Dec 06, 2017

Antonio “Bobby” Bonilla was a baseball player, who played in Major League Baseball for around fifteen years, and retired in 2001 for the New York Mets. He became the highest paid baseball player in 1992 when he received six million dollars a year from the Mets. After a brief stint with the then-Florida Marlins, he came back to play for the Mets, but suffered from many injuries due to a lack of form.

New York Mets released him from the roster, but needed to pay him the salary for the last season. They used a deferred payment system that allowed Bonilla to earn a cool $1.19 million (or more specifically $1, 193, 248.20 dollars) each year. This arrangement is known as the famous Bobby Bonilla contract and is often a matter of debate on different social forums. Here are a few extra details as well as the financial implications of this particular contract.

The Deferred Contract

New York Mets are famous for using deferred contracts in order to allow them to bring in new talent to become formidable challengers for the World Series title. In 2000, they needed to pay Bonilla a sum of around 5.9 million dollars for the last year of his contract. They worked out a deal with sports agent Dennis Gilbert, who was also an insurance agent.

The deal was worked out by Gilbert as a favorable one by attaching an eight percent interest on the original sum. The deal would allow the Mets to defer their payments and start them a decade later, as they paid the first installment in 2011. They have arranged to pay Bonillo a total of 29.8 million dollars in twenty five years ending in 2035. Interestingly, Bonillo retired in 2001, and hasn’t played in around 15 years, for which he will keep on receiving payments throughout his life.

The Financial Aspect

Many Mets fans and other people make fun of the Bonilla contract every year, but the deal was done in good faith. The New York Mets had the Wilpons as their owners. They had invested their money with the famous investor Bernie Madoff, who was offering double digit returns on their investments. A deferred payment would allow them to save a lot of money over the years.

The problems appeared when it became known that Madoff was presenting fictional returns, which later declined. Other advantages of deferred payments still remained for the Mets, who could use the funds to attract talent towards the organization to become one of the top contenders for the World Series title.     

If we go through the individual calculations for his salary, we find that the deal delivered benefits to both Mets and Bonilla. It allowed the organization to save money when they required it most. In turn, Bonilla was able to secure his future and receive payments as retirement benefits, without having to worry about investing personally.

Deferred contracts can be a fun topic for everyone on Twitter, but the important financial aspects of these deals are often advantageous to all the parties. The Bonilla deal, for example, allowed the Mets to make space on their roster and look for better talent. On the other hand, it worked out perfectly for Bonilla as well, who will keep receiving these payments for many years to come.

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