The deal enabled the Mets to trade for Mike Hampton, who helped them make the World Series. The comp pick for Mike Hampton turned into David Wright. I make that deal 10 out of 10 times.
Tons of other players get a ton of deferred compensation for a much greater amount, but yeah, single out Bonilla.
This is about as dumb as mocking a retired school teacher or cop every time they receive their deferred compensation.
there are a ton since as well. Plus Bruce Sutter had $44 million in deferred compensation.
"Manny Ramirez has a 16-year, $32 million deferred money deal from the Red Sox which, like Bonilla’s, kicked in on July 1, 2011. It costs them $1.968 million a year and goes through 2026 when Ramirez is 54;
The Cardinals are paying Matt Holliday to play now, but they’ll still be paying him through 2029 under the $120 million, seven-year contract he signed in 2010;
Retired Rockies first baseman Todd Helton deferred $13 million of his 2011 salary (total was $19.1 million) and will be paid through 2024;
The Nationals will pay Ryan Zimmerman $10 million over five years after he’s retired, with a nominal organization job;
Ryan Braun will receive $18 million in payments in equal installments each July 1 from 2022 to 2031;
The Tigers are still paying Gary Sheffield between $1 million and $2.5 million annually through 2019;
The Mariners are paying Ichiro Suzuki a chunk of his last big deal through the year 2032;
The Reds signed Ken Griffey Jr. to a $116.5 million contract in February 2000, but more than half of that is still being paid by the team and will continue to be so until Griffey is in his 50s." Link - ( New Window )
The deal enabled the Mets to trade for Mike Hampton, who helped them make the World Series. The comp pick for Mike Hampton turned into David Wright. I make that deal 10 out of 10 times.
Tons of other players get a ton of deferred compensation for a much greater amount, but yeah, single out Bonilla.
This is about as dumb as mocking a retired school teacher or cop every time they receive their deferred compensation.
This isn't deferred money.
A thread on twitter for the people who just think Bonilla is a punch
of course, because it's the Mets it will remain so, but it wasn't a bad deal nor uncommon. This is not a complete list.
Michael Mayer
@mikemayerMMO
Happy MLB Deferment Day!
This thread is dedicated to past, present, and future deferred contracts given to Major League Baseball players.
It started before Bobby Bonilla and goes well beyond him.
6:41 AM · Jul 1, 2020·TweetDeck
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Michael Mayer
@mikemayerMMO
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2h
Replying to
@mikemayerMMO
The Atlanta Braves are still paying Bruce Sutter $1.12 million a year in a deferred payments through 2021 and he will also receive a final balloon payment of $9.1 million.
His deferred payments started in 1985.
Michael Mayer
@mikemayerMMO
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2h
The Orioles will pay Chris Davis $42 million in deferred money to be paid in 10 installments of $3.5 million annually each July 1, 2023-32, and five installments of $1.4 million each July 1, 2033-37
Michael Mayer
@mikemayerMMO
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2h
Orioles will have to pay Alex Cobb $20 million deferred with $2 million on 11/30/22 & $1.8 million annually each 11/30, 2023-32.
If Cobb does not pitch at least 130 innings in 2020, an additional $5.5 million of 2021 salary is deferred, payable $1.75 million annually, 2033-35
Michael Mayer
@mikemayerMMO
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2h
The Orioles will give Mark Trumbo deferred payments of $1.5 million on November 1st in each of 2020, 2021, and 2022.
Michael Mayer
@mikemayerMMO
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2h
The Orioles agreed to give Ubaldo Jimenez $9 million in deferred money, which they started paying in 2018.
Payments are in $2.25 million installments.
Michael Mayer
@mikemayerMMO
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2h
Yovani Gallardo was given $3.25 million deferred in his contract with the Orioles, that will be paid in installments of $1.625 million each on 7/1/19 and 7/1/20.
The Orioles and Mariners are sharing these payments following trade to Seattle.
Michael Mayer
@mikemayerMMO
·
2h
When Darren O'Day re-signed with Orioles in 2015, he agreed to $1 million deferred payments to be paid in 2020-2023.
Michael Mayer
@mikemayerMMO
·
2h
Chris Sale agreed to receive $50 million in deferred payments from the Red Sox.
He will receive $10 million annually on June 30th from 2035-2039 and if club exercises 2025 option, $5 million is deferred until 6/30/2040.
Michael Mayer
@mikemayerMMO
·
2h
The Red Sox will give Dustin Pedroia $18 million in deferred payments, $2 million every year in 2021-2024 and $2.5 million every year in 2025-2028.
Michael Mayer
@mikemayerMMO
·
2h
The Red Sox started their deferred payments to Manny Ramirez in 2011 at $1,968,677.
He will receive $2,013,418 today and payments continues through 2026 at 2.5% interest.
Michael Mayer
@mikemayerMMO
·
2h
When Evan Longoria signed with the Rays in 2017, he agreed to defer $11 million without interest.
Michael Mayer
@mikemayerMMO
·
2h
The Blue Jays are responsible for $5 million of Troy Tulowitzki's contract from 2019 that was deferred, payable in 10 equal installments each Jan. 1, 2025-34 with 3% interest.
Michael Mayer
@mikemayerMMO
·
2h
Paul Konerko started receiving annual deferred payments of $1 million from the White Sox in 2014 and that continues through 2021.
Michael Mayer
@mikemayerMMO
·
42m
The Washington Nationals agreed to give Max Scherzer deferred payments of $15 million each July 1 from 2022 to 2028.
Michael Mayer
@mikemayerMMO
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41m
Brian Dozier received a one-time deferred payment from Nationals of $2 million on 1/15/2020.
Michael Mayer
@mikemayerMMO
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40m
Anibal Sanchez will receive a one-time deferred payment of $4 million on 1/15/2021 from the Nationals.
Michael Mayer
@mikemayerMMO
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39m
$10 million of Patrick Corbin's 2024 salary with the Nationals is deferred without interest, to be paid Nov. 2024 through Jan 15, 2026.
Michael Mayer
@mikemayerMMO
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37m
The Washington Nationals gave Ryan Zimmerman a 5-year, $10 million personal services contract that will begin once his playing career ends.
Michael Mayer
@mikemayerMMO
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33m
Stephen Strasburg will get the following deferred payments from the Washington Nationals:
$10 million on July 1 of 2020-2022
$26,666,667 on July 1 of 2027-2029
$3,999,974 on Dec 31, 2029
Michael Mayer
@mikemayerMMO
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31m
The St. Louis Cardinals will pay Matt Holliday $1.4 million on July 15th every year from 2020 to 2029.
Michael Mayer
@mikemayerMMO
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30m
The Mets have paid Bret Saberhagen a deferred payment of $250,000 annually starting in 2004 and that continues through 2028.
Michael Mayer
@mikemayerMMO
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24m
The New York Mets will cut a check for $1,193,248.20 to Bobby Bonilla today and will continue that annually through 2035.
The payments started in 2011.
Michael Mayer
@mikemayerMMO
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21m
Jeurys Familia will receive two deferred payments of $1 million from the Mets:
One by 1/15/22 and the other payable by 7/1/22.
Michael Mayer
@mikemayerMMO
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20m
When Jacob deGrom signed his extension with Mets, he agreed to defer $52.5 million.
Will defer $12M in 2020, $13.5M in 2021, $15M in 2022, $12M in 2023, $15M in 2024 if club exercises option.
