Baseball for the Thinking Fan

Login | Register | Feedback

btf_logo
You are here > Home > Baseball Newsstand > Discussion
Baseball Primer Newsblog
— The Best News Links from the Baseball Newsstand

Saturday, November 13, 2010

Mets Will Pay Bonilla $30 million over 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.

I know this article is old but I don’t believe it was every discussed here. And, well, it’s hilarious!

Weekly Journalist_ Posted: November 13, 2010 at 12:48 PM | 22 comment(s) Login to Bookmark
  Tags: general

Reader Comments and Retorts

Go to end of page

Statements posted here are those of our readers and do not represent the BaseballThinkFactory. Names are provided by the poster and are not verified. We ask that posters follow our submission policy. Please report any inappropriate comments.

   1. Mayor Blomberg Posted: November 13, 2010 at 03:22 PM (#3689339)
There was this discussion.
   2. Enrico Pallazzo Posted: November 13, 2010 at 03:33 PM (#3689344)
Fail.
   3. Swedish Chef Posted: November 13, 2010 at 03:35 PM (#3689347)
It is possible that the Mets will have a GM who wasn't alive during Bonilla's playing days before he is fully paid off.
   4. Rally Posted: November 13, 2010 at 03:46 PM (#3689351)
Sounds crazy but doubt it's any different than had Bobby taken the $ and bought a deferred annuity.
   5. rdfc Posted: November 13, 2010 at 04:03 PM (#3689359)
Could the Mets trade Bonilla's contract for another team's salry dump?
   6. Lassus Posted: November 13, 2010 at 04:51 PM (#3689376)
"Agent Scott Borris"?

Good lord, he's one of those identity-changing immortals! Just... not very creative.
   7. John DiFool2 Posted: November 13, 2010 at 05:45 PM (#3689401)
Sounds crazy but doubt it's any different than had Bobby taken the $ and bought a deferred annuity.


Well, he can always sell it to J. G. Wentworth and get (<ahem> most...) of it back now. "It's my money, and I need it NOW!"
   8. Greg Goosen at 30 Posted: November 13, 2010 at 06:53 PM (#3689438)
If there is a basketball think factory website, they will have weekly threads of the tv deal the Silna brothers and their attorney made with the ABA/NBA merger and Spirits of St Louis.
   9. HowardMegdal Posted: November 13, 2010 at 07:35 PM (#3689460)
Here's a terrific alternate take from Amazin' Avenue on Bonilla's buyout.
   10. bobm Posted: November 13, 2010 at 08:12 PM (#3689472)
In case one is worried that this story has never been discussed at BBTF:

Friday, October 04, 2002
ESPN.com: MLB - Six indicted for bilking Mets out of $2 million

Taking millions of dollars and offering no benefit in return? It must be the Mets.

Dan 'The Boy' Werr Posted: October 04, 2002 at 04:13 AM | 6 comment(s) | Bookmark
Related News:


--------------------------------------------------------------------------------
Reader Comments and Retorts
...

5. User unknown in local recipient table (Craig B) Posted: October 04, 2002 at 03:08 PM (#165555)

I haven't even started collecting that $36 million the Mets owe me.

If I were a Mets fan, this sentence would make me want to cry.
6. Benji Posted: October 05, 2002 at 03:49 AM (#165560)

Almost forgot about the $36 million to Bonilla, Harizin's Mo. Thanks a freakin lot for reminding me. I hope Rickey takes it all in their next card game.

Friday, May 02, 2008
ESPN: Stark - April was a month that really defied logic

...
Reader Comments and Retorts
...
16. rLr Is King Of The Romans And Above Grammar Posted: May 02, 2008 at 01:42 PM (#2766591)

Didn't the Mets do this with Bonilla - not as a buyout but as an initial contract "sweetener"?

I thought he had some sort of long-term payment plan.

