Why is Bobby Bonilla Still Getting Paid by the Mets?

It all comes down to how his contract was structured. Teams would rather pay out a large contract over a period of many years than over a few years. Bonilla agreed to this arrangement, ensuring his continued payments even decades after the initial contract was signed.

The Payout Structure Works Out for Both Parties

The payout structure works out very well for both player and team. Bonilla gets a tax break as his salary arrives in smaller, later amounts. Meanwhile, the New York Mets can pay the salary later, reducing the 'present value' of the amount he is owed.

Understanding the Long-Term Contract

Caused by the contract he signed two decades ago, Bonilla receives $1 million annually for the length of the contract. This massive deferred payment plan benefits both parties, especially considering the financial circumstances of the time.

Motivation Behind the Deferred Payment

The Mets paid Bonilla a large upfront contract, but he chose to stretch this payment over 30 years. This unique agreement means that even though the original contract period has ended, Bonilla continues to receive his annual stipend. This decision by Bonilla and the Mets ensures a steady stream of payment well into the future.

Financial Benefits and Popularity

Bobby Bonilla is a professional baseball player with extensive experience. His popularity and skill have increased his value in the sport, contributing to the success of his deferred payment arrangement.

Historical Context of the Contract

Back when the Mets signed Bonilla to a contract (which was then the largest in baseball history - $29 million over five years), the team was convinced it was a smart move. By deferring some of the payment, they received an 8% interest rate, which was a significant win considering interest rates over the past few decades. The deal was further complicated by the owners' involvement with Bernie Madoff, who was running a Ponzi scheme.

Despite this, Bonilla secured a great deal. He agreed to receive more than $1 million annually for 25 years. The exact years of the deal start and end are not clear, but it is evident that Bonilla is in excellent financial shape for the rest of his life, barring any financial missteps.

Conclusion

The unique contract structured in the 1990s continues to benefit both Bobby Bonilla and the Mets. The deferred payment arrangement provides Bonilla with tax advantages and consistent income, while the Mets benefit from reduced present value and a loyal player. This case study underscores the importance of strategic financial planning in professional sports.