Met's to start paying Bonilla again (1 Viewer)

[Billy Bats]

You want to talk about bad deals?! Check out this Met's gem between themselves and Bobby Bonilla. I don't remember hearing about this when he was released, but I guess they wouldn't want this publicized too much. There has to be more to this story, I have to believe, otherwise it's the dumbest thing I've ever seen.

1. Bobby Bonilla finally gets paid

Hey, New York Mets fans, think things couldn't get any worse? Next year former outfielder Bobby Bonilla goes back on the payroll at the ripe old age of 48.

In 1999, Bonilla returned to the Mets for a second stint at Shea following his borderline disastrous free-agent signing in 1992. Bonilla wasn't any better the second time around, so the Mets waived him in 2000. The problem was that the team still owed Bonilla $5.9 million in guaranteed salary.

Bonilla's agents worked out a deal with the Mets where he would defer the salary if the team would pay him $1,193,248.20 every July 1 from 2011 to 2035. Not a bad deal for someone who was so bad the team basically paid him to go away.

So instead of paying him off at 5.9 million, someone actually agreed to pay him $1.2 million for 25 years for a total of 30 million instead?!

http://www.cnn.com/2010/LIVING/worklife/04...acts/index.html

 

[Bob Loblaw]

Wow! How great for him!

 

[Giant Wooden Badger]

Depends on what they did with the original $5MM.

 

[Deranged Hermit]

I read about this on metsblog.com a few days ago. There HAS to be more to this, or else the Mets are even dumber with their money than I thought they were.....

 

[whoknew]

I read about this on metsblog.com a few days ago. There HAS to be more to this, or else the Mets are even dumber with their money than I thought they were.....

I read about this the other day also. It's not quite as bad as you think. I did a little calculation and I think the PV of the deal in 2000 was like $8 or 9 million at a 5% discount rate.Obviously not ideal, but not as bad as it seems at first glance. I forget what the hurdle rate is for the Mets. Maybe someone can calculate it.

 

[Smack Tripper]

Hard to believe Wilpon got mixed up with Madoff considering strong decisions like this,

 

[pollardsvision]

Someone else can do the math on this, but it sounds like the Mets made out pretty well.

$6 mill. invested in 2000 will be a whole lot more than $30 mill in 2035.

Bonilla's agent screwed him. Unless, of course, he knew there was no way in hell Bonilla would invest or even save any of the money. In that case, this was a good deal for all parties.

 

[dparker713]

Depends on what they did with the original $5MM.

See Madoff, Bernard.

 

[INRIhab]

The Mets did this for a reason.

When teams decide to pay players in future dollars (like they agreed to do with Bonilla back in 2000), they typically take the $ and invest it in a deferred annuity....So if Bonilla was owed $6MM back in 2000, the Mets probably invested that $6MM, which has been accruing interest ever since....by doing this, the Mets can actually make a profit rather than simply paying Bonilla to go away (as long as the interest they get > interest rate set with Bonilla, and you also have to consider time factors).

That being said, if they gave Bonilla's money to Bernie Madoff back in 2000 then everything I said is incorrect and the Mets simply lost their money...

The interest rate that Bonilla is getting is 8%.

 

[INRIhab]

"Bonilla's agents worked out a deal with the Mets where he would defer the salary if the team would pay him $1,193,248.20 every July 1 from 2011 to 2035. Not a bad deal for someone who was so bad the team basically paid him to go away."

Actually, they didn't pay him to go away....they took his salary and invested it...which is exactly why they deferred the payments...the person who wrote this is an idiot.

EDIT: Well, I guess they did pay him to go away ... but they paid him in future dollars, assuming that they would make a profit on the deal. I'm sure Bernie is the one who promised a return greater than the interest on the Bonilla agreement, so the money probably just disappeared. #### you Bernie.

 

[Sweet Love]

Someone else can do the math on this, but it sounds like the Mets made out pretty well.

$6 mill. invested in 2000 will be a whole lot more than $30 mill in 2035.

Bonilla's agent screwed him. Unless, of course, he knew there was no way in hell Bonilla would invest or even save any of the money. In that case, this was a good deal for all parties.

This would be my guess and if someone would pay me like that, I am sure I would be better off in the long run. Now he gets paid until he is roughly 70 years old. Truth is, unless he borrows against future payments, he will never be poor, which has to give him piece of mind and also looking at the track record of some other athletes of his era (Eric Davis, Darryl Strawberry and Doc Gooden), he will come out waaaay ahead of those guys. I'd actually be curious as to whether his total playing days earnings equal 30 million.

 

[Mr. Retukes]

Someone else can do the math on this, but it sounds like the Mets made out pretty well. $6 mill. invested in 2000 will be a whole lot more than $30 mill in 2035. Bonilla's agent screwed him. Unless, of course, he knew there was no way in hell Bonilla would invest or even save any of the money. In that case, this was a good deal for all parties.

Assuming a 4% rate of return (after taxes), $5.9 million would be worth $9.3 million on 7/1/11 and $24.4 million on 7/1/35. Meanwhile, $1.2 million per year for 24 years will be about $50 million in 2035.At 10%, you'd end up with $202 million if you took the lump sum, but only $127 million if you took the 24-year payout.The breakeven point is a little less than 8% ROR.