The NFL has annouced its verdict in the New England Patriots taping scandal: Coach Bill Belichick is being fined $500,000 and the Patriots $200,000 plus one or two draft picks. Here’s my question: is Bill worried about bouncing tomorrow’s rent check? Notably, if he were a corporate CEO, the answer would almost certainly be not: he wouldn’t pay a dime out of his own pocket.
Under ordinary agency principles, the fine would seem to be for conduct within the scope of employment and therefore subject to indemnification as a matter of right. (The conduct isn’t illegal, just prohibited by a very vague league rule.) Thus, the default should be that Belichick will get reimbursed by the Pats. But something is wrong with this analysis, as the actual, distinctly administered, fine would otherwise be quite deceptive.* So we’ve got to assume that Belichick’s contract contains a clause saying something like: “All league fines are your responsibility, and you agree not to seek indemnification against us.”
If that is true, then the question becomes: can NFL coaches buy insurance against potential losses like this? On one view of the behavior, the answer is no, because you generally can’t insure against acts in your control. But maybe Belichick didn’t personally order this behavior, he just permitted it – he’s negligent. If that were so, he certainly could have puchased some kind of policy that would have reimbursed him. Whether he did or not is of course unknown, though given his reputation for strategic genius, I wouldn’t be terribly surprised.
(Image Source: Wikicommons)
*I’m assuming that the NFL isn’t so cynical as to think that a separate fine might quiet the public uproar even if it really is just a $700,000 tax on the organization.