Bobby Bonilla on the Payroll?

Wednesday, August 19, 2009

Andrew Vazzano of The Ropolitans writes: just tweeted something that I had completely forgotten about.

Here’s his tweet:

"Does anyone realize that starting in 2011, the New York Mets will pay Bobby Bonilla $1.2 mil / year for 25 years? What an organization!"

That’s right. Starting July 1, 2011, and on every July 1 until 2035, the Mets will send a check to Bobby Bonilla worth $1,193,248.20.

When the Mets released Bonilla in January of 2000, instead of picking up the $5.9 million owed to him for that year, they agreed to pay him nearly $1.2 million over the course of 25 years. That’s almost $30 million.


Might as well bring him back as a coach somewhere for that much money. Or have him cut the grass at Citi Field.

Or maybe he can play left field.

Eli From Brooklyn: So how true is this and what were the Mets thinking? Well, a fellow, Bernie, wrote this in the comment section on The Ropolitans:

Bernie: It is actually correct, and a horrible deal...for Bonilla. Ahh the power of compounded interest. The way it works, the Mets set aside $6 million in 2000 @ a rate of 12% per year. They are not allowed to withdraw any funds until year 11, in which they can withdraw $1,200,000 per year for 25 years. After the 25 years, and after paying off Bonilla, the Mets will have...drum roll please....$138 million. So they took the $6 million he was supposed to receive and invested it themselves and made $132 million for themselves on it. They also have a similar deal with Bret Saberhagen. Now here comes the problem with this deal and others. Madoff is the one that was guaranteeing them the 12%. So the Mets are now going to be paying the players out of their pockets, with new 2011 dollars, not 2000 compounded dollars, and on top of that, never receiving the $138 million lump sum. Much of the speculated $700 million the Mets lost was not what they lost out of pocket, but what was supposed to be there after this great compounded rate.

Eli From Brooklyn: Duh, I knew that.


chip said...

so bottom line can he help this team out? yes or no

Skeptic Al said...

Heres the crux of the story. Bernie Madof existed because stupid people with stupid money actually were willing to believe the impossibility of consistant 12 percent compounded returns. And more so put all their eggs in the impossible basket.

Madoff aint the only one who sold the Mets on the impossible. Bonnilla ( and many others since) have done just the same, falling for it year after year, and compounding our grief !

Bobby B said...

I'm baaaack!

Anonymous said...

It would only have taken a compound interest rate of about 5% to make this a good deal for the Mets, and anything over that could have generated significant profits. As Al suggests, their real mistake was not making this deal with Bonilla but rather investing with Madoff.

Eli From Brooklyn said...

Well said, Anonymous.

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