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podcast transcript
Every July 1, retired Major League Baseball player Bobby Bonilla receives a direct deposit from the New York Mets, even though he hasn’t played for the team in 25 years.
Sports fans celebrate this day with a mixture of glee and bewilderment, calling it “Bobby Bonilla Day” and generally deriding it as the ultimate symbol of front office incompetence.
But that’s not true.
This signing wasn’t a typical Mets mistake. This was a highly calculated financial strategy based on standard accounting logic.
Learn more about Bobby Bonilla Day in this episode of Everything Everywhere Daily.
At the peak of his career, Bobby Bonilla was one of the best players in baseball. Paired with Barry Bonds, Bonilla was the anchor of the Pittsburgh Pirates’ legendary “Killer B’s” lineup.
He played almost every day, had a contact hit, averaged 25 home runs per year, regularly drove in 100 runs, and led the league in doubles. He was one of the best players in baseball when he became a free agent in 1991.
The New York Mets, eager to recapture the glory of their 1986 World Series championship, won a fierce bidding war for his services, making Bonilla the highest-paid player in Major League Baseball history at the time.
Not only was he the highest-paid player in baseball, he was briefly the highest-paid athlete in American sports, making more money per season than Michael Jordan!
Mets fans were excited. They signed the best free agent in sports, and best of all, Bonilla was a New Yorker born in the Bronx. The front office added Bonilla to the roster, which already included two Cy Young Award-winning pitchers in Doc Gooden and Frank Viola.
Mets fans expected a win.
Bonilla was a microcosm of the New York Mets. The organization made a huge financial commitment to its roster and built a team with the third-highest payroll in baseball.
Despite spending more than everyone else in the division, the team finished Bonilla’s first season in second-to-last place. Although Bonilla’s numbers declined and he failed to live up to his status as the highest-paid player in American Sports, he remained a strong middle-order hitter for the Mets.
Bonilla’s 1992 Mets were so disappointing that they inspired a nasty book by New York sportswriters Bob Klapisch and John Harper. Worst Team Money Can Buy: Collapse of the 1992 NY Mets..
He returned in 1993, hitting 34 home runs that season and hitting hard for the remainder of his tenure. The Mets traded Bonilla to the Baltimore Orioles at the 1995 trade deadline. As the first half of the 1995 season began, his value soared.
With this trade, the Mets acquired two of the best outfield prospects in baseball in Alex Ochoa and Damon Buford. Bonilla had a strong performance the rest of the year and helped lead the Orioles to the postseason.
Blaming Bonilla for the Mets’ collapse during his tenure is simply unfair. His performance was slightly below the standard he had established in Pittsburgh, and he was included in the 1993 All-Star team in New York.
After being traded to the Orioles, Bonilla had several productive seasons before fading. Despite his decline, Bonilla returned to New York for the 1999 season.
In 1997, the New York Mets brought reliever Mel Rojas to New York from the Montreal Expos. He had a big arm, and the Mets thought they could revitalize his career. The Rojas experiment was a disaster. In fact, in late 1998, the Mets wanted him so much that they traded him to the Dodgers for a rapidly declining Bobby Bonilla and his nearly $6 million contract.
The Mets thought the 35-year-old Bonilla could recapture his former power. But the Mets were wrong… Very wrong. Bonilla’s 1999 season was a disaster.
Not only did he fail to play at his previous high level, Bonilla played at an inexplicably low level. In 60 games, Bonilla had a noticeably poor batting average of .160 with 4 home runs, and his defense was so bad that he became difficult to play against.
Bobby Valentine, the old-school manager who led the New York Mets in 1999. He was known for his outstanding baseball mind and very charismatic and mercurial leadership style. Bonilla and Valentine clashed frequently.
New York was the worst place for a “Clash of the Bobbys” to occur due to the intense media scrutiny of the feud. Bonilla’s cratering on-field performance forced Valentine to bench him, and Bonilla did not take it well. During an overtime win over the Toronto Blue Jays, Bonilla refused to appear as a pinch hitter.
The rivalry between Valentine and Bonilla continued to simmer, reaching a boiling point during the 1999 NLCS clinching game against the Atlanta Braves when Bobby Bonilla and Rickey Henderson retreated to the clubhouse to play cards instead of watching the game from the dugout.
According to Bonilla, the card distracted an irate Henderson after Valentine had pulled him from the game a few innings earlier.
Regardless of why Bonilla and Henderson were playing cards in the clubhouse, the damage was done. Bonilla became an outcast on the team. With a toxic relationship with his manager and an apparently declining skill set, Bonilla gave the Mets every reason to move on immediately.
