OT: - Happy Bobby Bonilla Day | The Boneyard

OT: Happy Bobby Bonilla Day

WestHartHusk said:
Pretty sure it was a dumb deal for Bobby.
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Pretty sure it was a dumb deal for Bobby? Let me negotiate with you in the future.

In 2000, the Mets agreed to buy out Bonilla’s remaining $5.9 million contract.

Instead of paying that cash up-front, the team agreed to give Bonilla $1.19 million per year for 25 years. The payments were deferred, starting in 2011. His annual pay includes a guaranteed 8% interest rate.

“I think he got the greatest deal in the whole world,” Jeffrey Levine, the director of advanced planning at Buckingham Wealth Partners, said of Bonilla. “He absolutely took the Mets to the woodshed.”

Bobby Bonilla Day: Why his deal with the Mets was so lucrative (cnbc.com)
 
His financial advisor understood the time value of money. He had a life insurance background and negotiated this as a win win. The Mets needed financial breathing room at the time and back then, 8% wasn't a crazy interest rate. Bonilla is paid thru an annuity so it isn't all Mets money!
 
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Chin Diesel said:
Pretty sure it was a dumb deal for Bobby? Let me negotiate with you in the future.

In 2000, the Mets agreed to buy out Bonilla’s remaining $5.9 million contract.

Instead of paying that cash up-front, the team agreed to give Bonilla $1.19 million per year for 25 years. The payments were deferred, starting in 2011. His annual pay includes a guaranteed 8% interest rate.

“I think he got the greatest deal in the whole world,” Jeffrey Levine, the director of advanced planning at Buckingham Wealth Partners, said of Bonilla. “He absolutely took the Mets to the woodshed.”

Bobby Bonilla Day: Why his deal with the Mets was so lucrative (cnbc.com)
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And I would like to do a deal with you. The Mets didn’t pay him for 11 years, and then started paying him in 2011. If he got the lump sum and a ~6% return he’d have been better off.
 
WestHartHusk said:
And I would like to do a deal with you. The Mets didn’t pay him for 11 years, and then started paying him in 2011. If he got the lump sum and a ~6% return he’d have been better off.
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Think about it like this though. If he had gotten the original $5.9 million at that age he probably would have pissed it away on stupid things like cars, vacations, etc. Now he's older, and hopefully wiser, and he's able to live a comfortable life knowing he gets at least $1 million every year. Probably a better deal for him because it saved him from himself.
 
hardcorehusky said:
His financial advisor understood the time value of money. He had a life insurance background and negotiated this as a win win. The Mets needed financial breathing room at the time and back then, 8% wasn't a crazy interest rate. Bonilla is paid thru an annuity so it isn't all Mets money!
Expand ...
The correct application of the time value of money would be to take the lump sum up front.
 
Chin Diesel said:
Pretty sure it was a dumb deal for Bobby? Let me negotiate with you in the future.

In 2000, the Mets agreed to buy out Bonilla’s remaining $5.9 million contract.

Instead of paying that cash up-front, the team agreed to give Bonilla $1.19 million per year for 25 years. The payments were deferred, starting in 2011. His annual pay includes a guaranteed 8% interest rate.

“I think he got the greatest deal in the whole world,” Jeffrey Levine, the director of advanced planning at Buckingham Wealth Partners, said of Bonilla. “He absolutely took the Mets to the woodshed.”

Bobby Bonilla Day: Why his deal with the Mets was so lucrative (cnbc.com)
Expand ...
WestHartHusk said:
And I would like to do a deal with you. The Mets didn’t pay him for 11 years, and then started paying him in 2011. If he got the lump sum and a ~6% return he’d have been better off.
Expand ...
casual-yardin said:
The correct application of the time value of money would be to take the lump sum up front.
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Bonilla is beating inflation by a huge margin. That alone makes the deal OK.

Inflation averaged 2.1% over the past 21 years. $5.9 million in 2000 dollars is $9.15 million today. Bonilla has taken in $13.13 ($14.263 with inflation) over the 11 payments to date (which doesn't figure in how he's invested that $ over the past decade). That $14.263 million, coincidentally, would've been worth about $9.15 million in 2000.

Let's remember a lot of things could've gone sideways. Morgan Stanley could've put him in a large position with JBS Uniphase, like they did almost all of their "growth" clients.

Yes, there were many ways he could've exceeded the returns he's getting, including investing in the Mets. But what he's getting is none too shabby.
www.actionnetwork.com

Rovell: How Bonilla's Deal Could've Been Even Better

Bobby Bonilla and his agent agreed to a great deal that is still earning him money today. Darren Rovell looks at how it could've been even better.
www.actionnetwork.com www.actionnetwork.com
 
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Every year, it's the same uninformed stupidity about this deal.

Doing what they did, the Mets were able to acquire Mike Hampton and draft David Wright. Those moves a) got rid of a huge cancer in Bonilla and b) got them to 2 World Series. Every Mets fan in the world would redo this move a million times over.

"The $5.9 million the Mets avoided paying Bonilla for the 2000 season gave them some extra payroll flexibility. This allowed them to trade for ace pitcher Mike Hampton, who became the ace of that pennant-winning Mets team. Hampton went 15-10 with a 3.14 ERA (142 ERA+) that year — not to mention a Silver Slugger-winning .274/.313/.274 at the plate. Had it not been for Hampton, the Mets likely wouldn’t have made it to the World Series.

And that’s not all the Mets got out of deferring Bonilla’s contract. Once Hampton signed with the Rockies, the Mets received the 38th overall pick in the 2001 draft as compensation for his departure. With that pick, the Mets took David Wright."
 
Deepster said:
Every year, it's the same uninformed stupidity about this deal.

Doing what they did, the Mets were able to acquire Mike Hampton and draft David Wright. Those moves a) got rid of a huge cancer in Bonilla and b) got them to 2 World Series. Every Mets fan in the world would redo this move a million times over.

"The $5.9 million the Mets avoided paying Bonilla for the 2000 season gave them some extra payroll flexibility. This allowed them to trade for ace pitcher Mike Hampton, who became the ace of that pennant-winning Mets team. Hampton went 15-10 with a 3.14 ERA (142 ERA+) that year — not to mention a Silver Slugger-winning .274/.313/.274 at the plate. Had it not been for Hampton, the Mets likely wouldn’t have made it to the World Series.

And that’s not all the Mets got out of deferring Bonilla’s contract. Once Hampton signed with the Rockies, the Mets received the 38th overall pick in the 2001 draft as compensation for his departure. With that pick, the Mets took David Wright."
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It was and is a classic win/win.

It freed money up for the Mets and it allowed Bobby B to be set up for many years to come. He had undoubtedly made more money than he would have if he had taken the money up front.

What I find most interesting is a $5.9M contract was a back breaker back then. Now, it's a rounding error to get rid of an aging player you don't want.
 
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