Deferrals to be paid 7/1 in 15th year after salary is earned, from 2035 through 2039
Michael Mayer
@mikemayerMMO
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16m
Here's the known details of David Wright's deferrals with the Mets (thanks @SotoC803
)
2021: $5.1 million
2022: $5.1M
2023: $5.1M + ~$566k interest
2024: $3.1M
2025: $3.1M
Michael Mayer
@mikemayerMMO
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13m
Goose Gossage received deferred payments from the Padres of $240,000 per year from 1990-2006 and $125,000 from 2007-2016.
Michael Mayer
@mikemayerMMO
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7m
Here's the complicated details of the deferred payment agreement between Christian Yelich and the Brewers via Cot's Contracts on @baseballpro
.
Michael Mayer
@mikemayerMMO
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2m
Phil Niekro signed a three-year deal with the Braves for 1980-1982, part of that deal included deferred payments of $8,500 per month starting on Jan. 1, 1985 through 2010.
The deal enabled the Mets to trade for Mike Hampton, who helped them make the World Series. The comp pick for Mike Hampton turned into David Wright. I make that deal 10 out of 10 times.
Tons of other players get a ton of deferred compensation for a much greater amount, but yeah, single out Bonilla.
This is about as dumb as mocking a retired school teacher or cop every time they receive their deferred compensation.
This isn't deferred money.
yes, it is
defer:
verb
past tense: deferred; past participle: deferred
put off (an action or event) to a later time; postpone.
"they deferred the decision until February"
The deal enabled the Mets to trade for Mike Hampton, who helped them make the World Series. The comp pick for Mike Hampton turned into David Wright. I make that deal 10 out of 10 times.
Tons of other players get a ton of deferred compensation for a much greater amount, but yeah, single out Bonilla.
This is about as dumb as mocking a retired school teacher or cop every time they receive their deferred compensation.
This isn't deferred money.
yes, it is
defer:
verb
past tense: deferred; past participle: deferred
put off (an action or event) to a later time; postpone.
"they deferred the decision until February"
It's not deferred. It's crazy.
RE: The Mets could have bought him out for $5.9 mil
but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
but they kept that $5.9M for 11 years before paying him a cent. Even forgetting that they based the decision on the Madoff returns, the S&P average return over the 20 years they've had Bonilla's money) has been better than 8% (on average over that time - not each year).
RE: RE: RE: The Mets could have bought him out for $5.9 mil
but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
In other words, they agreed to defer the money?
And pay a shit ton on top of the deferred money.
Its called time value of money.... interest.
The Mets deferred payment at a rate that is lower than what their investment rate was. (Ignore for a moment that their investment rate was inflated by a ponzi scheme, which is fair) but the concept of deferring payment now and paying interest is preeeeetttty common.
Have you ever had a car loan? Student loan? Mortgage?
all my friends that are Mets fans are disgusted by it.
Read the article I posted. Read the tweets pjcas posted. There are far higher deferred compensation plans, and far worse contracts, in baseball. Yet Bonilla gets singled out. It's ignorant.
Plenty of athletes go bankrupt after they are done playing their sport. I have no issues. That is what the Mets contracted for. It enabled them to stay within their desired budget, get Mike Hampton, make the World Series with Hampton, and turn the comp pick into David Wright. It enabled Bonilla to get paid beyond his playing years. Both sides got what they wanted.
RE: RE: The Mets could have bought him out for $5.9 mil
but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
but they kept that $5.9M for 11 years before paying him a cent. Even forgetting that they based the decision on the Madoff returns, the S&P average return over the 20 years they've had Bonilla's money) has been better than 8% (on average over that time - not each year).
Correct but where can you guarantee 8%? Even if it wasn't until 2011? And with the Mets in the situation they are currently in 8t isn't a good look for them. If they had money and weren't thinking about selling the team very few would care. But with not spending over the years in a market like NY and then when you do you spend on a guy like Lowrie the optics look awful.
all my friends that are Mets fans are disgusted by it.
Read the article I posted. Read the tweets pjcas posted. There are far higher deferred compensation plans, and far worse contracts, in baseball. Yet Bonilla gets singled out. It's ignorant.
Plenty of athletes go bankrupt after they are done playing their sport. I have no issues. That is what the Mets contracted for. It enabled them to stay within their desired budget, get Mike Hampton, make the World Series with Hampton, and turn the comp pick into David Wright. It enabled Bonilla to get paid beyond his playing years. Both sides got what they wanted.
That's the issue. It was a self imposed budget. This wasn't trying to get under the cap like the NFL. And as I stated in my last post, the Wilpons are in worse shape now hence the backlash. If they were making "smart decisions" with their money would they be in the situation they are in? I'm not hear to argue about this. I just dont know why people are defending this franchise. All my Mets fans are so done with this team because of ownership and cannot wait for them to sell (assuming the Wilpons don't hang around in any deal).
RE: RE: RE: The Mets could have bought him out for $5.9 mil
but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
but they kept that $5.9M for 11 years before paying him a cent. Even forgetting that they based the decision on the Madoff returns, the S&P average return over the 20 years they've had Bonilla's money) has been better than 8% (on average over that time - not each year).
Correct but where can you guarantee 8%? Even if it wasn't until 2011? And with the Mets in the situation they are currently in 8t isn't a good look for them. If they had money and weren't thinking about selling the team very few would care. But with not spending over the years in a market like NY and then when you do you spend on a guy like Lowrie the optics look awful.
It wasn't a great deal for the Mets - mostly because they crafted it expecting to continue to get 10%+ returns like they were with Madoff, no debating that, it's just not quite the punchline people make it out to be.
RE: RE: RE: The Mets could have bought him out for $5.9 mil
but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
but they kept that $5.9M for 11 years before paying him a cent. Even forgetting that they based the decision on the Madoff returns, the S&P average return over the 20 years they've had Bonilla's money) has been better than 8% (on average over that time - not each year).
Correct but where can you guarantee 8%? Even if it wasn't until 2011? And with the Mets in the situation they are currently in 8t isn't a good look for them. If they had money and weren't thinking about selling the team very few would care. But with not spending over the years in a market like NY and then when you do you spend on a guy like Lowrie the optics look awful.
Rule of 72. At 8%, the money would double in 9 years. So by 9 years, you have 12 million. Another 2 years, you have about a million a year. At 11 years, you are at $14 million. Bonilla gets $1.19 million, which is (doing off the top of my head) roughly 8% of $14 million. So, the plan was that instead of paying Bonilla $5.9 million off the bat, they pay him off the money that generates, and have $14 million or so at the end.
You say you understand finance, but I don't think you do.
all my friends that are Mets fans are disgusted by it.
Read the article I posted. Read the tweets pjcas posted. There are far higher deferred compensation plans, and far worse contracts, in baseball. Yet Bonilla gets singled out. It's ignorant.
Plenty of athletes go bankrupt after they are done playing their sport. I have no issues. That is what the Mets contracted for. It enabled them to stay within their desired budget, get Mike Hampton, make the World Series with Hampton, and turn the comp pick into David Wright. It enabled Bonilla to get paid beyond his playing years. Both sides got what they wanted.
That's the issue. It was a self imposed budget. This wasn't trying to get under the cap like the NFL. And as I stated in my last post, the Wilpons are in worse shape now hence the backlash. If they were making "smart decisions" with their money would they be in the situation they are in? I'm not hear to argue about this. I just dont know why people are defending this franchise. All my Mets fans are so done with this team because of ownership and cannot wait for them to sell (assuming the Wilpons don't hang around in any deal).
