
Bobby Bonilla's 25-Year Contract with The New York Mets (2011) - kimsk112
https://www.businessinsider.com/worst-contract-in-sports-history-bobby-bonilla-2011-7
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tomjakubowski
The article doesn't mention that team owner Fred Wilpon thought deferring
Bonilla's contract was a great idea because he could use the savings at the
time to invest in Bernie Madoff's fund.

[https://www.nytimes.com/2012/02/21/sports/baseball/mets-
saw-...](https://www.nytimes.com/2012/02/21/sports/baseball/mets-saw-madoff-
as-house-money-trustee-says.html)

~~~
moate
They also used the savings to acquire Mike Hampton (who later provided them
with the compensation pick they used to draft David Wright.

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klinskyc
Fun fact -> They offered this because they were getting such good returns
(greater than 8%) through Bernie Madoff, and figured they could just pay off
the contract interest through that

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astura
The Bernie Madoff connection is, by far, the most interesting part about the
Bobby Bonilla salary deferral contract. Its truly a shame TFA didn't mention
it.

[https://www.marketwatch.com/story/the-mets-are-paying-
bobby-...](https://www.marketwatch.com/story/the-mets-are-paying-bobby-
bonilla-over-1-million-a-year-because-of-bernie-madoff-2015-07-01)

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thinkingkong
Somewhat related is the best contract in sports history:

[https://en.wikipedia.org/wiki/Ozzie_and_Daniel_Silna#The_dea...](https://en.wikipedia.org/wiki/Ozzie_and_Daniel_Silna#The_deal)

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zaroth
Einstein something, something, compound interest.

Amazing what saving money at an 8% interest rate will do for your future self!
The S&P has only returned 4.8% CAGR [1] from 2000-2018 so that was a pretty
tremendous ROI for Bonilla.

[1] -
[http://www.moneychimp.com/features/market_cagr.htm](http://www.moneychimp.com/features/market_cagr.htm)

~~~
dmix
So it started compounding in 2011 + the next 25yrs? Not when he signed the
contract? Which means he’d need to not touch the money to get the full $29M
amount

8% over 25yrs is a crazy good deal for anyone, not to mention on top of
millions.

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the_watcher
Spotrac has the details of the payments: [https://www.spotrac.com/mlb/new-
york-mets/bobby-bonilla-1188...](https://www.spotrac.com/mlb/new-york-
mets/bobby-bonilla-11887/cash-earnings/)

~~~
dmix
That doesn’t show the interest rates. But based on that it also looks like he
got 5x yrs of $500k from the Orioles also starting in 2011. I’m guessing he
signed a similar deal with them since he stopped playing in 2000…

This man makes smart financial decisions.

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astura
The key to making smart financial decisions for MLB players is having an
excellent agent.

Bonilla's agent was Dennis Gilbert, who was previously involved in the life
insurance industry.

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pitt1980
fwiw

Mets Payroll in 1999 - 71,506,427

5,900,000/71,506,427 = 8.25% of payroll

\---------

Mets Payroll 2011 120,147,310

1,193,248/120,147,310 = 0.99% of payroll

\----------

Mets Payroll 2018 $154.61M

1,193,248/154,610,000 = 0.77% of payroll

\-------

also fwiw, not sure we can trace exactly how efficiently the Mets spent the
$5.9 million they saved in 1999, but the Mets won 97 games that year, the next
year they won 94 and made it to the World Series

\----------

given time value of money....

'worst contract in sports history' seems pretty hyperbolic

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anoonmoose
At one point in time (2013), Bobby Bonilla and Jason Bay were the two highest
paid outfielders for the Mets, and neither of them were on the team. This
occurred in the middle of a six-year sub-0.500 stretch. They probably could
have used the $1.2M better than that.

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matthewowen
Probably not. $1.2MM doesn't buy you much baseball player.

~~~
moate
Buys you 2 rookie contracts fwiw.

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slg
A slight pedantic response, it pays for 2 rookie contracts but it wouldn't
really allow you buy the contracts of 2 rookies. Baseball rules are designed
to suppress the salary of rookies below their free market rates in order to
benefit both veteran players and less wealthy teams. The end result is that
any decent rookie has a lot of surplus value attached to their contract and
they become an asset rather than a liability. Teams generally need to give up
multiple millions in value in order to "buy" a rookie from another team and
gain the right to pay that player half a million dollars.

