Wednesday marks the arrival of one of MLB’s most beloved unofficial holidays: Bobby Bonilla Day.
Every July 1, the New York Mets deliver a payment of $1.193 million to Bobby Bonilla, a former outfielder who has not played for the club since 1999. They payments are an obligation the Mets took on when they got Bonilla to agree to forego a $5.9 million salary for the 2000 season, with that seven-figure sum due once per year from 2011 to 2035.
Advertisement
It’s a deal that has come to define the Mets, a team that has made itself very easy to mock in the past few to several decades. This year figures to be no different, with the Mets foundering in last place at 36-50 and having recently fired manager Carlos Mendoza. Ever year, the jokes arrive on social media. The explainers. The “lolMets” of it all.
After all, what’s more short-sighted than agreeing to give a guy $29.83 million in the future just so you don’t have to give him $5.9 million immediately?
Well, here’s the thing. The Bobby Bonilla deal is perfectly fine from the Mets’ side. And that’s not even an “of course an organization with a $365 million payroll isn’t going to sweat a $1.19 million payment each year” rationalization. The simple fact is that turning $5.9 million in 2000 into $29.83 million between 2011 and 2035 barely registers as a major gain in the world of finance. If anything, it’s analogous to what happens in your average (and soberly maintained) 401(k).
There’s a reason why the deal became regarded as a disaster for the Mets, but it is hardly anything inside the deal itself. Let’s get into it.
Advertisement
Matching Bobby Bonilla’s gains hasn’t been that hard
We’ll repeat the numbers one last time.
-
$29.83 million between 2011 and 2035.
When the Mets and Bonilla’s people sat down to figure out a fair compensation, they landed on a deferred payment schedule that gave Bonilla an annual compound interest of 8%. That’s a decent gain over time, acceptable for many retirement accounts. However, that is a rate of return roughly equivalent to what you historically get just by parking your money in the U.S. stock market.
Let’s take that $5.9 million payment in January 2000 and put it in the most basic place you can put it: the S&P 500. Using a calculator based on historical data, investing that $5.9 million with dividends reinvested and not adjusting for inflation or taxes, you get a current value of … $49 million.
Advertisement
Let’s say you don’t want the full volatility of the U.S. stock market and instead invest 60% into stocks and 40% into bonds. Using a different calculator, that strategy works out to $35.2 million.
Even taking stock market gains and bonds out of the equation, the inflation alone is significant, with $5.9 million in 2000 being worth $11.7 million in 2026.
We’re not saying Bonilla shouldn’t have taken that deal. It just really needs to be said: no one with a legitimate financial background thinks such a return is that wild.
There’s actually a great comparison to this, in which firms around the country try to get people to agree to a deal similar to what Bonilla got: the lottery.
Advertisement
If you’ve read about lottery winnings before, you might have heard how you should probably take the lump sum over the offered annuity, even if the annuity winds up paying far more over time. There was a winner earlier this year who took a $4.56 million lump sum after withholdings over a “$1,000 A Day For Life” prize, which had a guaranteed minimum payout of $7 million.
Do you think the lotteries are doing that out of kindness? Or could they be well aware of what’s possible when the winner doesn’t take that money up front?
The Mets cut Bobby Bonilla’s salary, then reached the World Series
Here’s another fact that sometimes gets lost in the Bonilla of it all with the Mets.
Advertisement
The Mets wanted to cut Bonilla and his 2000 salary so they could turn their team into a contender. The same offseason, they traded for starting pitcher Mike Hampton, who had a similar salary and proceeded to post a 3.14 ERA in 217 2/3 innings in 2000.
Hampton helped lead the Mets to the 2000 World Series. We should not have to explain to you that reaching the World Series comes with direct and indirect financial benefits, from the seat sales to the increased credibility with fans going forward. Do those benefits add up to $5.9 million in 2000? There’s no way to know, but this ain’t nothing.
Oh, and Hampton left after the 2000 season for an eight-year, $121 million contract with the Colorado Rockies. That sounds unfortunate for the Mets, until you learn they got a compensation pick for that departed free agency, the 38th overall pick in the 2001 MLB Draft.
Let’s just say the player they drafted, David Wright, worked out.
Advertisement
Bernie Madoff is what went wrong for Mets ownership
So why is the Bonilla deal so often presented as a reason for the Mets being a laughingstock? The answer for that lies in the friendship between the Wilpon family, who ran the Mets for much of the 21st century, and Bernie Madoff, perhaps the most infamous white-collar criminal of the 21st century.
We mentioned an 8% return for Bonilla in his deal. At the time, Madoff was offering his investors a promise of double-digit returns. The theoretical math for the Wilpons was simple: any money saved now can be turned into vastly more money in the future.
Obviously, that didn’t work out. It definitely didn’t work out for Madoff, who was sentenced to 150 years in prison and died in 2021. It also wound up being brutal for the Wilpons.
Advertisement
The aftermath of the Madoff scandal saw trustee Irving Picard sue several people for profiting off Madoff in some way, even if their investments had gone up in smoke. Basically, a line was drawn between “benefactor” and “victim,” and the Wilpons were found to be on the “benefactor” side.
Patriarch Fred Wilpon denied any knowledge of the scheme, but he wound up having to pay $162 million to settle Picard’s lawsuit in 2012. That’s when the Mets’ money dried up until their sale in 2020 to the much richer Steve Cohen, to whom the Bonilla deal is basically a combination joke/rounding error.
So, with the Mets having to cut payroll significantly after 2011, right when the Bonilla payments started, you can see where the jokes began.
Taxes are what went right for Bobby Bonilla
Let’s also be clear, no one here is saying Bonilla is a fool for taking that deal.
Advertisement
He might have underperformed the S&P 500, but there is value in knowing a similar payment is awaiting you in your golden years, in addition to your MLB pension. Bonilla probably felt pretty good about his choices during the Great Recession, and ultimately people are going to prioritize stability more than firms with far more resources.
There is also definitely something to be said about the fact that Bonilla went from the majority of his income being exposed to New York state taxes, to now cashing his checks in Florida, where there is no state income tax.
One more fun note is that the Mets aren’t even the only team sending Bonilla checks on July 1. He worked out a similar deal with the Baltimore Orioles, who are paying him $500,000 each year from 2004 to 2028.
So that’s the Bobby Bonilla deal, which is hardly a disaster for the Mets. Investing with Madoff certainly was, but pushing back a player’s salary at a significant but manageable interest rate and using those immediate savings to bring in a player that helps you reach the World Series, and later draft Wright, honestly belongs among the Mets’ better deals over the past three decades.
