefer that Dan and Geno stop winning championships so they wouldn't have to pay these "unexpected" bonuses.

Yeesh.

If you think 80% of the bonuses are essentially guaranteed and you're actually paying a few hundred thousand to save a few million then the idea makes more sense.

 

[The Yakk]

If you think 80% of the bonuses are essentially guaranteed and you're actually paying a few hundred thousand to save a few million then the idea makes more sense.

Very true.

But your scenario is not in any way close to reality. The deal you imagine is a fantasy.

 

[Travelman6]

Can't he be accused of gambling?

 

[Hamms30]

Insurance and Basketball! That's what Connecticut does!!!!

 

[CTpessimist]

https://www.usf.edu/business-finance/purchasing/documents/single-source-game-point-capital-8.21.23.pdf

Significantly cheaper when your odds of winning the title are nearly zero!

 

[CTpessimist]

We might buy it again next year…

No. Contractor Contract No.
New Approval
Amount Term Fund Source Program Director
CT Based
S/MBE
6 Game Point Capital, LLC UC-24-KA0831203 $3,999,999 Upon execution -
08/31/24
Multiple
Sources
David Benedict,
Athletic Director
*The Administration is seeking approval to enter into contracts based on the material terms and conditions identified below, subject to final legal review.
BUS SERVICES
ENERGY POWER PURCHASE AGREEMENT AND LICENSING
EXPERIENTIAL GLOBAL LEARNING PROGRAM
Purpose
Purpose
Postseason compensation, travel and award insurance. This is the result of a publicly advertised solicitation. Initial
term is for one year with four one-year extensions available.

 

[CTpessimist]

If you think 80% of the bonuses are essentially guaranteed and you're actually paying a few hundred thousand to save a few million then the idea makes more sense.

That’s the ultimate question. What is the break even point? If it’s sweet 16 maybe it always make sense to have. If it’s final four maybe it’s not.

If it allows us to offer Hurley a compensation package with incentives worth an extra 3 mil without some government body objecting - I think it’s cool to have every year.