Read the rest here...It's Friday, July 1, and we should be thinking about our Fourth of July weekend plans. But as baseball fans, we can't. Why? Because today is all about Bobby Bonilla.
A man who last played 5,381 days ago owns this day. Not just this July 1, but every July 1 through 2035. It's the day when the New York Mets pay him $1,193,248.20.
So with the water cooler and Twitter buzzing about the Bonilla deal, here's your primer.
How did the deal present itself?
Deferred-money deals have been going on for a long time, but the Mets did more of them than most. The first deferred-money deal we know about is Darryl Strawberry's 1985 contract, in which the Mets deferred 40 percent of his 1990 $1.8 million team option ($700,000) at a 5.1 percent interest rate. The deal, which pays out $1.64 million from 2004 to 2033, was obtained through a life insurance company.
Bonilla's agent, Dennis Gilbert, was an insurance agent at the same time he developed into a superagent (Gilbert's clients included Bonilla, Barry Bonds, Jose Canseco and Danny Tartabull), so he was more uniquely prepared to understand annuity-type payouts than other agents.
How does the deal actually work?
The Mets owed Bonilla $5.9 million for the 2000 season and no longer wanted him. So the club negotiated with Gilbert to attach an 8 percent annual interest rate to that money. With the clock starting in 2000, that adds up to $29.8 million. The first installment of the payout came on July 1, 2011, and the Mets will pay their sixth installment on Friday.
http://espn.go.com/mlb/story/_/id/16650 ... uly-1-2035
This is a fascinating breakdown of one of the more controversial compensation contracts in the history of professional sports. Normally I am not a fan of long term annuities. If you win the lottery and have a clue about money and investing you will almost always be better off taking the lump sum. But in this case, I think Bonilla was very shrewd and this was a good deal. Especially when you consider how many famous athletes wind up dead broke within a few years of retirement.
