July is here, so that means it’s time for another round of snickering about how the New York Mets have to make their annual $1.93 million payment to Bobby Bonilla, who hasn’t played for them in 20 years. (The Mets are obligated to pay Bonilla that sum on July 1 of every year from 2011 through 2035).
The cultural subtext of these annual hurr durr the Mets have to pay Bonilla more than a million a year for doing nothing for 25 years is, I think, something like this:
(1) The Mets were idiots for agreeing to such a crazy arrangement.
(2) Bobby Bonilla is making tens of millions for doing literally nothing, like some sort of glorified Puerto Rican welfare king, and that ain’t right.
As to the first point, this deferred comp arrangement actually wasn’t a bad deal for the Mets. (The idiocy was taking on the last two years of an obviously washed up Bonilla’s massive contract in 1998).
After the 1999 season the Mets still owed Bonilla $5.9 million, but wanted him off the team, because he was now terrible (plus he played cards with Rickey Henderson in the clubhouse during the last game of the NLCS, occasioning much outrage from the middle-aged white sportswriters who are the arbiters of baseball’s mos maiorum).
The Mets also wanted to make some expensive free agent acquisitions, so Bonilla’s agent proposed the following: Instead of a lump sum payment of $5.9 million, the Mets would pay Bonilla $1.93 million per year between 2011 and 2035. Now if you apply an 8% interest rate to the owed $5.9 million, paying Bonilla a total of $29.75 million in equal annual sums between 2011 and 2035 is actually identical, financially speaking, with the lump sum payment the Mets would have had to make at the time they got rid of Bonilla’s contract.
An 8% interest rate may sound a bit high, but hey Mets owner was Fred Wilpon was getting 12% to 15% every year on his money from his good friend Bernie Madoff, whose name may ring a bell. (Wilpon claims to have been totally shocked to discover in 2008 that Madoff was running a Ponzi scheme. I’m sure he was. Because if there’s one thing financially sophisticated people like Wilpon know is that a guaranteed 12% to 15% annual return on your money has got to be absolutely on the level).
Which brings me to the second part of Bobby Bonilla Day. Fred Wilpon bought a half stake in the Mets in 1986 for $40.5 million, and bought the rest of the team for $391 million in 2002. Today the Mets have an estimated worth of $2.3 billion, which means Wilpon has extracted close to two billion dollars from the Mets in exchange for exactly the same sort of labor Bonilla has been performing for the team since the dawn of the new millennium, that is, none.
Keep that in mind the next time you read another story about the crazy salaries these spoiled greedy players are making these days.
[SL] Also worth noting that Bonilla was an excellent player who was paid fair value over the course of his career, but as Paul says owners would definitely prefer you believe the legend!