In the fall of 2023, Jordan Montgomery helped lead the Texas Rangers to the first World Series title in franchise history. At age 31, the left-hander hoped to parlay a year in which he set career highs for wins (10), ERA (3.20) and strikeouts (166), and then went 3-1 with a 2.90 ERA in the postseason, into a long-term free-agent payday. When that didn’t materialize, he settled for a one-year, $25 million deal from the Arizona Diamondbacks, just two days before Opening Day.
Montgomery struggled badly in his new home, putting up a 6.23 ERA, and was worth -1.4 wins above replacement in 2024, according to Baseball Reference. Diamondbacks owner Ken Kendrick took blame for a contract he called a “horrible decision.” Still, Arizona was forced to pay out Mongomery’s full salary.
John Abbamondi started LongBall Capital & Insurance Services with Shiraz Rehman and is ready for a big offseason in baseball. Courtesy of LongBall Capital Inc.
However, a new insurance company from a former longtime sports executive could help teams mitigate the risk associated with high-salaried players. Hypothetically, if the Diamondbacks had such an arrangement in place with Montgomery, they would have only owed him about half of that 2024 money.
It’s all part of a new firm co-founded in February 2023 by John Abbamondi, the former chief executive officer of the Brooklyn Nets and previously an assistant general manager of the St. Louis Cardinals, and Shiraz Rehman, at one time an assistant GM for the Chicago Cubs and Texas Rangers. The firm, LongBall Capital & Insurance Services, has a licensed insurance agency known as LongBall Insurance Services LLC, with its holding company known as LongBall Capital Inc.
LongBall had a $4 million capital raise in August 2023, with the majority coming from institutional funding, as well as high-net-worth individuals who work on Wall Street or in sports. It has partnered with United Specialty Insurance Company, a subsidiary of publicly traded insurance conglomerate Markel. United Specialty holds an “A” rating from AM Best (the rating is of the belief they have a superior ability to meet their insurance obligations). LongBall owns the product, with United Specialty outsourcing the pricing and sourcing to LongBall. So when a team enters into a policy, United Specialty would pay them.
By this past May, Abbamondi and Rehman had amassed enough capital to launch their first product, Disability+, at scale.
“Baseball players are going to earn collectively somewhere around $5 billion in income this year. And all that risk is sitting with the clubs, not the players, because the players’ contracts are guaranteed,” Abbamondi said. “And what we’re saying to club owners is, you hedge everything else in your life. Even your team revenue is hedged because you sign long-term naming-rights deals. But your most significant cost, you’re bearing all the risk. So wouldn’t it make sense to transfer or share some of that risk with a third party?”
Traditionally, insurance policies for players signing large, guaranteed contracts have only covered long-term injuries such as a torn ACL. For baseball, they often feature a 60- to 90-day deductible before a team can recover any money. It is only after that period that teams can start getting a percentage of the player’s salary on a daily basis.
However, Disability+ would also cover a player’s performance suffering due to playing through an injury, coming off an injury, dealing with a mental health issue, fatigue, loss of skill or just simply having a bad year for reasons unknown.
“My partner and I, with our jobs in baseball — and we also did it in the NBA — we bought these policies,” said Abbamondi. “And frankly, we always thought that they weren’t a great hedge for what we really care about. And the product that we wanted to buy didn’t exist.
“Our claim that a club gets from us is not counting days on the injured list. The claim that the club gets from us is based on how well the player performed, full stop.”
The claims, under a variable pricing model, are based on a player’s runs above replacement (RAR), a similar metric to wins above replacement (WAR). Teams are provided with the proprietary metric’s formula, so they understand how it works, as well as a schedule that shows claims for each level of RAR. Using a policy based on numbers would allow LongBall to settle claims within a couple days of a season’s end.
Essentially, if a player lives up to his contract, the team would pay a premium on top of the guaranteed salary. However, if a player performs poorly, a team would be able to recoup a portion of the money owed.