Bret Saberhagen, too, I believe. I think the Mets are still paying those guys.
17. RB in NYC (Now with Time-Consuming New Job!) Posted: May 02, 2008 at 02:19 PM (#2766627)

I think the Mets are still paying those guys.
Don't know about Sabes but the Mets aren't exactly paying Bobby Bo, although he's cleaning up anyway:

The Mets are still paying for the mistake of signing Bobby Bonilla in 1992 … and they will be for a long time. Bonilla struck a deal with the team in 2000 in which it purchased an annuity rather than pay him the remaining $5.9 million of deferred money that he was owed. So every July 1 from 2011 to 2035, Bonilla will receive $1.19 million, with the total payments adding up to nearly $30 million.

(Link)



Wednesday, July 29, 2009
Matthews: Mets haven’t fired Minaya? Blame it on Madoff

Trick confidence?

...
Reader Comments and Retorts
...

41. NaOH Posted: July 29, 2009 at 11:12 AM (#3272190)

Thanks, Sam M. That is a reasonable enough perspective. It does, though, seem to indicate the Mets have a higher-than-usual number of ifs and question marks moving forward. That could be made worse if the Mets are struck by the common year-to-year volatility of bullpen performance. And, of course, there's the question of exactly how much money the Mets have to spend, as you mentioned. There are deferred payments to Glavine, a lot of money to Delgado is deferred and its unknown when those payments begin, and in 2011 the Mets begin their 25-annual payments to Bonilla.

I don't know how much those deferrals really impact the team, but impressions are that they have a tightly monitored budget, and we wont know for a few months if this year's performance will significantly impact next year's attendance. As it stands, they have $92 million committed to 2010 and 8 players eligible for arbitration. Those numbers would jump if any of the options are picked up (Putz or Wagner). Considering the free agent class is pretty thin this year, and the Mets budget is already up there, it looks like it might be tough to upgrade some areas for next year.
   11. bobm Posted: November 13, 2010 at 08:23 PM (#3689474)
Also discussed in 2010:

Wednesday, February 10, 2010
Phour for Phour: Remember Bobby Bonilla? The Mets do…

As if we needed another reason to laugh at the lowly Mets, here is a great little piece of info brought to us by Phils beat writer Andy Martino on his philly.com blog.

4. OK, yes, get angry about paying Geoff Jenkins $1.25 million this season. But think about this: Beginning in 2011, the Mets will pay Bobby Bonilla $1.19 million in deferred money every July 1 until 2035. Seriously.

That’s right, the Mets payroll still includes 6 time all-star Bobby freakin’ Bonilla. He retired in 2001 and he hasn’t played for the Mets since 1999. Could you imagine the Phillies still having Greg Jeffries or Danny Tartabull on the payroll for the next 25 years. I decided to dig a little into the story to find out whether Bonilla just happened to have the greatest agent in the history of the world to essentially give him an additional pension or if the Mets just botched something up. Not surprisingly, I found out yet again why the Mets hold the title of the most inept franchise in baseball.

Tripon Posted: February 10, 2010 at 09:09 PM | 21 comment(s) | Bookmark


Friday, April 16, 2010
Verducci: For slumping Ortiz, Soriano and Burrell, it’s getting late early

...
Reader Comments and Retorts
...
3. Joba To The Stars (Y_R) Posted: April 16, 2010 at 06:07 PM (#3504759)

So, what are the contenders for contracts worse than Alfonso Soriano's, in the history of baseball?


Carl Pavano and Kei Igawa spring to mind.
...
17. TVerik, snack hero Posted: April 16, 2010 at 07:05 PM (#3504787)

And it's irresponsible to have a "worst contract ever" thread without mentioning Bobby Bonilla and the Mets.
...
19. Angel (Pagan) of Harlem Posted: April 16, 2010 at 07:16 PM (#3504796)

In his three fulls years with the Mets (age 29-31), Bonilla had a .267/.357/.487 line, which was good for a 127 OPS+. He had a 142 OPS+ the previous three years. Based on performance, his contract was not a disaster. It's just that Mets' fans expected him to be Barry Bonds, which he wasn't.
...
23. The District Attorney Posted: April 16, 2010 at 07:28 PM (#3504810)

Bonilla was not all that bad on the field for the Mets. His defense and attitude both stunk, and he became the living symbol of an awful team, but he did hit. Over the sum total of the time he was there¹, he was probably the best player on that (again, awful) team.

