I don’t know about Bonilla personally, but this payment structure is a good way to protect athletes from themselves. 70% of professional athletes in the US have financial hardships shortly after they retire. (1) 70%!!! After making millions of dollars. The article goes into details but it’s basically because they go from lower class to elite class instantly and start spending it at an alarming rate without any education on good investment strategies. A good example of this structure actually working is Allen Iverson and his Reebok contract, which pays him $800k a year for 35 years. It’s the only money he has left after blowing through > $100M of his NBA earnings.
> 70% of professional athletes in the US have financial hardships shortly after they retire. (1) 70%!!!
The article’s way off. It’s somewhat correct for why rich superstar athletes go broke after retirement. But the reality is that this shouldn’t be surprising because at least 70% of professional athletes make almost no money, retire very young (not by their choice), and have few transferable skills.
There’s 5,000 minor league baseball players alone who (except for a few) are essentially broke. And the average NFL career is over by the time the player is 25. For every Antoine Walker who blows through $50 million, there’s 1,000 27-year olds with chronic injuries, maybe an opiate addiction, and not much in the way of job prospects.
Pretty stupid to think one should make NFL one’s career, then. Odds stacked against you 10000-to-1, with dire consequences for failure and, worse, CTE is virtually guaranteed if you succeed. It’s all-around stupid from every angle you look at it.
Yet tens of thousands of children are being guided toward this “career” by their parents and guardians. It is disgusting.
So his employer invested money that would normally have gone towards Bonilla's paycheck into a Ponzi scheme... but instead of losing everything as a result (which is what would have happened to 99.99% of employees), Bonilla will end up with five times the original salary.
Always enlightening to get a glimpse into how things work for those at the top.
The key point is that Bonilla wasn’t. If I lost money with Madoff, I couldn’t tell my mortgage company that it was too bad for them that I was going to pay my mortgage with the money that was lost.
The other Mets players didn't lose everything as a result of the Madoff Ponzi scheme, it was only the owner. This scheme let the owner legally move the money over to the ponzi scheme, that's it.
The only dumb thing the Mets did was invest the money with Madoff. 36 mil was worth a lot more in 1999 than it is now, and even more than it will be in 2035. However, there's pretty much no chance Bonilla would have gotten the contract at all unless he agreed to this insane deferral structure. So he was still a winner in that regard.
In any case, it was a great deal for the Mets except that they got scammed and actually lost all the money they thought they were going to make by deferring payments.
36 mil was worth a lot more in 1999 than it is now, and even more than it will be in 2035.
Time value of money ... and basic math.
Bonilla only had $6 mil left on his contract in 1999. He will receive $30 mil by 2035 thanks to the 8% annual rate. That's a pretty exorbitant rate over the past 24 years when inflation only averaged 2-3% a year.
The $6 mil Bonilla was owed back in 1999 is only worth about $12 mil in today's dollars. Fred Flintsone and the Mets lost their asses to Madoff and Bonilla.
> 36 mil was worth a lot more in 1999 than it is now, and even more than it will be in 2035
I’m assuming you are referring to inflation, so $36M in 1999 is about $67M today, so nearly double. It’s fairly easily possibly that it’ll be in over 3x by 2035.
> Madoff was the mastermind of the most notorious Ponzi scheme in history.
You can deprive him of his coins, of his company, and even his Bahamas penthouse. But please don't deprive Sam Bankman Fried of the honor of running the most notorious Ponzi scheme in history.
Likely because everyone already knew deep down that crypto was(is) a scam. Even in crypto, SBF is mostly forgotten. Small scale crypto scams keep happening and everyone just moves on within days.
It was 8% for over a decade growing (doubling like you said), then they paid off ~1.2 a year off in principal and interest (not lump sum) over the following 24 years.
Reds are also still paying Ken Griffey Jr. Orioles are paying Chris Davis. Nationals are on hook for both Scherzer and Strasburg. I can keep going for quite a while. But everyone will only talk about Bobby Bonilla because New York media made a fuss about it and that’s all people know. Talk about the media misleading masses…
Yeah, it's how teams get players and work around hard and soft salary caps, avoid luxury taxes, etc... Take a look at international futbol sometime to see insane money being thrown around.
(1) https://yourmoneyvehicle.com/mindset/why-pro-athletes-retire.... (2) https://thelibertyline.com/2022/06/08/allen-iverson-reebok-t....