inFocus: Sports injury and economic loss

Date: March, 2015 sports injury and economic loss

Originally published in the InFocus, Early Spring 2015 issue.

The alarm goes off. It’s 5 a.m. on Saturday morning, and you roll out of bed. The coffee is brewing, the bags are packed, and all you need now is for your children to come downstairs dressed and ready to go. For once, the drive is short and you are thankful as you enter the arena and feel the familiar chill on your skin. It’s hockey season again and your weekends are spent driving from arena to arena to watch games and cheer the kids on. Despite the early mornings, hockey is an invaluable experience for your family, especially your children.

It can all change in an instant when suddenly your 12-year-old crashes headlong into the boards.

Now what?

When an incident resulting in injury occurs during a sports game, and the injury is serious in nature (such as a concussion), it is not surprising that questions regarding the details of the incident, the impact on the child and the potential liability develop quickly. Who is to blame? Was it the child’s fault? Was it another player that caused the incident? Did a faulty Zamboni leave an obstacle on the ice that caused the child to trip? What is the economic impact (i.e. losses and/or costs) that will be incurred by the injured child over their lifespan?

Coaches, trainers, the league, and each team may owe a duty of care to all of the children participating in an organized sport. If there is a breach of this duty, and an injury occurs, then recovery for any of the injury-related losses may be pursued. In every situation, a lawyer should be consulted to obtain independent legal advice regarding the incident and, should the claim hold merit, to identify the parties who could be legally liable in an incident like this. When the claim proceeds, the lawyer may hire an accountant to assist with quantifying the possible economic loss incurred, which could include the loss of future wages and opportunities and/or future care costs (based on identified needs), as a result of the injury.

We are often called upon to assess possible economic losses incurred by children over their lifetime in scenarios such as that described above, and more commonly, when injured in automobile accident or a slip and fall incident. In economic loss assessments we rely on medical doctors to explain the biological impact of an injury, this way we remain within our expertise and in the realm of valuation.

As part of an economic loss assessment, we may be required to predict a child’s career path, which can be a challenging task. It may be necessary to consider both the earning potential had the incident not occurred and the residual earning potential as a result of the incident. Questions on which we require direction from the lawyer could include:

  • What would the child’s career path have been had the incident not occurred?
  • With the level of injuries sustained, what is the child able to accomplish now?

We may also consider certain indicators beyond average population statistics such as:

  • The parents’ level of education, occupations, income and motivations;
  • The academic achievements and school transcripts of the child pre-incident; and
  • The expressed interests and motivation of the child pre-incident.

A vocational assessment, requested by the lawyer and completed by an expert in this field, evaluates the potential career path of an injured child who has no preceding work history. Such an assessment provides relevant guidance required to value potential economic losses.

The economic assessment of the injury of a professional athlete, or a prospective professional athlete, would be far more challenging than that of a recreational athlete. Due to the nature of the profession and the additional contracts that can come with success as a professional athlete, it would be necessary to consider multiple career outcomes. These could depend on:

  • Professional career likeliness;
  • Acceptance and degree of success in a professional league;
  • Career duration on and off the ice;
  • Lost endorsements; and
  • The possibility of other injuries that can have an impact on career length or quality of life.

The above factors would vary widely from individual to individual and our role would require us to consider the possibility of more than one scenario when calculating the potential economic loss incurred.

Injuries from participation in full contact sports, like hockey, are often shrugged off as “just part of the game”. However, the reality is, the injuries sustained could have long-lasting social and economic impact on the injured party. It is important that the proper advice is sought. If you have any questions about personal injuries and resulting economic loss, we encourage you to contact the author of this article.

Authors

With contributions from: Daniel M. Edwards, MA, CPA, CA • IFA, CBV, CFE, CFF, Daniel M. Edwards Professional Corporation – Partner, Valuations | Forensics | Litigation; and Jim Muccilli, MBA, CPA, CA • IFA, CBV, CFE, ASA, CFF, Jim Muccilli Professional Corporation – Partner, Valuations | Forensics | Litigation

Daniel M. Edwards, Partner in Valuations | Forensics | Litigation (daniel.edwards@crowesoberman.com)

Jim Muccilli, Partner in Valuations | Forensics | Litigation (jim.muccilli@crowesoberman.com).

Specific professional advice should be obtained prior to the implementation of any suggestion contained in this article.

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