I don't think that's even close to being the worst contract ever, but I will say that it looks exceedingly dumb that the Mets are paying Bonilla until *2035*. Arguably worse is that the D-Backs are paying Bernard Gilkey until 2017 -- that's a lot sooner, of course, but Gilkey didn't do much of anything for them (161 games, 246/329/384). Still, these aren't really significant obligations... they're not a lot of money, and of course they become even less costly each year, given inflation. Just looks stupid, is all ;-)

Dreifort probably wins here, since as Tom Foley says, it was an extremely risky contract from the get-go. It'd be like giving Jon Sanchez that contract right now, or something. Park might be second; again, it was pretty foreseeable he would not do well there. I suppose we have to see with Wells, this is not the perfect time to run down that one ;-) And really, we have to see with Soriano too.

Here's another contender: Adam Eaton once got a very large sum of money to pitch. Weird, huh?

¹ Not including 1999, of course.
...
34. CrosbyBird Posted: April 16, 2010 at 08:09 PM (#3504847)

And if Soriano met expectations, he was an unprecedented power/speed guy who plays an infield position. His had a chance to be a reasonable contract as well, the moment it was signed.

That was a pretty bad contract the day it was signed, unless the Cubs were planning to move Soriano back to 2B, or to CF. Soriano was on the wrong side of 30 with a career OBP below .330, which is pretty terrible for a corner outfielder. He wasn't a particularly good fielder and a lot of his value was in his legs, which generally don't age well.

It would have been crazy to expect much better than his 2007 or 2008 seasons, which still weren't worth $18M, especially over the entire contract.

I don't think that's even close to being the worst contract ever, but I will say that it looks exceedingly dumb that the Mets are paying Bonilla until *2035*.

I think that deal only looks dumb to people without an understanding of the time value of money.

The Mets replaced a $5.9M debt payable in 2000 with a long-term debt that was worth $5.9M in 2000 dollars. If I'm Bonilla, I like the deal because I've got steady income long after I retire as opposed to having volatility in my retirement savings. If I'm the 2000 Mets, I like the deal because the current interest rate appears to be in a lower cycle as compared to the previous decade and I expect that a loan at 7% interest is going to look pretty good.

Of course, typical Met luck for the already relatively low interest rate to migrate to historical lows over the next decade. The turn in the economy makes this deal look a lot worse right now, but remember that the Mets still haven't paid a penny on this deal yet. There's a long time between now and 2035 for interest rates to revert to 1980s/early 1990s form.
35. TVerik, snack hero Posted: April 16, 2010 at 08:26 PM (#3504855)

I think that deal only looks dumb to people without an understanding of the time value of money.



I think I understand the time value of money, and I think the deal is dumb. In exchange for the 2000 performance, the Mets have to devote a small percentage of their payroll every year for the appreciable future to Bobby. That deal doesn't make sense for the same reason that you don't buy a sofa on a thirty-year payment plan. The payments seem very reasonable, but at some point you're paying money for something that is probably not in your possession anymore.
...
41. Bob Meta-Meusel Posted: April 16, 2010 at 09:00 PM (#3504916)

That deal doesn't make sense for the same reason that you don't buy a sofa on a thirty-year payment plan. The payments seem very reasonable, but at some point you're paying money for something that is probably not in your possession anymore.


Says the person who has obviously never been in my parents' living room.
...
49. CrosbyBird Posted: April 16, 2010 at 09:24 PM (#3504953)

I think I understand the time value of money, and I think the deal is dumb. In exchange for the 2000 performance, the Mets have to devote a small percentage of their payroll every year for the appreciable future to Bobby. That deal doesn't make sense for the same reason that you don't buy a sofa on a thirty-year payment plan. The payments seem very reasonable, but at some point you're paying money for something that is probably not in your possession anymore.

