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Starting next year the Mets will pay Bobby Bonilla $1.2 million per season through 2035

Jul 1, 2010, 12:45 PM EDT

Mike Sielski of the Wall Street Journal notes that starting exactly one year from today the Mets will begin paying Bobby Bonilla an annual salary of $1.2 million … for the next 25 years.
Bonilla is 47 years old, has been retired since 2001, and hasn’t played for the Mets since 1999, but when they bought out the remaining $5.9 million on his contract in January of 2000 they agreed to defer payment at eight percent interest.
And now it’s time to pay the fiddler.
Back then Bonilla was represented by agent Jeff Borris of Beverly Hills Sports Council and the Mets’ general manager was Steve Phillips, and according to agent Steve Gilbert “both sides thought it was a good idea.” And in fairness to Phillips, the Bonilla thing certainly wasn’t his worst idea.
Anyway, as Sielski notes by deferring the money owed to Bonilla the Mets were able to add Mike Hampton, Todd Zeile, and Derek Bell to the 2000 team that won the National League pennant and lost to the Yankees in the World Series, but now instead of simply paying him the $5.9 million in 2000 the team will end up giving Bonilla slightly under $30 million from 2011 to 2035.
Bonilla was at Hiram Bithorn Stadium in Puerto Rico this week for the Mets-Marlins series and referred to his unique arrangement as “that beautiful thing.”

  1. Jonny5 - Jul 1, 2010 at 1:06 PM

    That’s the sweetest retirement plan I’ve ever heard of. And he starts his retirement effective now, at 47. Damn.

  2. nps6724 - Jul 1, 2010 at 1:17 PM

    It’s rare that an athlete outsmarts a high-level executive, even if it is Steve Phillips.

  3. BigPhil - Jul 1, 2010 at 1:28 PM

    It just looks cooler than it is. It’s simple math, and he didnt “magically” make $5.9mm into $30mm. Bonilla and the Mets both got a fair deal, but it was smart for Bobby to do it since he’s an athlete and they have all sorts of history with money problems after they stop playing.

  4. G2 - Jul 1, 2010 at 1:33 PM

    It worked out well for the Wilpons too. They invested their $6 Million with a can’t miss investor

  5. Brad19 - Jul 1, 2010 at 1:33 PM

    Mets GM: “We sure could use Bonilla.”
    Mets Owner: “Can’t afford him and all those other guys.”
    Mets GM: “I could put him on my Visa card.”
    Mets Owner “But then he’d cost like $30 million before you paid it off.”

  6. Matt S. - Jul 1, 2010 at 1:42 PM

    Well, good thing $1.2 million in 2035 will be about $50,000 in 2010 dollars.

  7. The Rabbit - Jul 1, 2010 at 1:47 PM

    If I had to take a w-a-g as to the actual circumstances surrounding this deal, I’d start with Fred Wilpon. He was President, CEO and had an ownership stake in the Mets at the time.
    I don’t how long he had invested with Madoff (or someone else promising above market returns) but it wouldn’t surprise me that the deal was designed so that the Mets could take a fraction of what was owed Bonilla at the time, make annual installments into investments expecting unrealistic, risk free interest, and have enough to “annuitize” the payouts using the same aggressive interest calculations.
    It’s exactly the same way pension plans went down the tubes starting in the 80’s.

  8. davidc45629 - Jul 1, 2010 at 1:51 PM

    Hey G2 – How do you know that 6 mil didn’t end up in Madoff’s hands?

  9. Scott - Jul 1, 2010 at 2:03 PM

    FYI, with projected inflation, they will end up paying him $22-23M in FY2000 dollars.

  10. Dan in Katonah - Jul 1, 2010 at 2:43 PM

    It looks like they valued it as if buying an annuity that began payment in 10 years. Of course, since interest rates were much higher then, it probably looked like a good deal. However, lower interest rates and the fact that they probably invested the $5.9M with Madoff, makes that deal look a little less wise. Also, Bonilla sucked.

  11. dorothygp - Jul 1, 2010 at 3:14 PM

    Who was the genious that made the Bobby Bonnila deal? The Mets will pay for that one for years to come. They could put a uniform on him maybe? He could could keep the bench warm for the pitchers? There must be some way they can get their moneys worth.