I want the Wilpons gone as well. Not understanding the reasoning behind the deal and disliking the Wilpons are not the same thing.
that's my point. Guaranteeing 8% is crazy. Just my two cents. And I agree there are other teams that can be criticized for similar deals. I am just pointing out when you are in the NY market and you make a deal like that you expect it to go back to your team and it hasn't. EVERY Mets fans I know is so done with them. The money truly hasn't made it back to the team. And I feel like when the Mets sign a big name player or pay a player a lot it doesn't work out (Mo Vaughn and Lowrie come to mind). I know shit happens but I feel the pain because I am a Knicks fan. I know how frustrating it is but the Mets shouldn't be talked in the same breath with the Knicks. The sooner they sell the better.
Man, this thread really became a self-fulfilling prophecy.
Every year this thread turns into a referendum on deferral . And yes some other teams have opted for the same approach.
The funny part everyone gets a kick out of is in the intervening time the Mets lost a fortune in fraudulent investments, settled another 150M in lawsuits, and then snubbed their nose at an offer to sale the team for a fortune only for the world to fall apart and the value of the team now a complete question mark.
It’s like a millionaire financing a TV at Best Buy when he’s got the cash in his pocket. Only to then drop the cash on the floor on the way out. Then getting sued for littering.
RE: RE: RE: RE: The Mets could have bought him out for $5.9 mil
but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
but they kept that $5.9M for 11 years before paying him a cent. Even forgetting that they based the decision on the Madoff returns, the S&P average return over the 20 years they've had Bonilla's money) has been better than 8% (on average over that time - not each year).
Correct but where can you guarantee 8%? Even if it wasn't until 2011? And with the Mets in the situation they are currently in 8t isn't a good look for them. If they had money and weren't thinking about selling the team very few would care. But with not spending over the years in a market like NY and then when you do you spend on a guy like Lowrie the optics look awful.
Rule of 72. At 8%, the money would double in 9 years. So by 9 years, you have 12 million. Another 2 years, you have about a million a year. At 11 years, you are at $14 million. Bonilla gets $1.19 million, which is (doing off the top of my head) roughly 8% of $14 million. So, the plan was that instead of paying Bonilla $5.9 million off the bat, they pay him off the money that generates, and have $14 million or so at the end.
You say you understand finance, but I don't think you do.
Again, I do. And GUARANTEEING 8% is crazy. Show me one institution that guarantees 8% every year. I bet you cannot find one except for the Mets.
Every year this thread turns into a referendum on deferral . And yes some other teams have opted for the same approach.
The funny part everyone gets a kick out of is in the intervening time the Mets lost a fortune in fraudulent investments, settled another 150M in lawsuits, and then snubbed their nose at an offer to sale the team for a fortune only for the world to fall apart and the value of the team now a complete question mark.
It’s like a millionaire financing a TV at Best Buy when he’s got the cash in his pocket. Only to then drop the cash on the floor on the way out. Then getting sued for littering.
Millionaire would be smart to finance the tv at best buy at an interest rate lower than what he expects to earn... thats probably why he's a millionaire...
Everyone here should always be taking advantage of 0% interest financing whenever it's available.
That said, your middle point is spot on... many many other things to rip on them for
that's my point. Guaranteeing 8% is crazy. Just my two cents. And I agree there are other teams that can be criticized for similar deals. I am just pointing out when you are in the NY market and you make a deal like that you expect it to go back to your team and it hasn't. EVERY Mets fans I know is so done with them. The money truly hasn't made it back to the team. And I feel like when the Mets sign a big name player or pay a player a lot it doesn't work out (Mo Vaughn and Lowrie come to mind). I know shit happens but I feel the pain because I am a Knicks fan. I know how frustrating it is but the Mets shouldn't be talked in the same breath with the Knicks. The sooner they sell the better.
It turned out bad, but at the time not considered crazy. Some of the other deferrals are more in the 3 - 4% range, so grand scheme it's not a debilitating deal.
It's worse for PR than reality.
When the Mets sell, the new owners would be smart to just buy Bonilla out to end the stigma - or they can leave it as a way to show just how clownish the Wilpons were.
RE: RE: RE: RE: RE: The Mets could have bought him out for $5.9 mil
but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
but they kept that $5.9M for 11 years before paying him a cent. Even forgetting that they based the decision on the Madoff returns, the S&P average return over the 20 years they've had Bonilla's money) has been better than 8% (on average over that time - not each year).
Correct but where can you guarantee 8%? Even if it wasn't until 2011? And with the Mets in the situation they are currently in 8t isn't a good look for them. If they had money and weren't thinking about selling the team very few would care. But with not spending over the years in a market like NY and then when you do you spend on a guy like Lowrie the optics look awful.
Rule of 72. At 8%, the money would double in 9 years. So by 9 years, you have 12 million. Another 2 years, you have about a million a year. At 11 years, you are at $14 million. Bonilla gets $1.19 million, which is (doing off the top of my head) roughly 8% of $14 million. So, the plan was that instead of paying Bonilla $5.9 million off the bat, they pay him off the money that generates, and have $14 million or so at the end.
You say you understand finance, but I don't think you do.
Again, I do. And GUARANTEEING 8% is crazy. Show me one institution that guarantees 8% every year. I bet you cannot find one except for the Mets.
Who is guaranteeing 8% or any number? I was just using that as an example. I don't know what projections the Wilpons used. The Wilpons were projecting numbers, and I do think Madoff was guaranteeing them a certain percentage based on their investment. The mistake the Wilpons made was trusting Madoff. Not making the Bonilla deal under the context of what they thought they were getting with Madoff.
But ripping on them for this deal is silly. Standard business practice.
Many, many other things to have an actual issue with. Complaining about this dilutes the rest.
Agreed but this is just another piece to add to the other issues with the Wilpons. I'm not here ripping Mets fans. I hope the Mets do well outside of playing the Yankees. It's great for the area. I used to watch a lot of Mets games when I was younger. I remember Ron Darling hitting a HR. I remember watching Kiner's Corner. It's fun when they are good. I just don't get the defending of the deal either. I don't think it is bad as most make it out to be and people celebrating Bobby Bonilla day. I still don't think it was a smart deal. If you ask who you'd rather be in the deal nobody would side with the Mets over Bonilla. It is what kt is. It isn't a crippling deal. It's just that of you are "saving" money you'd hope it was going back in to your team and that doesn't seem to be the case.
that's my point. Guaranteeing 8% is crazy. Just my two cents. And I agree there are other teams that can be criticized for similar deals. I am just pointing out when you are in the NY market and you make a deal like that you expect it to go back to your team and it hasn't. EVERY Mets fans I know is so done with them. The money truly hasn't made it back to the team. And I feel like when the Mets sign a big name player or pay a player a lot it doesn't work out (Mo Vaughn and Lowrie come to mind). I know shit happens but I feel the pain because I am a Knicks fan. I know how frustrating it is but the Mets shouldn't be talked in the same breath with the Knicks. The sooner they sell the better.
It turned out bad, but at the time not considered crazy. Some of the other deferrals are more in the 3 - 4% range, so grand scheme it's not a debilitating deal.
It's worse for PR than reality.
When the Mets sell, the new owners would be smart to just buy Bonilla out to end the stigma - or they can leave it as a way to show just how clownish the Wilpons were.
That's a good idea. Having this linger year after year makings them a joke (right or wrong, just reading how this is a celebrated day). Gotta move on from it.
RE: RE: RE: RE: RE: RE: The Mets could have bought him out for $5.9 mil
but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
but they kept that $5.9M for 11 years before paying him a cent. Even forgetting that they based the decision on the Madoff returns, the S&P average return over the 20 years they've had Bonilla's money) has been better than 8% (on average over that time - not each year).
