The New York Mets and Bobby Bonilla
If you are a beleaguered New York Mets fan, the start of a new season brings a painful reminder of “Bobby Bonilla Day,” which occurs like clockwork every July 1.
Why is there a Bobby Bonilla Day and how come it hurts to remember?
Although Bobby Bonilla played for the Mets for a total of five seasons during the ‘90s, and has been retired since 2001, the organization is still obligated to pay him every July 1 in the amount of $1,193,248.20.
This has been occurring since 2011 and will continue until 2035. Why is he receiving those annual payments?
Before the start of the 2000 season, Bonilla had $5.9 million remaining on his contract. With his performance slumping, the Mets wanted to buy out his contract. Instead of cutting him a check for the $5.9 million, they offered to pay him roughly $1.2 million a year between 2011 and 2035, or almost $30 million total. Bonilla accepted.
What prompted the Mets to make this deal with Bonilla?
Rather than pay Bonilla the $5.9 million remaining on his contract, the Mets were motivated to postpone payments into the future. In an unusual twist, the Wilpon family, then-owners of the Mets, were heavily invested with a hedge fund manager named Bernie Madoff. Perhaps they thought keeping the $5.9 million invested would pay off in the long run?
For Bonilla, if he was willing to be patient and wait a full 11 years to receive his first payment and 35 years to receive it all, he would receive far more than the $5.9 million originally owed. It helped that Bonilla had been a professional athlete for many years by that point and presumably had saved at least some of his prior earnings along the way. But his patience is now paying off in spades.
Bonilla surmised that he did not have an immediate need for liquidity. He could afford to be patient and play the long game. If Bonilla did the math, as he surely did, he would have known that the net present value of the $1.2 million payments, discounted for the time value of money, was more than $10 million in 2000 – almost twice the $5.9 million he could have had then.
Only Bonilla and his advisors at that time know how this negotiation played out, but whomever persuaded this particular professional athlete to accept this offer from the Mets deserves a lot of credit!
As for the Wilpon family, former owners of the New York Mets, when they sold the team to Steve Cohen on November 6, 2020 for $2.4 billion, this contractual obligation to their former player may have just been a rounding error. But its probably safe to assume that in the sale negotiations Cohen and his advisors built this liability into the terms of sale.
And Bobby Bonilla, now 59 years old, finished his career with over 2,000 hits, almost 300 home runs and 1,200 RBIs having played for a total of 8 teams including the Mets twice in 1992-1995 and 1999. At one time he was the highest paid player in major league baseball thanks to the contract he signed with the Mets in 1991.
Many are aware of the deal he struck with the Mets in 2000, but Bonilla and his advisors also negotiated a separate payout from the Baltimore Orioles that was initiated in 2004 and pays him an additional $500,000 a year thru 2029.
Bonilla and his high school sweetheart were married for 20 years and divorced in 2009, but both will continue to live comfortably for many more years to come….
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