  12. paul - Jul 1, 2010 at 4:55 PM

    Steve Phillips thought he was a fat chick. That’s why he gave in so easy

  13. john pileggi - Jul 1, 2010 at 5:21 PM

    Bonilla: The gift that keeps on giving, long after you are sane enough to notice. HArd top believe that a guy that they signed when I was 32 will be getting paid when I am 83. Steve Philips will be working for a little league team.

  14. jabberwock - Jul 2, 2010 at 12:22 AM

    My new hero! All hail, Bobby Bonilla! Stick it to the man, Bobby!

  15. Neilw - Jul 2, 2010 at 10:32 AM

    Does Aaron Gleeman or any of the readers who commented understand basic math?
    Get out a paper and pencil or use Microsoft Excel and you can see that no one got a steal and no one got ripped off. The only advantage for either side was when taxes would be paid.
    Its the same as winning a lottery when the winner has the choice of getting a one time payment of $1 million, or something like $75,000 per year for 20 years.
    If you invested $5.9 million in 2000 at 8% you would have the same money in 2035 as if you got paid $1.2 million per year from 2011 to 2035.
    At 8% per year, $5.9 million grows to more than $80 million by 2035.
    Why is this such a hard concept for people to understand?

  16. crashwave - Jul 2, 2010 at 3:39 PM

    We get it, neilw. Problem is, 8% is incredibly high. Nobody’s made that kind of money this decade or even close.
    Bonilla’s 5.9 million is currently worth 12.7 million, and will continue to increase at 8% annually.
    If you invested 5.9 mil in the S&P index (for example) ten years ago, you’d be sitting on 4.2 million now. Who knows what the future will bring, but I wouldn’t bet on more than 8% returns.
    Steve Phillips literally mortgaged the Mets future, at a lousy (for the borrower) rate of 8%.

  17. Neilw - Jul 3, 2010 at 11:39 AM

    2 points.
    1. I don’t think most people here “get it”. Most people, including the original article, ignore the basic concept of the time value of money. $1 today is worth more than $1 in the future. The article and most comments are written as if “Oh my God! The Wilpons could have paid $6 million in 2000, but now they are stuck paying $1.2 million per year from 2011 to 2035!” Big deal. The value is the same. It’s like saying “Oh my God! I thought I had half a dozen dollars! Turns out I have $6!”
    2. 8% is not “incredibly high”. That was the going rate for life insurance annuities in 2000, and it was that rate for several years. Today, interest rates are lower. But the Wilpons didn’t set up this annuity in 2010 or 2008, they set it up in 2000.
    I have a low opinion of the Wilpon’s ability to run the Mets as a business, but this Bonilla story is a non-story. It doesn’t reflect poorly on the Wilpons, and it hasn’t helped or hurt them that interest rates today are lower than in 2000.
    I think you are probably unfamiliar with annuities. Regular people can buy annnuities. They are nothing special or hidden. They are commonly used in sports because of they allow the player to defer paying taxes while they allow the team to get a tax deduction up front. For example, the Mets got $6 million tax deduction in 2000 for buying the annuity for Bonilla, but Bonilla doesn’t get taxed on the proceeds until he actually gets paid starting in 2011.
    There are plenty of dumb business decisions the Wilpons made (including bringing Bonilla back to the Mets for a second tour), but creating a deferred compensation structure for Bonilla is not one of those dumb decisions.

  18. Neilw - Jul 3, 2010 at 11:45 AM

    Just in case it still isn’t clear, in 2000, the going rate for an annuity was 8%. It doesn’t matter if rates went up to 12% or down to 4% years later. The Wilpons bought the annuity at 8%. It’s just like buying a house, a car, a computer or any other product. The annuity required a one time payment by the Mets in 2000. That’s all. If you bought a car, boat, house, gold, television, computer or airplane in 2000, it doesn’t matter if the price in 2008 or 2010 is higher or lower than in 2000. You already paid for the product.
    You could have bought 30 year US government treasury bonds in 2000 with a much higher interest rate than you can buy 20 year US government treasury bonds in 2010. But that doesn’t affect your value and income from having bought the 30 year bond back in 2000. The Mets paid $6 million in 2000 and are done with it. They’ve taken the financial hit already. They took the financial hit 10 years ago.

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