Happy Bobby Bonilla Day!

[Chuck]

The New York Mets pay Bobby Bonilla $1.19M every July 1 through 2035.

He hasn't played since 2001.

[Blarg]

The greatest social security paycheck ever. 

[Dtwncbad]

And every year people who actually understand finance and the time value of money roll their eyes at the amatuerish, mathematically false notion that Bonilla won that deal.

[Vegas Halo Fan]

9 minutes ago, Dtwncbad said:

And every year people who actually understand finance and the time value of money roll their eyes at the amatuerish, mathematically false notion that Bonilla won that deal.

I would like to lose something that pays me $1.9M per year for doing nothing.

[Dtwncbad]

2 minutes ago, Vegas Halo Fan said:

I would like to lose something that pays me $1.9M per year for doing nothing.

Nobody argues he isn't sitting pretty.  But that's half an analysis.  The point is he was better off financially with the deal he had before the famous adjustment. 

[Stradling]

Just now, Dtwncbad said:

Nobody argues he isn't sitting pretty.  But that's half an analysis.  The point is he was better off financially with the deal he had before the famous adjustment. 

So the $5.9 million in 1999 is worth more than $1.2 million a year from 2011-2035?  Even if he had to deal with the horrible market crash in 2008?  I am not questioning you, I am asking you a question.

[Dtwncbad]

The following is from Business Insider:

"If Bonilla had accepted the $5.9 million in 2000 and invested the entire amount at 8% interest, the original investment would have grown to $104.1 million by 2035*. If instead, Bonilla takes his annual payment and invests that with an 8% annual return, he would have $95.2 million by 2035….

But more importantly to the Mets, if they invested the $5.9 million at 8% interest in 2000. That money would have grown to more than $14 million before they had to make a single payment. And that money would continue to draw interest even while they are making payments."

The whole point is that if Bonilla really, really wanted to maximize his wealth, he could have done better with just an adequate financial planner.

The Mets get mocked over this every year, but it is not warranted.  The Mets "won" the deal mathematically.

[arch stanton]

Just now, calscuf said:

Where can you get a safe 8% return these days?

In hypothetical scenarios involving other people’s money 

[Lou]

29 minutes ago, calscuf said:

Where can you get a safe 8% return these days?

my favorite parts are:

1. that an athlete would invest 100% of their yearly salary

2. that athletes dont pay taxes 

3. that athletes don't have expenses 

[Dtwncbad]

2 hours ago, calscuf said:

Where can you get a safe 8% return these days?

One very easy answer is private equity.

[gurn67]

3 hours ago, Dtwncbad said:

The following is from Business Insider:

"If Bonilla had accepted the $5.9 million in 2000 and invested the entire amount at 8% interest, the original investment would have grown to $104.1 million by 2035*. If instead, Bonilla takes his annual payment and invests that with an 8% annual return, he would have $95.2 million by 2035….

But more importantly to the Mets, if they invested the $5.9 million at 8% interest in 2000. That money would have grown to more than $14 million before they had to make a single payment. And that money would continue to draw interest even while they are making payments."

The whole point is that if Bonilla really, really wanted to maximize his wealth, he could have done better with just an adequate financial planner.

The Mets get mocked over this every year, but it is not warranted.  The Mets "won" the deal mathematically.

Yes, athletes always plan for the future and invest their huge short term contracts wisely. Just ask hundreds of former multi-millionaire athletes like Allen Iverson, Latrell Sprewell, Antoine Walker, Lenny Dykstra, Jack Clark, Terrell Owens, etc... if they'd like to have an extra 2 million coming in every year until they're 72.

[Brandon]

I knew where he was going with the financial post, which didn't mention inflation, but there are a lot of variables to not included than to simply say he or the Mets would make x.

At the end of the day, someone took 5.9m and turned it into 29m (or somewhere around here if memory serves me correct) for collecting 8% on a good life insurance policy from a damn good investment that is not going to default on repayment. I'd say that's a win.

[Dtwncbad]

Yes, Bonilla is rich and his deal gave him a return that provides a great income for a long time.

You can examine it for Bonilla lots of ways, with some ways having the math show he could have done better.  But he is rich either way so good for him.

I just find it silly that people think the Mets were stupid.  The math, ESPECIALLY for the Mets, is perfectly sound and was a very reasonable decision for them.

Nobody should mock the Mets for this contract.

[Dtwncbad]

3 hours ago, Brandon said:

I knew where he was going with the financial post, which didn't mention inflation, but there are a lot of variables to not included than to simply say he or the Mets would make x.

At the end of the day, someone took 5.9m and turned it into 29m (or somewhere around here if memory serves me correct) for collecting 8% on a good life insurance policy from a damn good investment that is not going to default on repayment. I'd say that's a win.

 

11 minutes ago, calscuf said:

I agree it sounds worse than it is.  But it’s disingenuous to say the Mets won.  It worked out and made sense for both sides.

Maybe.  It worked out great for Bonilla (as would many of other smart options) so calling the Mets winners VERSUS Bonilla may not be correct.

There is no doubt though in the real financial world that the Mets have absolutely nothing to be embarrassed about in this deal because it fully made financial sense for them.  In that context it was a win for the Mets.

But they are mocked about it all the time.

[Lou]

I'd say the Mets are the big loser here, because at the end of the day, they are still the Mets. 

[Angel Oracle]

Once Pujols retires early, over how many years will they split up the remaining salary owed him?

The same ten years as his services contract?

[Lou]

1 hour ago, Angel Oracle said:

Once Pujols retires early, over how many years will they split up the remaining salary owed him?

The same ten years as his services contract?

one day

[Tank]

7 hours ago, Dtwncbad said:

Yes, Bonilla is rich and his deal gave him a return that provides a great income for a long time.

You can examine it for Bonilla lots of ways, with some ways having the math show he could have done better.  But he is rich either way so good for him.

I just find it silly that people think the Mets were stupid.  The math, ESPECIALLY for the Mets, is perfectly sound and was a very reasonable decision for them.

Nobody should mock the Mets for this contract.

i wonder how i can get the mets to pay me for 1.9 mil for 34 years for not playing for them, those clever bastards!

[Lou]

15 minutes ago, Tank said:

i wonder how i can get the mets to pay me for 1.9 mil for 34 years for not playing for them, those clever bastards!

and like a dumbass, I've been doing it for free.

i need a new agent.

[Puget Sound Angel]

We have this every two weeks when Pujols gets paid.