Correct but where can you guarantee 8%? Even if it wasn't until 2011? And with the Mets in the situation they are currently in 8t isn't a good look for them. If they had money and weren't thinking about selling the team very few would care. But with not spending over the years in a market like NY and then when you do you spend on a guy like Lowrie the optics look awful.
Rule of 72. At 8%, the money would double in 9 years. So by 9 years, you have 12 million. Another 2 years, you have about a million a year. At 11 years, you are at $14 million. Bonilla gets $1.19 million, which is (doing off the top of my head) roughly 8% of $14 million. So, the plan was that instead of paying Bonilla $5.9 million off the bat, they pay him off the money that generates, and have $14 million or so at the end.
You say you understand finance, but I don't think you do.
Again, I do. And GUARANTEEING 8% is crazy. Show me one institution that guarantees 8% every year. I bet you cannot find one except for the Mets.
Who is guaranteeing 8% or any number? I was just using that as an example. I don't know what projections the Wilpons used. The Wilpons were projecting numbers, and I do think Madoff was guaranteeing them a certain percentage based on their investment. The mistake the Wilpons made was trusting Madoff. Not making the Bonilla deal under the context of what they thought they were getting with Madoff.
The Mets guaranteed 8% to get the ~1.2 mil per year for 25 years. When you do the math you get $35+ mil because of the guaranteed 8%.
person and I'd tip my cap to Bonilla for negotiating a great deal for himself - Even though it's not THAT bad of a deal for the Mets. It's clearly better for Bonilla.
But Bonilla turning into such a POS makes it hard to even root for him turning this into the annual spectacle it is.
The reality is though if Bonilla put $5.9M in a different investment vehicle in 2000 and didn't touch it until 2011, and then only withdrew a portion of it each year for 25 years he may have wound up doing better.
RE: RE: RE: RE: RE: The Mets could have bought him out for $5.9 mil
Again, I do. And GUARANTEEING 8% is crazy. Show me one institution that guarantees 8% every year. I bet you cannot find one except for the Mets.
What on earth are you talking about? The Mets were borrowing money from Bonilla. And 8% was a very reasonable interest rate at that time. The bond yield on the top rated corporate rates in 2000 was in the mid 7% range (it varied over the year, I don't know exactly when this deal went down). So the Mets were borrowing at (or near) market rates. Obviously rates have fallen significantly since then, and it's become a much more costly deal for them than it was at the time (I wonder if they've ever tried to buy him out). But the notion that a rate of that level is never guaranteed is absurd. That's what interest is. Most debt is non-adjustable, and the borrower GUARANTEES the interest to the creditor. And the interest rate the Mets paid was wholly consistent with prevailing rates at the time.
is 10-11%, 8% since the index went to 500 stocks in 1957.
Don't know what agreement the Wilpons had with Madoff, but it would not be surprising for Madoff to guarantee 10% annual return or whatever to the Wilpons, especially with the amount of capital they gave to Madoff (I think they lost $700 million). Viewing it in that context, it is not at all crazy that the Wilpons would expect an 8% average return on the $5.9 million. Link - ( New Window )
RE: RE: RE: RE: RE: RE: The Mets could have bought him out for $5.9 mil
Again, I do. And GUARANTEEING 8% is crazy. Show me one institution that guarantees 8% every year. I bet you cannot find one except for the Mets.
What on earth are you talking about? The Mets were borrowing money from Bonilla. And 8% was a very reasonable interest rate at that time. The bond yield on the top rated corporate rates in 2000 was in the mid 7% range (it varied over the year, I don't know exactly when this deal went down). So the Mets were borrowing at (or near) market rates. Obviously rates have fallen significantly since then, and it's become a much more costly deal for them than it was at the time (I wonder if they've ever tried to buy him out). But the notion that a rate of that level is never guaranteed is absurd. That's what interest is. Most debt is non-adjustable, and the borrower GUARANTEES the interest to the creditor. And the interest rate the Mets paid was wholly consistent with prevailing rates at the time.
That's when the economy was booming. That 8% doesn't look so good down the road. You are correct that back in 2000 I don't know what the interest rates were but if you are in that field people have to realize that that wasn't sustainable. That was during the .com bubble where everybody was making money. That had to be a unique time. Again, this isn't ripping the Mets. Read my other posts. I don't want to rewrite everything.
is 10-11%, 8% since the index went to 500 stocks in 1957.
Don't know what agreement the Wilpons had with Madoff, but it would not be surprising for Madoff to guarantee 10% annual return or whatever to the Wilpons, especially with the amount of capital they gave to Madoff (I think they lost $700 million). Viewing it in that context, it is not at all crazy that the Wilpons would expect an 8% average return on the $5.9 million. Link - ( New Window )
I am not fully aware of the whole Madoff situation so not sure if that played into it. But, yeah, they were probably making at least 10% on their money and thought it was a deal but there has to be some wiggle room if rates drop. That's all I am saying.
It amuses me how many people defend this to the death every summer
not sure why you are comparing the interest rate on essentially a senior unsecured bond (if not higher), to average S&P returns. The former guarantees you continued payment deep into a liquidation scenario, while the latter is glorified gambling with no guarantee of principal return.
8% was even at that time, an outsized return to promise someone. Warren Buffett during the height of the financial crisis secured 6-10% interest rates from banks for preferred stock - at a time when banks needed to shore up capital incredibly fast, or become insolvent.
And most importantly, this wouldnt be a big deal if the Wilpons ran their team like a large market franchise - instead we get excuses every year such as this or David Wright's dead money... why they can't spend with the big boys. That's the issue.
RE: It amuses me how many people defend this to the death every summer
not sure why you are comparing the interest rate on essentially a senior unsecured bond (if not higher), to average S&P returns. The former guarantees you continued payment deep into a liquidation scenario, while the latter is glorified gambling with no guarantee of principal return.
8% was even at that time, an outsized return to promise someone. Warren Buffett during the height of the financial crisis secured 6-10% interest rates from banks for preferred stock - at a time when banks needed to shore up capital incredibly fast, or become insolvent.
And most importantly, this wouldnt be a big deal if the Wilpons ran their team like a large market franchise - instead we get excuses every year such as this or David Wright's dead money... why they can't spend with the big boys. That's the issue.
You summed it up better than me. The key is if the team benefited or even just won. If they were winning few would be discussing it. But lately it gets magnified. I like pj's idea of the new owners just paying out the rest of the contract and not have it be a story every year.
Every year this thread turns into a referendum on deferral . And yes some other teams have opted for the same approach.
The funny part everyone gets a kick out of is in the intervening time the Mets lost a fortune in fraudulent investments, settled another 150M in lawsuits, and then snubbed their nose at an offer to sale the team for a fortune only for the world to fall apart and the value of the team now a complete question mark.
It’s like a millionaire financing a TV at Best Buy when he’s got the cash in his pocket. Only to then drop the cash on the floor on the way out. Then getting sued for littering.
Millionaire would be smart to finance the tv at best buy at an interest rate lower than what he expects to earn... thats probably why he's a millionaire...
Everyone here should always be taking advantage of 0% interest financing whenever it's available.
That said, your middle point is spot on... many many other things to rip on them for
The rub is the Mets brass was terrible at investing and finances, and this is a small but representative example of how bad Wilpon has been at all of this the last 25 years.
The Mets effectively borrowed money from Bonilla, trusting their return would be higher. Smart move. The tragic part is one of the primary instruments they used did guarantee higher than 10% returns. Unfortunately that instrument was massive fraud. A fraud the courts were seemingly about to show Wilpon was aware of and he settled.
