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Baseball Primer Newsblog — The Best News Links from the Baseball Newsstand Thursday, July 01, 2010Sielski: Mets Still Owe Bobby Bonilla 25 Annual Payments of $1.9 MillionI’ll show you the Brink’s right here, motherf——-!
Repoz
Posted: July 01, 2010 at 12:20 PM | 43 comment(s)
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1. Zach Posted: July 01, 2010 at 01:04 PM (#3575848)This is the only problem with the deal. The Mets grossly mis-estimated the long-term interest rate environment.
The interest rate on the deal was eight percent
This is the only problem with the deal. The Mets grossly mis-estimated the long-term interest rate environment.
Well, they were making 12% on their Madoff investments.
I guess it depends. For a guy like Bonilla, who had already received a large amount of money at that time, this is comparable to getting a 25 year annuity. It is a nice hedge against other investments he might have been making at that time.
Income, eh? That is smart!
My cat just took a (stuff) on the floor. That (stuff) smells like (stuff).
And I think the Rangers bankrupcty hearing showed they were still paying players from long ago.
I think the Royals are still paying George Brett's "lifetime contract."
Homer: Explain how.
Homer's Brain: Income can be paid in money. Money can be used in exchange for goods and services.
Homer: Woo-hoo!
The economy? The duality of man? The loneliness of the long distance runner? Delta's ability to compete against Southwest for the new landing slots at Greensboro and Oklahoma City? For crissakes, what did he actually say?!!
This.
Ah, it's a profit deal.
Take a chance and win some crap!
Where are you getting 8% long-term with credit as good as an MLB team? Nowhere. It's a great deal for Bonilla.
The Mets should have done LIBOR + 300 or something.
Eh, then they would just call J.G. Wentworth.
“You pull something off like that, and later on you don’t have to worry about [sh*t].”
Anyway, to show his appreciation, Bonilla should give something back to the Mets. The rights to his charity bowling tournament, for example.
The AAA-BBB spread was only 55 bps? And the AAA-Tsy spread was 228 bps? That seems unlikely. You sure you've got the right #'s?
http://www.federalreserve.gov/releases/h15/20000103/
There were a number of anomalies in the credit markets during the dot-com boom when people focused on stocks that moved 20% in a day instead of on other things, and this may well have been one of overlooked relative values.
Note that they had to strike a reasonably fair bargain (at least from Bonilla's perspective) or the MLBPA wouldn't have approved the arrangement.
http://www.federalreserve.gov/releases/h15/20000103/
There were a number of anomalies in the credit markets during the dot-com boom when people focused on stocks that moved 20% in a day instead of on other things, and this may well have been one of overlooked relative values.
Weird. Just shows you better look at more than a snap shot of current rates before making a trade.
Market consistent prices can still be irrational. Unfortunately, the market can stay irrational longer than you can stay liquid.
He should wait and see just how much his taxes go up next year first.
Note that they had to strike a reasonably fair bargain (at least from Bonilla's perspective) or the MLBPA wouldn't have approved the arrangement.
It was ex-ante fair, but ex-post not. He made a good trade, they made a bad one.
Any voluntary transaction is "fair" at the time, or it wouldn't get made. It's still a stretch to say the results were fair.
Was the AOL-Time Warner deal fair? Not really. Time Warner shareholders got ripped off, and AOL shareholders got a windfall b/c of the collective stupidity prevailing at the moment.
How is it not a windfall for Bonilla? I can see how if the Mets hedged it was not an idiotic decision for them.
Or is Bonilla *that* disadvantaged by future value of money < present value of money
Based on the new practice of gaming, I sometimes wonder if I'm not better off taking a better look at the Daily Racing Form
I know you're joking, but given the Madoff rumors last year and what was going on in the credit and real estate markets, I wouldn't be surprised if Bonilla did have some moments of worry about the security of his future paychecks.
As long as he is a creditor of the MLB ballclub, and not some random Wilpon entity, he had no risk. There is virtually no scenario in which a NYC MLB club can't meet its payroll obligations that doesn't involve every other financial instrument being worthless too.
My cat has coughed up hairballs smarter than Dykstra.
Unless it was with Lehman...
Nah. Interest rate swaps are usually collateralized daily.
In your ashtray, no less.
OHHH, is that what it was? Thanks!
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