May 17, 2012

The Infamous Bobby Bonilla Contract


There is an absolutely amazing article in the latest ESPN The Magazine about the infamous Bobby Bonilla contract with the Mets.  If you remember, Bobby is going to be paid roughly $1.2 million dollars for each of the next 25 years.  This came about when the Bobby was going to be paid $5.9 million on the last year of his contract in 2001 and he proposed instead of that large chuck on money that the payments be smaller and paid out over a much longer period of time starting in 2011.

This contract is oftentimes sited as an example of baseball spending gone out of control.  Reexamining what actually happened though, you learn that the Mets were doing a hugely smart financial decision if only they weren't going to rely on Bernie Madoff to help them pull it off.  Basically, the Mets would take that $5.9 million that was due Bonilla, invest it with Madoff, and by the time Bobby's payments would end in 2036 the Mets would have made between $60-70 million dollars more than if they had just paid Bobby his $5.9 million in 2001.  It's playing the long game that would have worked had Madoff not misappropriated many, many billions of dollars.  

2 comments:

lifetimetopps said...

It was silly to make that arrangement, though - because the Mets aren't an investment firm or a bank - they are a baseball franchise.

Dennis said...

I caught this in ESPN the Mag last week and when I read it, I wasn't so much struck by the contract itself--it's been a constant source of embarrassment for the Mets for years--but that a pro athlete actually had the intelligence and foresight to agree to a deal that benefits him as much as this one does. Bonilla comes off as a guy who didn't come from money, but unlike other sports stars, learned quickly to manage his earnings wisely, putting him in an outstanding financial position today. I'm glad the article emphasized that as much as mocking the Mets for their financial incompetency.