RE: It amuses me how many people defend this to the death every summer
not sure why you are comparing the interest rate on essentially a senior unsecured bond (if not higher), to average S&P returns. The former guarantees you continued payment deep into a liquidation scenario, while the latter is glorified gambling with no guarantee of principal return.
8% was even at that time, an outsized return to promise someone. Warren Buffett during the height of the financial crisis secured 6-10% interest rates from banks for preferred stock - at a time when banks needed to shore up capital incredibly fast, or become insolvent.
And most importantly, this wouldnt be a big deal if the Wilpons ran their team like a large market franchise - instead we get excuses every year such as this or David Wright's dead money... why they can't spend with the big boys. That's the issue.
The Wilpons had the $5.9 million making money for over a decade. It was projected to double by that time, and most decent investments would in 11 years. Even if they didn't get the full 8% every year, if they had to cut into the principal a bit, they would still have expected to come out well on top.
In fact they were below market averages. What he was providing was CONSISTENT returns. Rather than being up 25% one year and down 10% the next, Madoff’s fund provided a consistently positive annual return. (On paper obviously)
And the same point that comes out every year on this thread. It's not so much the deferred $5.9M, it's the fact that the Wilpon's always cry poverty when it comes to the payroll and dead money and why the Mets can't go after prized free agents.
As another poster alluded to above, when the new owner comes in, it would make sense to just by Bonilla out so the negative PR goes away.
Tons of other players get a ton of deferred compensation for a much greater amount, but yeah, single out Bonilla.
This is about as dumb as mocking a retired school teacher or cop every time they receive their deferred compensation.
"Manny Ramirez has a 16-year, $32 million deferred money deal from the Red Sox which, like Bonilla’s, kicked in on July 1, 2011. It costs them $1.968 million a year and goes through 2026 when Ramirez is 54;
The Cardinals are paying Matt Holliday to play now, but they’ll still be paying him through 2029 under the $120 million, seven-year contract he signed in 2010;
Retired Rockies first baseman Todd Helton deferred $13 million of his 2011 salary (total was $19.1 million) and will be paid through 2024;
The Nationals will pay Ryan Zimmerman $10 million over five years after he’s retired, with a nominal organization job;
Ryan Braun will receive $18 million in payments in equal installments each July 1 from 2022 to 2031;
The Tigers are still paying Gary Sheffield between $1 million and $2.5 million annually through 2019;
The Mariners are paying Ichiro Suzuki a chunk of his last big deal through the year 2032;
The Reds signed Ken Griffey Jr. to a $116.5 million contract in February 2000, but more than half of that is still being paid by the team and will continue to be so until Griffey is in his 50s."
Link - ( New Window )
It cracks me up. It exposes ignorant baseball fans.
Tons of other players get a ton of deferred compensation for a much greater amount, but yeah, single out Bonilla.
This is about as dumb as mocking a retired school teacher or cop every time they receive their deferred compensation.
This isn't deferred money.
Michael Mayer
@mikemayerMMO
Happy MLB Deferment Day!
This thread is dedicated to past, present, and future deferred contracts given to Major League Baseball players.
It started before Bobby Bonilla and goes well beyond him.
6:41 AM · Jul 1, 2020·TweetDeck
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Michael Mayer
@mikemayerMMO
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2h
Replying to
@mikemayerMMO
The Atlanta Braves are still paying Bruce Sutter $1.12 million a year in a deferred payments through 2021 and he will also receive a final balloon payment of $9.1 million.
His deferred payments started in 1985.
Michael Mayer
@mikemayerMMO
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2h
The Orioles will pay Chris Davis $42 million in deferred money to be paid in 10 installments of $3.5 million annually each July 1, 2023-32, and five installments of $1.4 million each July 1, 2033-37
Michael Mayer
@mikemayerMMO
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2h
Orioles will have to pay Alex Cobb $20 million deferred with $2 million on 11/30/22 & $1.8 million annually each 11/30, 2023-32.
If Cobb does not pitch at least 130 innings in 2020, an additional $5.5 million of 2021 salary is deferred, payable $1.75 million annually, 2033-35
Michael Mayer
@mikemayerMMO
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2h
The Orioles will give Mark Trumbo deferred payments of $1.5 million on November 1st in each of 2020, 2021, and 2022.
Michael Mayer
@mikemayerMMO
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2h
The Orioles agreed to give Ubaldo Jimenez $9 million in deferred money, which they started paying in 2018.
Payments are in $2.25 million installments.
Michael Mayer
@mikemayerMMO
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2h
Yovani Gallardo was given $3.25 million deferred in his contract with the Orioles, that will be paid in installments of $1.625 million each on 7/1/19 and 7/1/20.
The Orioles and Mariners are sharing these payments following trade to Seattle.
Michael Mayer
@mikemayerMMO
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2h
When Darren O'Day re-signed with Orioles in 2015, he agreed to $1 million deferred payments to be paid in 2020-2023.
Michael Mayer
@mikemayerMMO
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2h
Chris Sale agreed to receive $50 million in deferred payments from the Red Sox.
He will receive $10 million annually on June 30th from 2035-2039 and if club exercises 2025 option, $5 million is deferred until 6/30/2040.
Michael Mayer
@mikemayerMMO
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2h
The Red Sox will give Dustin Pedroia $18 million in deferred payments, $2 million every year in 2021-2024 and $2.5 million every year in 2025-2028.
Michael Mayer
@mikemayerMMO
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2h
The Red Sox started their deferred payments to Manny Ramirez in 2011 at $1,968,677.
He will receive $2,013,418 today and payments continues through 2026 at 2.5% interest.
Michael Mayer
@mikemayerMMO
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2h
When Evan Longoria signed with the Rays in 2017, he agreed to defer $11 million without interest.
Michael Mayer
@mikemayerMMO
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2h
The Blue Jays are responsible for $5 million of Troy Tulowitzki's contract from 2019 that was deferred, payable in 10 equal installments each Jan. 1, 2025-34 with 3% interest.
Michael Mayer
@mikemayerMMO
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2h
Paul Konerko started receiving annual deferred payments of $1 million from the White Sox in 2014 and that continues through 2021.
Michael Mayer
@mikemayerMMO
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42m
The Washington Nationals agreed to give Max Scherzer deferred payments of $15 million each July 1 from 2022 to 2028.
Michael Mayer
@mikemayerMMO
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41m
Brian Dozier received a one-time deferred payment from Nationals of $2 million on 1/15/2020.
Michael Mayer
@mikemayerMMO
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40m
Anibal Sanchez will receive a one-time deferred payment of $4 million on 1/15/2021 from the Nationals.
Michael Mayer
@mikemayerMMO
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39m
$10 million of Patrick Corbin's 2024 salary with the Nationals is deferred without interest, to be paid Nov. 2024 through Jan 15, 2026.
Michael Mayer
@mikemayerMMO
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37m
The Washington Nationals gave Ryan Zimmerman a 5-year, $10 million personal services contract that will begin once his playing career ends.
Michael Mayer
@mikemayerMMO
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33m
Stephen Strasburg will get the following deferred payments from the Washington Nationals:
$10 million on July 1 of 2020-2022
$26,666,667 on July 1 of 2027-2029
$3,999,974 on Dec 31, 2029
Michael Mayer
@mikemayerMMO
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31m
The St. Louis Cardinals will pay Matt Holliday $1.4 million on July 15th every year from 2020 to 2029.