If I can invest the $1000 I paid for my sofa at a higher return than I'm being charged in interest to finance, it's a great deal for me.

I suspect very strongly that the Mets enjoy far more than a 7% return on their yearly investments. That's a huge factor. Take $6M out of the 2000 budget, and the Mets might not make the playoffs. It wasn't a championship, but when you make the World Series, it's a huge financial return.


...
53. TVerik, snack hero Posted: April 16, 2010 at 10:59 PM (#3505023)

If I'm the new Mets GM, I'm really angry that Steve Philips took money out of my pocket in order to pay a crappy player ten years ago.
54. greenback Posted: April 16, 2010 at 11:12 PM (#3505031)

If I'm the new Mets GM, I'm really angry that Steve Philips took money out of my pocket in order to pay a crappy player ten years ago.

That's a weird way to look at it, because the new GM understands that it was a profitable decision (well, aside from the Madoff part). From that perspective, the current GM can do the same thing to the next GM anyway.

ETA: If I understand the CBA correctly, it's also wrong:


Deferred compensation obligations incurred in a Contract executed after December 31, 1985 but before September 30, 2002 must be fully funded by the Club, in an amount equal to the present value of the total deferred compensation obligation, on or before the third January 1 following the championship season in which the deferred compensation is earned. Deferred compensation obligations incurred in a Contract executed on or after September 30, 2002 must be fully funded by the Club, in an amount equal to the present value of the total deferred compensation obligation, on or before the second July 1 following the championship season in which the deferred compensation is earned.


There is some stuff about deductibles that may apply though.
55. TVerik, snack hero Posted: April 16, 2010 at 11:20 PM (#3505035)

My thought is "I have salary obligations to this guy and that isn't fair".

Bonilla, for instance (unless I misunderstand these things) counts against any salary cap that is imposed by MLB. Should the Metsies pay luxury tax, they must include the relative pittance that Bobby Bo is "earning".

I'd feel that my hands were tied by a previous administration, and though it wouldn't ruin my day, I think there's a great reason why his is one of the only contracts like that.
   12. bobm Posted: November 13, 2010 at 08:27 PM (#3689475)
For good measure...

Saturday, April 24, 2010
Weird baseball contract clauses

CNN, using Mental Flosswork.

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.

Gamingboy Posted: April 24, 2010 at 11:40 PM | 8 comment(s) | Bookmark
Related News: General, Business


--------------------------------------------------------------------------------
Reader Comments and Retorts
Go to end of page

Statements posted here are those of our readers and do not represent the BaseballThinkFactory. Names are provided by the poster and are not verified. We ask that posters follow our submission policy. Please report any inappropriate comments.

Page 1 of 1 pages 1. RMc is the Commissioner of Baseball Posted: April 25, 2010 at 10:26 AM (#3513616)

So, instead of paying him $5.9MM to go away, the Mets will pay him $29,831,205 to go away? Nice.
2. Eddie Gaedel Posted: April 25, 2010 at 10:48 AM (#3513629)

Someone smarter than me can do the math, but it looks like the Mets guaranteed him about a 7% return on the deferred amount. Given the economy at the turn of the century, that wasn't a terrible gamble.
3. Rich Posted: April 25, 2010 at 11:07 AM (#3513642)

It's not as good a ROI as Madoff promised, but it's not bad.
4. Random Transaction Generator Posted: April 25, 2010 at 11:12 AM (#3513646)

Does that mean that Bonilla's name will appear on the contract list on Cot's website?

If so, that will definitely mess some people up.
5. Misirlou smote the water with a 2 X 4 Posted: April 25, 2010 at 11:28 AM (#3513653)

Someone smarter than me can do the math, but it looks like the Mets guaranteed him about a 7% return on the deferred amount. Given the economy at the turn of the century, that wasn't a terrible gamble.