The insurance premium is driven by how big the maximum claim is, and a risk profile assessment of the player. Data scientist Sam Elias, who worked in baseball analytics for the Los Angeles Dodgers, is crucial to LongBall’s ability to underwrite the risk. Elias is responsible for developing models used to forecast player performance, and to price the risk if a player’s performance falls beneath some threshold.
The Diamondbacks had no choice but to pay out all of the $25 million deal they signed Jordan Montgomery to, despite his dreadful season that included a 6.23 ERA. getty images
Building the product took approximately a year. That included going through licensing, obtaining insurance capital and capacity from companies, and testing the product before going to market. Conversations were held with several key stakeholders, including MLB teams, the commissioner’s office, players and agents. A player policy used by the Cubs served as a proof of concept.
Chicago Cubs GM Jed Hoyer, who has known Abbamondi for years, took out a Disability+ policy with LongBall on an unspecified player in 2023 (the player was made aware of the policy) and said he would do future deals with them.
“Traditional insurance is based on injury, usually catastrophic injury, whereas this product is based on what the player is able to perform on the field,” Hoyer said. “And I think that for what we are trying to do, I think that makes a lot more sense.”
Had Arizona been able to take out a LongBall policy on Montgomery, it could have, hypothetically, claimed a maximum of $15 million. Generally, for free agents like Montgomery, the max claim represents 60% of the average annual value of the contract.
When deducted from Montgomery’s guaranteed $25 million salary and a $2.7 million insurance premium, the Diamondbacks would’ve been on the hook for $12.7 million total.
If Montgomery had a good season, they would have paid out his guaranteed $25 million salary and the $2.7 million insurance premium to LongBall, on behalf of United Specialty, for a total cost of $27.7 million.
Team chief financial officers would be charged with accounting for how those various scenarios would factor into the team’s overall payroll budget every year.
Abbamondi said they plan to start selling policies in the offseason.
“The way we think of it, it’s a true win-win in sports, where the player gets what he or she wants; the club gets the reduction in risk that is super helpful to them; and from a fan’s perspective, it increases the chance that their favorite player is going to come to, or stay in, their city,” Abbamondi said.
Abbamondi said a team president of a small-market club noted the benefits of a risk-mitigation insurance policy on mega deals, which could better help them attempt to keep their star players.
“He said, ‘Look, the problem for a club like us is if the contract works out, it’s great. He pays for himself.’ But if it doesn’t work out, a big deal like that can cripple a small club for a decade,” Abbamondi said. “We take that downside off the table for them.”
Prince Fielder, now a senior adviser with LongBall, provides a test case. He was drafted seventh overall by Milwaukee in 2002 and made three All-Star teams for the Brewers before leaving to sign a nine-year, $214 million deal with the Detroit Tigers before the 2011 season.
“If this was there [when I played], I think I could’ve probably had more of a chance to stay in Milwaukee, but you never know,” Fielder said. “But I think it wouldn’t have hurt if this was around.”
MLB declined to comment on the policies.
One potential concern that could arise is optics. For example: If a player had a terrible first half, and his RAR was bad, would the team limit his playing time because he was not playing well? Or because they have the policy and want to get a partial payout?
There have not been any Disability+ policies beyond the one done with the Cubs, which is now expired. MLB does not proactively approve these types of insurance policies, but would evaluate them on a case-by-case basis. However, the league does not allow any products that are based on team performance.
Abbamondi wants to ultimately expand to other major professional sports in North America, as well as global soccer.
Ex-MLB outfielder Chris Dickerson is also a LongBall senior adviser. Formerly, he was a member of the MLB Players Association’s executive board. In his current role, he has spoken with dozens of players to get their take. “Their feedback was widely positive. That’s why I’m here,” Dickerson said. Dickerson asked players if they would be OK getting an insurance policy taken out against them. Because their contracts remained guaranteed and their teams could potentially add help at the trade deadline with the money saved from a policy, players were on board.
For Abbamondi, it’s the latest step in his expansive career.
“I spent 10 years flying in planes in the Navy and 20 years working in professional sports,” he said, “and my wife teases me that I’ve gone from ‘Top Gun’ to ‘Moneyball’ to insurance agent.”