Michael Mayer
@mikemayerMMO
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30m
The Mets have paid Bret Saberhagen a deferred payment of $250,000 annually starting in 2004 and that continues through 2028.
Michael Mayer
@mikemayerMMO
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24m
The New York Mets will cut a check for $1,193,248.20 to Bobby Bonilla today and will continue that annually through 2035.
The payments started in 2011.
Michael Mayer
@mikemayerMMO
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21m
Jeurys Familia will receive two deferred payments of $1 million from the Mets:
One by 1/15/22 and the other payable by 7/1/22.
Michael Mayer
@mikemayerMMO
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20m
When Jacob deGrom signed his extension with Mets, he agreed to defer $52.5 million.
Will defer $12M in 2020, $13.5M in 2021, $15M in 2022, $12M in 2023, $15M in 2024 if club exercises option.
Deferrals to be paid 7/1 in 15th year after salary is earned, from 2035 through 2039
Michael Mayer
@mikemayerMMO
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16m
Here's the known details of David Wright's deferrals with the Mets (thanks @SotoC803
)
2021: $5.1 million
2022: $5.1M
2023: $5.1M + ~$566k interest
2024: $3.1M
2025: $3.1M
Michael Mayer
@mikemayerMMO
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13m
Goose Gossage received deferred payments from the Padres of $240,000 per year from 1990-2006 and $125,000 from 2007-2016.
Michael Mayer
@mikemayerMMO
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7m
Here's the complicated details of the deferred payment agreement between Christian Yelich and the Brewers via Cot's Contracts on @baseballpro
.
Michael Mayer
@mikemayerMMO
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2m
Phil Niekro signed a three-year deal with the Braves for 1980-1982, part of that deal included deferred payments of $8,500 per month starting on Jan. 1, 1985 through 2010.
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The deal enabled the Mets to trade for Mike Hampton, who helped them make the World Series. The comp pick for Mike Hampton turned into David Wright. I make that deal 10 out of 10 times.
Tons of other players get a ton of deferred compensation for a much greater amount, but yeah, single out Bonilla.
This is about as dumb as mocking a retired school teacher or cop every time they receive their deferred compensation.
This isn't deferred money.
yes, it is
defer:
verb
past tense: deferred; past participle: deferred
put off (an action or event) to a later time; postpone.
"they deferred the decision until February"
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In comment 14927168 KDavies said:
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The deal enabled the Mets to trade for Mike Hampton, who helped them make the World Series. The comp pick for Mike Hampton turned into David Wright. I make that deal 10 out of 10 times.
Tons of other players get a ton of deferred compensation for a much greater amount, but yeah, single out Bonilla.
This is about as dumb as mocking a retired school teacher or cop every time they receive their deferred compensation.
This isn't deferred money.
yes, it is
defer:
verb
past tense: deferred; past participle: deferred
put off (an action or event) to a later time; postpone.
"they deferred the decision until February"
It's not deferred. It's crazy.
In other words, they agreed to defer the money?
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but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
In other words, they agreed to defer the money?
And pay a shit ton on top of the deferred money.
Because they don't understand finance and just buy into the fodder?
but they kept that $5.9M for 11 years before paying him a cent. Even forgetting that they based the decision on the Madoff returns, the S&P average return over the 20 years they've had Bonilla's money) has been better than 8% (on average over that time - not each year).
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In comment 14927179 robbieballs2003 said:
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but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
In other words, they agreed to defer the money?
And pay a shit ton on top of the deferred money.
Its called time value of money.... interest.
The Mets deferred payment at a rate that is lower than what their investment rate was. (Ignore for a moment that their investment rate was inflated by a ponzi scheme, which is fair) but the concept of deferring payment now and paying interest is preeeeetttty common.
Have you ever had a car loan? Student loan? Mortgage?
Same thing.
Sign me up for that...
Read the article I posted. Read the tweets pjcas posted. There are far higher deferred compensation plans, and far worse contracts, in baseball. Yet Bonilla gets singled out. It's ignorant.
Plenty of athletes go bankrupt after they are done playing their sport. I have no issues. That is what the Mets contracted for. It enabled them to stay within their desired budget, get Mike Hampton, make the World Series with Hampton, and turn the comp pick into David Wright. It enabled Bonilla to get paid beyond his playing years. Both sides got what they wanted.
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but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
but they kept that $5.9M for 11 years before paying him a cent. Even forgetting that they based the decision on the Madoff returns, the S&P average return over the 20 years they've had Bonilla's money) has been better than 8% (on average over that time - not each year).
Correct but where can you guarantee 8%? Even if it wasn't until 2011? And with the Mets in the situation they are currently in 8t isn't a good look for them. If they had money and weren't thinking about selling the team very few would care. But with not spending over the years in a market like NY and then when you do you spend on a guy like Lowrie the optics look awful.
8% is the standard long term return of the market... sooo... $5.9M indeed does turn into $37M over 25 years..
Thats exactly the point and why its a non-issue
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all my friends that are Mets fans are disgusted by it.
Read the article I posted. Read the tweets pjcas posted. There are far higher deferred compensation plans, and far worse contracts, in baseball. Yet Bonilla gets singled out. It's ignorant.
Plenty of athletes go bankrupt after they are done playing their sport. I have no issues. That is what the Mets contracted for. It enabled them to stay within their desired budget, get Mike Hampton, make the World Series with Hampton, and turn the comp pick into David Wright. It enabled Bonilla to get paid beyond his playing years. Both sides got what they wanted.
That's the issue. It was a self imposed budget. This wasn't trying to get under the cap like the NFL. And as I stated in my last post, the Wilpons are in worse shape now hence the backlash. If they were making "smart decisions" with their money would they be in the situation they are in? I'm not hear to argue about this. I just dont know why people are defending this franchise. All my Mets fans are so done with this team because of ownership and cannot wait for them to sell (assuming the Wilpons don't hang around in any deal).
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In comment 14927179 robbieballs2003 said:
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but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
but they kept that $5.9M for 11 years before paying him a cent. Even forgetting that they based the decision on the Madoff returns, the S&P average return over the 20 years they've had Bonilla's money) has been better than 8% (on average over that time - not each year).
Correct but where can you guarantee 8%? Even if it wasn't until 2011? And with the Mets in the situation they are currently in 8t isn't a good look for them. If they had money and weren't thinking about selling the team very few would care. But with not spending over the years in a market like NY and then when you do you spend on a guy like Lowrie the optics look awful.
It wasn't a great deal for the Mets - mostly because they crafted it expecting to continue to get 10%+ returns like they were with Madoff, no debating that, it's just not quite the punchline people make it out to be.
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In comment 14927179 robbieballs2003 said:
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but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
but they kept that $5.9M for 11 years before paying him a cent. Even forgetting that they based the decision on the Madoff returns, the S&P average return over the 20 years they've had Bonilla's money) has been better than 8% (on average over that time - not each year).
Correct but where can you guarantee 8%? Even if it wasn't until 2011? And with the Mets in the situation they are currently in 8t isn't a good look for them. If they had money and weren't thinking about selling the team very few would care. But with not spending over the years in a market like NY and then when you do you spend on a guy like Lowrie the optics look awful.
Rule of 72. At 8%, the money would double in 9 years. So by 9 years, you have 12 million. Another 2 years, you have about a million a year. At 11 years, you are at $14 million. Bonilla gets $1.19 million, which is (doing off the top of my head) roughly 8% of $14 million. So, the plan was that instead of paying Bonilla $5.9 million off the bat, they pay him off the money that generates, and have $14 million or so at the end.