I get a little less than 8%, but then the true return is how this was all handled for tax purposes. For example, if that 5.9 mil was taxed in 2000, then the return is considerably higher, as the starting principle was much less than 5.9 mil.
6. David Nieporent (now, with child) Posted: April 26, 2010 at 05:57 AM (#3514181)

So, instead of paying him $5.9MM to go away, the Mets will pay him $29,831,205 to go away? Nice.
No; instead of paying him $5.9MM to go away, the Mets will pay him $5.9MM to go away. The media couldn't grasp the very simple concept of the time value of money at the time this deal was made, and treated it as some sort of windfall for Bonilla/idiocy for the Mets, and for some reason they still can't grasp it. (What exactly is "weird" about deferring compensation with interest?)

(Is it a good rate of return? Yes. But each side was gambling on what rates would be like.)
7. Jerry Willard and his Bowling Trophies (Dan Lee) Posted: April 26, 2010 at 06:21 AM (#3514183)

This isn't dissimilar to what the ABA did 40 years ago to sign guys like Julius Erving. They'd sign players to contracts with huge total dollar figures, but most of the money would come in the form of an annuity that would start paying out when the player turned 41. (They called it the Dolgoff Plan.)

The ABA, for PR purposes, would include the payout value of the annuity as part of the player's announced salary. I guess the Bobby Bo contract would look even worse if they'd done that.
8. Sheer Tim Foli Posted: April 26, 2010 at 10:14 AM (#3514275)

The media couldn't grasp the very simple concept of the time value of money at the time this deal was made,


I really wish time value of money was included as a fundamental teaching in grade/public school. I was way too old before I grasped it and all because I didn't take enough business courses in high school. It should not be a business lesson it should be a life lesson.


And, in case one has missed these threads, there's a Primate with the handle Bobby Bonilla's Annuity (Matt) whose profile states: "Total Comments 13745".
   13. The District Attorney Posted: November 13, 2010 at 09:36 PM (#3689501)
Could the Mets trade Bonilla's contract for another team's salry dump?
Probably easier than Oliver Perez, anyway.
   14. ?Donde esta Dagoberto Campaneris? Posted: November 13, 2010 at 09:57 PM (#3689509)
In fairness to the Mets, isn't that a pretty good deal for a guy that's good enough to be their fourth starter?
   15. Hombre Brotani Posted: November 13, 2010 at 10:53 PM (#3689527)
And now it’s time to pay the fiddler.
Shouldn't that be "pay the piper"?
   16. Greg Pope Posted: November 13, 2010 at 11:03 PM (#3689533)
All this talk and nobody's commented on the real outrage:

And now it’s time to pay the fiddler.


What the heck is that?

EDIT: Teach me to go to the Internet to look up a phrase before commenting on it so I don't make a jackass of myself. Someone else swoops in first.
   17. O Tempura, O Morays ('Spos) Posted: November 13, 2010 at 11:57 PM (#3689551)
So the moral of the story is only accept the 25 hamburgers ten years from now if the economy goes in the dumpster?
[edit] is going to go in the dumpster
   18. O Tempura, O Morays ('Spos) Posted: November 14, 2010 at 12:00 AM (#3689552)
[double posted my edit]
   19. Karl from NY Posted: November 14, 2010 at 01:11 AM (#3689588)
What happens if Bonilla pulls a Ken Caminiti? Do the payments stop or continue into Bonilla's estate?
   20. Misirlou cut his hair and moved to Rome Posted: November 14, 2010 at 01:23 AM (#3689592)
What happens if Bonilla pulls a Ken Caminiti? Do the payments stop or continue into Bonilla's estate?


It's gotta be the latter.
   21. Zach Posted: November 14, 2010 at 09:39 AM (#3689700)
And the moral of the story is that "time value of money" includes interest rates in the future, not just today.

