Bobby Bonilla hasn't swung a baseball bat professionally in over a decade, yet every year on July 1st The Mets cut him a check for $1.2 million. How is that possible? During his 14 MLB seasons, Bonilla was a six-time All-Star, three-time Silver Slugger, and a member of the 1997 World Series champion Florida Marlins. At his peak, he could be expected to hit 20 home runs a year with 100 RBIs and a batting average well over .300. In 1991, Bobby signed a five-year $29 million contract with the Mets that made him the highest-paid baseball player ever, up to that point. Unfortunately, towards the end of his career, Bobby became somewhat of a disappointment. In 1999, with one year left on his contract, he averaged just .160 with four home runs and 18 RBIs. So why did the Mets management agree to give him an incredibly lucrative new contract that still pays him millions every year today? The answer involves brilliant financial planning, an overly aggressive Mets organization, and, believe it or not, Bernie Madoff.
Bobby Bonilla bounced around a bit in the twilight of his career. A year after winning a World Series with the Marlins, he was shipped off to the Dodgers for a season. He was then brought back to The Mets, where he spent that horribly bad 1999 season mostly arguing with manager Bobby Valentine. That season ended with an embarrassing incident when Bobby and teammate Rickey Henderson were caught playing cards in the dugout while their team lost the final game of the NLCS to Atlanta. There wasn't much love between Bonilla and The Mets organization in 2000. Unfortunately, The Mets still owed him $5.9 million.
Bobby knew that these were likely the very last dollars he would ever see from a big league contract. He had a maximum of three subpar seasons left in his legs. Whatever money he had saved up plus this final payment from the Mets would potentially need to last over 40 years. Adding to the 36-year-old slugger's anxiety was the fact that many of his fellow athletes had gone broke a few years after retiring. Athletes going broke is an unfortunately common story. A recent Sports Illustrated report found that 70% of NFL players, 60% of NBA, and a high majority of MLB players are bankrupt within 2-4 years of retirement. Most of these athletes lack higher levels of education and do not have any skills that can be translated easily into the real world. Athletes are notoriously bad at managing their money. They tend to make terrible investment decisions and spend wildly even when there is no more money coming in. The list is endless.
Table of Contents
- Bobby Bonilla's Biography
- The Unconventional Financial Planning
- The Bernie Madoff Connection
- Lessons From Bobby Bonilla's Contract
Bobby Bonilla's Biography
Bobby Bonilla, born on February 23, 1963, in The Bronx, New York, is a former professional baseball player who played in Major League Baseball (MLB) from 1986 to 2001. He made a name for himself as a powerful hitter and a standout player in the league. Bonilla had a successful career with multiple teams, including the Pittsburgh Pirates, New York Mets, and the Florida Marlins. His legacy is particularly noted for the unique contract that he negotiated with the Mets, which has fascinated baseball fans and financial analysts alike.
| Personal Details | Information |
|---|---|
| Name | Bobby Bonilla |
| Date of Birth | February 23, 1963 |
| Birthplace | The Bronx, New York |
| Position | Outfielder, Third Baseman |
| MLB Debut | 1986 |
| Final Game | 2001 |
| Teams Played For | Pittsburgh Pirates, New York Mets, Florida Marlins, and others |
The Unconventional Financial Planning
When it came time to negotiate with The Mets, Bobby Bonilla was smart enough to secure one of the most forward-thinking contracts in sports history. He knew The Mets wanted him gone but technically owed him $5.9 million. He also knew he had a young son and daughter who would be looking to go to college, and as a 36-year-old, he likely had many years worth of life to live. So at this point, Bobby and his agents offered a unique compromise: The Mets would release Bobby to play for another team and they would delay the $5.9 million payment for 11 years, with interest.
In essence, The Mets agreed to pay Bobby a total of $29.8 million (instead of $5.9 million) in 25 annual installments of $1.192 million, starting in the year 2011. When he received his first $1.192 payment, Bobby was 48 years old and had not played in the big leagues for 10 years. This arrangement has basically guaranteed him a big league salary every year for the rest of his life. Today, Bobby Bonilla makes more per year from the Mets than most of the team's active players!
The Bernie Madoff Connection
In 1986, real estate developer Fred Wilpon purchased 50% of The New York Mets for an undisclosed sum. He purchased the remaining 50% for $135 million in 2002. Wilpon was also one of the biggest investors in Bernie Madoff's Ponzi scheme hedge fund. Prior to the fund's December 2008 collapse, Madoff was returning a consistent (and completely fake) double-digit rate of return every year. With those returns in mind, Wilpon knew that The Mets would actually make a huge profit by deferring Bonilla's $5.9 million.
Even though that meant agreeing to pay him more than five times the amount they owed ($29.8 million), Wilpon could safely estimate that the Mets would make $60-70 million off $5.9 million over those 25 years investing with Madoff. Unfortunately, as we all know now, Bernie Madoff's investment fund was actually a gigantic Ponzi scheme that wiped out between $20 and $65 billion in wealth for thousands of investors.
Lessons From Bobby Bonilla's Contract
Today, Bobby Bonilla is living the good life. On July 1st, 2013, he received his third direct deposit from The Mets for $1,193,248.20. Just five months earlier, Bobby celebrated his 50th birthday. He is a living lesson for why we might all be better off turning down lump sums and instead opting for deferred payments. The unique contract he negotiated has sparked discussions on financial planning and the importance of making informed decisions regarding money.
As we reflect on Bobby Bonilla's story, it is crucial to recognize the importance of financial education, careful planning, and understanding the implications of financial agreements. Whether one is a professional athlete or an everyday person, the lessons learned from Bobby's experience can be valuable in securing a stable financial future. I hope we all have to make that choice someday!