You say you understand finance, but I don't think you do.
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In comment 14927187 robbieballs2003 said:
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all my friends that are Mets fans are disgusted by it.
Read the article I posted. Read the tweets pjcas posted. There are far higher deferred compensation plans, and far worse contracts, in baseball. Yet Bonilla gets singled out. It's ignorant.
Plenty of athletes go bankrupt after they are done playing their sport. I have no issues. That is what the Mets contracted for. It enabled them to stay within their desired budget, get Mike Hampton, make the World Series with Hampton, and turn the comp pick into David Wright. It enabled Bonilla to get paid beyond his playing years. Both sides got what they wanted.
That's the issue. It was a self imposed budget. This wasn't trying to get under the cap like the NFL. And as I stated in my last post, the Wilpons are in worse shape now hence the backlash. If they were making "smart decisions" with their money would they be in the situation they are in? I'm not hear to argue about this. I just dont know why people are defending this franchise. All my Mets fans are so done with this team because of ownership and cannot wait for them to sell (assuming the Wilpons don't hang around in any deal).
I want the Wilpons gone as well. Not understanding the reasoning behind the deal and disliking the Wilpons are not the same thing.
The funny part everyone gets a kick out of is in the intervening time the Mets lost a fortune in fraudulent investments, settled another 150M in lawsuits, and then snubbed their nose at an offer to sale the team for a fortune only for the world to fall apart and the value of the team now a complete question mark.
It’s like a millionaire financing a TV at Best Buy when he’s got the cash in his pocket. Only to then drop the cash on the floor on the way out. Then getting sued for littering.
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In comment 14927189 pjcas18 said:
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In comment 14927179 robbieballs2003 said:
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but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
but they kept that $5.9M for 11 years before paying him a cent. Even forgetting that they based the decision on the Madoff returns, the S&P average return over the 20 years they've had Bonilla's money) has been better than 8% (on average over that time - not each year).
Correct but where can you guarantee 8%? Even if it wasn't until 2011? And with the Mets in the situation they are currently in 8t isn't a good look for them. If they had money and weren't thinking about selling the team very few would care. But with not spending over the years in a market like NY and then when you do you spend on a guy like Lowrie the optics look awful.
Rule of 72. At 8%, the money would double in 9 years. So by 9 years, you have 12 million. Another 2 years, you have about a million a year. At 11 years, you are at $14 million. Bonilla gets $1.19 million, which is (doing off the top of my head) roughly 8% of $14 million. So, the plan was that instead of paying Bonilla $5.9 million off the bat, they pay him off the money that generates, and have $14 million or so at the end.
You say you understand finance, but I don't think you do.
Again, I do. And GUARANTEEING 8% is crazy. Show me one institution that guarantees 8% every year. I bet you cannot find one except for the Mets.
But ripping on them for this deal is silly. Standard business practice.
Many, many other things to have an actual issue with. Complaining about this dilutes the rest.
The funny part everyone gets a kick out of is in the intervening time the Mets lost a fortune in fraudulent investments, settled another 150M in lawsuits, and then snubbed their nose at an offer to sale the team for a fortune only for the world to fall apart and the value of the team now a complete question mark.
It’s like a millionaire financing a TV at Best Buy when he’s got the cash in his pocket. Only to then drop the cash on the floor on the way out. Then getting sued for littering.
Millionaire would be smart to finance the tv at best buy at an interest rate lower than what he expects to earn... thats probably why he's a millionaire...
Everyone here should always be taking advantage of 0% interest financing whenever it's available.
That said, your middle point is spot on... many many other things to rip on them for
It turned out bad, but at the time not considered crazy. Some of the other deferrals are more in the 3 - 4% range, so grand scheme it's not a debilitating deal.
It's worse for PR than reality.
When the Mets sell, the new owners would be smart to just buy Bonilla out to end the stigma - or they can leave it as a way to show just how clownish the Wilpons were.
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In comment 14927195 robbieballs2003 said:
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In comment 14927189 pjcas18 said:
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In comment 14927179 robbieballs2003 said:
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but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
but they kept that $5.9M for 11 years before paying him a cent. Even forgetting that they based the decision on the Madoff returns, the S&P average return over the 20 years they've had Bonilla's money) has been better than 8% (on average over that time - not each year).
Correct but where can you guarantee 8%? Even if it wasn't until 2011? And with the Mets in the situation they are currently in 8t isn't a good look for them. If they had money and weren't thinking about selling the team very few would care. But with not spending over the years in a market like NY and then when you do you spend on a guy like Lowrie the optics look awful.
Rule of 72. At 8%, the money would double in 9 years. So by 9 years, you have 12 million. Another 2 years, you have about a million a year. At 11 years, you are at $14 million. Bonilla gets $1.19 million, which is (doing off the top of my head) roughly 8% of $14 million. So, the plan was that instead of paying Bonilla $5.9 million off the bat, they pay him off the money that generates, and have $14 million or so at the end.
You say you understand finance, but I don't think you do.
Again, I do. And GUARANTEEING 8% is crazy. Show me one institution that guarantees 8% every year. I bet you cannot find one except for the Mets.
Who is guaranteeing 8% or any number? I was just using that as an example. I don't know what projections the Wilpons used. The Wilpons were projecting numbers, and I do think Madoff was guaranteeing them a certain percentage based on their investment. The mistake the Wilpons made was trusting Madoff. Not making the Bonilla deal under the context of what they thought they were getting with Madoff.
But ripping on them for this deal is silly. Standard business practice.
Many, many other things to have an actual issue with. Complaining about this dilutes the rest.
Agreed but this is just another piece to add to the other issues with the Wilpons. I'm not here ripping Mets fans. I hope the Mets do well outside of playing the Yankees. It's great for the area. I used to watch a lot of Mets games when I was younger. I remember Ron Darling hitting a HR. I remember watching Kiner's Corner. It's fun when they are good. I just don't get the defending of the deal either. I don't think it is bad as most make it out to be and people celebrating Bobby Bonilla day. I still don't think it was a smart deal. If you ask who you'd rather be in the deal nobody would side with the Mets over Bonilla. It is what kt is. It isn't a crippling deal. It's just that of you are "saving" money you'd hope it was going back in to your team and that doesn't seem to be the case.
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that's my point. Guaranteeing 8% is crazy. Just my two cents. And I agree there are other teams that can be criticized for similar deals. I am just pointing out when you are in the NY market and you make a deal like that you expect it to go back to your team and it hasn't. EVERY Mets fans I know is so done with them. The money truly hasn't made it back to the team. And I feel like when the Mets sign a big name player or pay a player a lot it doesn't work out (Mo Vaughn and Lowrie come to mind). I know shit happens but I feel the pain because I am a Knicks fan. I know how frustrating it is but the Mets shouldn't be talked in the same breath with the Knicks. The sooner they sell the better.
It turned out bad, but at the time not considered crazy. Some of the other deferrals are more in the 3 - 4% range, so grand scheme it's not a debilitating deal.
It's worse for PR than reality.
When the Mets sell, the new owners would be smart to just buy Bonilla out to end the stigma - or they can leave it as a way to show just how clownish the Wilpons were.
That's a good idea. Having this linger year after year makings them a joke (right or wrong, just reading how this is a celebrated day). Gotta move on from it.
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In comment 14927202 KDavies said:
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In comment 14927195 robbieballs2003 said:
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In comment 14927189 pjcas18 said:
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In comment 14927179 robbieballs2003 said:
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but instead agreed to pay ~1.2 mil per year for 25 years including a negotiated 8% interest.
but they kept that $5.9M for 11 years before paying him a cent. Even forgetting that they based the decision on the Madoff returns, the S&P average return over the 20 years they've had Bonilla's money) has been better than 8% (on average over that time - not each year).