If someone offers to pay you 7% interest for 35 years, you say YES.
   22. Josh1 Posted: November 15, 2010 at 02:50 PM (#3690080)
I think I mentioned this last thread:

The Fed data releases for early January 2000 show that AAA corporate bonds yielded about 7.7% at the time and treasuries of almost all maturities out to 30 years yielded about 6.6% -- there was apparently a pretty large AAA-corporate to treasury spread at the time. (As a technical point, since the interest rate curve was very flat at the time, we can be a bit sloppy about mixing results from different maturities and ignoring the forward-starting nature of the annuity and still arrive at the right answer.)

If the Mets had wanted to pay Bonilla cash in 2000, he could have taken the cash and invested it easily in the market at 7% or more for long-dated AAA bonds and been at least as well off. If Bonilla had wanted cash in 2000, the Mets could have paid him out and taken a $5.9mm loan in the market to finance the payment. From the Fed data, a loan at the time would have probably cost the Mets at least 7%.

The transaction was very fair at the time, and Bonilla only looks smart and the Mets dumb because interest rates happened to go down after 2000. Anyone who used their savings to buy long-dated treasuries or corporate bonds in 2000 made the exact same trade as Bonilla, is just as smart, and made proportionally just as much money. Any company that issued long-dated bonds in 2000 is just as "dumb" as the Mets (I put "dumb" in quotations because as long as they invested the money in long term projects that returned over 7%, the companies made money, and the borrowing made sense).

http://www.federalreserve.gov/releases/h15/20000110/

You must be Registered and Logged In to post comments.

 

 

<< Back to main

BBTF Partner

Dynasty League Baseball

Support BBTF

donate

Thanks to
rr
for his generous support.

You must be logged in to view your Bookmarks.

Hot Topics

NewsblogMiguel Cabrera confirms plans to retire after 2023 season, but wants to stay in baseball
(19 - 7:04pm, Nov 30)
Last: Booey

NewsblogAaron Judge rumors
(10 - 7:03pm, Nov 30)
Last: kubiwan

NewsblogInside the decline of MLB’s star center fielders - Sports Illustrated
(10 - 6:57pm, Nov 30)
Last: The Yankee Clapper

NewsblogThe Great Player of Year X | Articles | Bill James Online
(60 - 6:37pm, Nov 30)
Last: Jaack

NewsblogDisney Pays $900M for MLB’s Remaining Stake in Streaming Company BAMTech
(4 - 6:19pm, Nov 30)
Last: Cris E

NewsblogPadres, Diamondbacks Among Teams Interested In Xander Bogaerts
(9 - 6:17pm, Nov 30)
Last: Cris E

NewsblogOT - World Cup Thread
(389 - 6:00pm, Nov 30)
Last: Biff, highly-regarded young guy

NewsblogEach club's most intriguing unprotected Rule 5 Draft option
(16 - 4:35pm, Nov 30)
Last: Der-K's tired of these fruits from poisoned trees

Newsblog2022-23 NBA Kick-Off Thread
(603 - 4:04pm, Nov 30)
Last: Your favorite TFTIO, me!

NewsblogMLB offseason survey - Free agency and trade predictions
(3 - 2:06pm, Nov 30)
Last: RoyalsRetro (AG#1F)

Hall of MeritMost Meritorious Player: 2022 Discussion
(28 - 2:01pm, Nov 30)
Last: DL from MN

NewsblogToronto Blue Jays hire Don Mattingly as bench coach
(1 - 11:59am, Nov 30)
Last: Random Transaction Generator

NewsblogDave Hillman, the oldest living Met, dead at 95
(6 - 11:23am, Nov 30)
Last: It's regretful that PASTE was able to get out

NewsblogOT - November* 2022 College Football thread
(382 - 9:09am, Nov 30)
Last: Stevey

NewsblogHall of Famer Jeff Bagwell criticizes Astros' recent tilt toward analytics but says he doesn't want GM job
(23 - 12:10am, Nov 30)
Last: What did Billy Ripken have against ElRoy Face?

Page rendered in 0.8675 seconds
45 querie(s) executed