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moate
If I'm "Joe Small Market Team" and I'm running my team with a self imposed cap
of X, having 1.2 million dollars off my payroll means I have the ability to
call up rookies I might not have been able to if I did have that 1.2 million
on my books.

Are there infinitely more factors in play (namely playing time BS in order to
maintain team control prior to free agency) in these types of decisions? Of
course. Do I believe that this hypothetical scenario would ever come up: No.

But, 1.2 million dollars = 2 Rookie Contracts with beer money left over.
Them's facts.

~~~
slg
I generally agree, which is why I made the distinction between "pay" and
"buy". Although you also have to factor in that rosters have a limited size.
If you are calling up a player, you need to get rid of a player. Veterans have
guaranteed contracts, so adding a young player to replace a veteran will
increase payroll like you suggested. However a young player's salary doesn't
have the same guarantee if they are removed from the roster. Therefore
shuffling out one young player for another generally has little to no impact
on the overall payroll.

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the_watcher
It was the worst negotiation in sports history, yes. But far worse contracts
have been signed. A bad NBA contract (some that obviously bad at the moment of
signing) can easily pay $30M in 2 years to a player who essentially doesn't
play at all. Which the teams then pay to dump on other teams (the NBA salary
cap creates a fascinating market).

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thinkcontext
My favorite is the NBA agreeing to pay a percentage of TV revenue in
perpetuity to the owners of the ABA team Spirits of St. Louis when the leagues
merged. The NBA gave the other ABA teams that they weren't taking $3M but the
Spirits held out. The NBA paid out $300M before finally buying them out for
$500M in 2014.

[https://www.forbes.com/sites/monteburke/2014/01/07/the-
nba-f...](https://www.forbes.com/sites/monteburke/2014/01/07/the-nba-finally-
puts-an-end-to-the-greatest-sports-deal-of-all-time/#11f50634f0ba)

~~~
shmuels2
Interesting twist: those owners also lost a heap of money with Madoff!

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pdwetz
Since this comes up every year, might as well point out this isn't an isolated
case.

Tweet thread covering various ones (as of last year):
[https://twitter.com/mikemayerMMO/status/1013295573779312640](https://twitter.com/mikemayerMMO/status/1013295573779312640)

~~~
the_watcher
Most deferred payments don't take a previously agreed upon amount and apply
interest to them though. They're usually agreed upon at the beginning of the
contract and allow the team to get a discount on the total dollar figure via
the time value of money.

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tobsmagoats
If I were an athlete I'd push for a contract like this, being young with a ton
of money can be a recipe for disaster.

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BubRoss
If you knew to set up a contract like this, would you really need to avoid
having lots of money while young?

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mixmastamyk
Worst or best? That's quite a retirement plan.

Edit: title changed on me.

~~~
moate
Seems like it worked well for everyone. The Mets are paying out less than they
would have if they'd paid the money at the time and because of the savings
were able to acquire players that helped them go onto the WS. Bonilla keeps
getting ~ a million dollars every year.

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the_watcher
They turned $5.9M into almost ~$30M. How is that they are paying out less?
It's possible that via time value they could make more than an 8% return, but
definitely not assured.

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unreal37
The argument is that they immediately spent the $5.9 million on another player
the next season (who they would not have been able to get due to the salary
cap), who led them into the World Series. They traded that player away for
another player who has become a superstar. So they did in fact turn the
savings into something meaningful.

It worked out for both of them. There are win-win deals.

~~~
the_watcher
I both agree and disagree. From a purely financial standpoint, this was almost
assuredly a bad deal for the Mets over the course of the payments.

That said, the whole point of owning a sports franchise is to get to and win a
championship, so in that sense, yes, this was almost definitely worth it.
Also, I don't know the economics for baseball in 2000, but I know that in the
NBA, each home playoff game is generally considered worth several million
dollars, so if Bonilla buyout for Hampton was causal to reaching the WS, they
may have made the money back in 2000 alone.

Plus, there's the whole "Bobby Bonilla seemed like he was a gigantic pain to
the organization" aspect.

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nickjj
Haven't heard of this until today.

Does anyone know what happens to the yearly payouts if Bobby dies between now
and the last scheduled payment? Does it go to his beneficiaries until the 25
years runs its course or does the contract terminate on the year he dies?

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jmull
Wow. Bobby hit his biggest home run, metaphorically, after retirement.

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isaacg
"Today" is in 2011

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halfdan
July 1st though, so basically just 11 days ago..

This post needs a [2011]