Correct but where can you guarantee 8%? Even if it wasn't until 2011? And with the Mets in the situation they are currently in 8t isn't a good look for them. If they had money and weren't thinking about selling the team very few would care. But with not spending over the years in a market like NY and then when you do you spend on a guy like Lowrie the optics look awful.
Rule of 72. At 8%, the money would double in 9 years. So by 9 years, you have 12 million. Another 2 years, you have about a million a year. At 11 years, you are at $14 million. Bonilla gets $1.19 million, which is (doing off the top of my head) roughly 8% of $14 million. So, the plan was that instead of paying Bonilla $5.9 million off the bat, they pay him off the money that generates, and have $14 million or so at the end.
You say you understand finance, but I don't think you do.
Again, I do. And GUARANTEEING 8% is crazy. Show me one institution that guarantees 8% every year. I bet you cannot find one except for the Mets.
Who is guaranteeing 8% or any number? I was just using that as an example. I don't know what projections the Wilpons used. The Wilpons were projecting numbers, and I do think Madoff was guaranteeing them a certain percentage based on their investment. The mistake the Wilpons made was trusting Madoff. Not making the Bonilla deal under the context of what they thought they were getting with Madoff.
The Mets guaranteed 8% to get the ~1.2 mil per year for 25 years. When you do the math you get $35+ mil because of the guaranteed 8%.
But Bonilla turning into such a POS makes it hard to even root for him turning this into the annual spectacle it is.
The reality is though if Bonilla put $5.9M in a different investment vehicle in 2000 and didn't touch it until 2011, and then only withdrew a portion of it each year for 25 years he may have wound up doing better.
What on earth are you talking about? The Mets were borrowing money from Bonilla. And 8% was a very reasonable interest rate at that time. The bond yield on the top rated corporate rates in 2000 was in the mid 7% range (it varied over the year, I don't know exactly when this deal went down). So the Mets were borrowing at (or near) market rates. Obviously rates have fallen significantly since then, and it's become a much more costly deal for them than it was at the time (I wonder if they've ever tried to buy him out). But the notion that a rate of that level is never guaranteed is absurd. That's what interest is. Most debt is non-adjustable, and the borrower GUARANTEES the interest to the creditor. And the interest rate the Mets paid was wholly consistent with prevailing rates at the time.
It’s a great day. Seeing Mets fans get bent out of shape about the deal being made fun of is gold.
Most people know why the deal was made, some don’t. Either way it’s funny.
Don't know what agreement the Wilpons had with Madoff, but it would not be surprising for Madoff to guarantee 10% annual return or whatever to the Wilpons, especially with the amount of capital they gave to Madoff (I think they lost $700 million). Viewing it in that context, it is not at all crazy that the Wilpons would expect an 8% average return on the $5.9 million.
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Again, I do. And GUARANTEEING 8% is crazy. Show me one institution that guarantees 8% every year. I bet you cannot find one except for the Mets.
What on earth are you talking about? The Mets were borrowing money from Bonilla. And 8% was a very reasonable interest rate at that time. The bond yield on the top rated corporate rates in 2000 was in the mid 7% range (it varied over the year, I don't know exactly when this deal went down). So the Mets were borrowing at (or near) market rates. Obviously rates have fallen significantly since then, and it's become a much more costly deal for them than it was at the time (I wonder if they've ever tried to buy him out). But the notion that a rate of that level is never guaranteed is absurd. That's what interest is. Most debt is non-adjustable, and the borrower GUARANTEES the interest to the creditor. And the interest rate the Mets paid was wholly consistent with prevailing rates at the time.
That's when the economy was booming. That 8% doesn't look so good down the road. You are correct that back in 2000 I don't know what the interest rates were but if you are in that field people have to realize that that wasn't sustainable. That was during the .com bubble where everybody was making money. That had to be a unique time. Again, this isn't ripping the Mets. Read my other posts. I don't want to rewrite everything.
Don't know what agreement the Wilpons had with Madoff, but it would not be surprising for Madoff to guarantee 10% annual return or whatever to the Wilpons, especially with the amount of capital they gave to Madoff (I think they lost $700 million). Viewing it in that context, it is not at all crazy that the Wilpons would expect an 8% average return on the $5.9 million. Link - ( New Window )
I am not fully aware of the whole Madoff situation so not sure if that played into it. But, yeah, they were probably making at least 10% on their money and thought it was a deal but there has to be some wiggle room if rates drop. That's all I am saying.
8% was even at that time, an outsized return to promise someone. Warren Buffett during the height of the financial crisis secured 6-10% interest rates from banks for preferred stock - at a time when banks needed to shore up capital incredibly fast, or become insolvent.
And most importantly, this wouldnt be a big deal if the Wilpons ran their team like a large market franchise - instead we get excuses every year such as this or David Wright's dead money... why they can't spend with the big boys. That's the issue.
8% was even at that time, an outsized return to promise someone. Warren Buffett during the height of the financial crisis secured 6-10% interest rates from banks for preferred stock - at a time when banks needed to shore up capital incredibly fast, or become insolvent.
And most importantly, this wouldnt be a big deal if the Wilpons ran their team like a large market franchise - instead we get excuses every year such as this or David Wright's dead money... why they can't spend with the big boys. That's the issue.
You summed it up better than me. The key is if the team benefited or even just won. If they were winning few would be discussing it. But lately it gets magnified. I like pj's idea of the new owners just paying out the rest of the contract and not have it be a story every year.
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Every year this thread turns into a referendum on deferral . And yes some other teams have opted for the same approach.
The funny part everyone gets a kick out of is in the intervening time the Mets lost a fortune in fraudulent investments, settled another 150M in lawsuits, and then snubbed their nose at an offer to sale the team for a fortune only for the world to fall apart and the value of the team now a complete question mark.
It’s like a millionaire financing a TV at Best Buy when he’s got the cash in his pocket. Only to then drop the cash on the floor on the way out. Then getting sued for littering.
Millionaire would be smart to finance the tv at best buy at an interest rate lower than what he expects to earn... thats probably why he's a millionaire...
Everyone here should always be taking advantage of 0% interest financing whenever it's available.
That said, your middle point is spot on... many many other things to rip on them for
The rub is the Mets brass was terrible at investing and finances, and this is a small but representative example of how bad Wilpon has been at all of this the last 25 years.
The Mets effectively borrowed money from Bonilla, trusting their return would be higher. Smart move. The tragic part is one of the primary instruments they used did guarantee higher than 10% returns. Unfortunately that instrument was massive fraud. A fraud the courts were seemingly about to show Wilpon was aware of and he settled.
8% was even at that time, an outsized return to promise someone. Warren Buffett during the height of the financial crisis secured 6-10% interest rates from banks for preferred stock - at a time when banks needed to shore up capital incredibly fast, or become insolvent.
And most importantly, this wouldnt be a big deal if the Wilpons ran their team like a large market franchise - instead we get excuses every year such as this or David Wright's dead money... why they can't spend with the big boys. That's the issue.
The Wilpons had the $5.9 million making money for over a decade. It was projected to double by that time, and most decent investments would in 11 years. Even if they didn't get the full 8% every year, if they had to cut into the principal a bit, they would still have expected to come out well on top.
As another poster alluded to above, when the new owner comes in, it would make sense to just by Bonilla out so the negative PR goes away.