The Mets explored the possibility of a buyout of the deal at the end of the season, but the card game accelerated the urgency. Knowing that the organization wanted to make an acquisition, Bonilla’s agent, Dennis Gilbert, proposed a unique solution.
To free up cash now and avoid dead money on the roster, Gilbert suggested deferring payments in a structure similar to an annuity. Gilbert has a long history in the insurance business, so deferring payments made sense for both his clients and the Mets organization.
Bonilla earned nearly $50 million during his playing career, and given his flexibility, Gilbert knew his client could live comfortably until acting began.
Gilbert approached the Mets with a unique offer. The base salary is $5.9 million plus interest of 8% per year, with payments starting in 2011 over 25 years.
Gilbert’s offer increased the total value of the remaining contract to nearly $30 million, while giving the Mets the flexibility to use that money immediately to improve a roster that nearly took them to the World Series.
This provided a win-win situation for everyone. Bonilla will receive $1.2 million per year from 2011 to 2035. The Mets will have to pay for what Bonilla did in his 30s until he is 72 years old. Payments are received on July 1st each year.
When asked about his decision to defer payments in a 2008 interview. new york postBonilla explained this clearly. It’s a beautiful thing.
A vague detail about the Mets’ Bobby Bonilla Day is that he and Gilbert also secured a similar agreement from the Baltimore Orioles. Unlike the Mets contract, the Orioles contract did not result from a buyout following a performance collapse. This formed part of his original contract when he joined the Orioles.
In 1995, Bonilla and the Orioles restructured the contract to defer $6 million due for the 1996 season and agreed to pay $500,000 annually on July 1 from 2004 through 2028.
When all is said and done, Bonilla will make more than $42 million in deferred contract payments, with interest accruing on about $12 million in base salary.
So why did the Mets find this deal attractive? It all had to do with the 8% interest assumed in the deal. Fred Wilpon, the Mets’ co-owner and key decision-maker, earned profits of more than 10% each year. The reason he was able to make such profits was because of his excellent investment manager… ..Bernie Madoff.
Wilpon figured he could keep that $5.9 million in Madoff’s hands and that the investment would generate hundreds of millions of dollars based on the returns Madoff promised him after the contract period ended.
The Mets also knew they were close to the World Series, and they could put that $6 million salary back into improving the ballclub.
The Mets actually got closer to their goal. The Mets targeted American League Cy Young Award runner-up Mike Hampton in a blockbuster five-player trade. To offset the salary increase, the Mets allocated a portion of the Bonilla Buyout.
Mike Hampton delivered one of the best pitching performances in recent memory. He went 22-4 with a 2.89 ERA and provided exactly what the Mets needed at the top of their rotation.
Hampton did not disappoint. He pitched very well in the 2000 season, leading the Mets to the World Series with an incredible playoff performance.
The Mets’ stellar 2000 season ended with a loss to the Yankees in the famous Subway Series. I actually watched Game 5, the final game of the World Series, held at Shea Stadium that year.
Hampton’s experience continued to pay off for the Mets. He turned down a lucrative contract offer from the Mets in the offseason after the World Series and signed a blockbuster deal with the Rockies.
As a result, the Mets received a draft pick from the Rockies in the next MLB draft. Hampton’s departure gave the Mets the 38th pick in the 2001 draft, which they used to draft David Wright.
He played for the Mets for 14 years and became a fixture on their roster. From a baseball perspective, Bonilla’s performance actually worked in the Mets’ favor and allowed them to win the National League Championship.
Financially things were quite different.
As you probably know, Bernie Madoff wasn’t the investing genius everyone thought he was. He was literally running a classic Ponzi scheme. In 2008, Madoff’s plan fell apart and the Wilpon family’s fortune took a hit, as well as that of the Mets.
To further complicate matters, a series of lawsuits in 2011 alleged that Mets owners Fred Wilpon and Saul Katz facilitated fraud by ignoring obvious red flags in Madoff’s scheme. In 2012, the two sides settled the lawsuit out of court for $162 million.
The terms of the lawsuit limited Wilpon’s liability but created a complex and byzantine framework that seriously undermined the Mets’ financial stability. This agreement saved the Wilpon family from bankruptcy but had a huge impact on the Mets’ finances.
Following this decision, the Mets cut payroll by an unprecedented amount and began selling the team in 4% increments to increase revenue. Hedge fund manager Steve Cohen was one of the early investors. Cohen purchased a 4% stake for $20 million. Ownership sold these blocks to give the Mets financial flexibility, while impaired management sought to save on their investment.
Cohen gradually purchased additional stakes, concluding a landmark deal following the Wilpons’ 2020 team auction. Cohen acquired the Mets for $2.4 billion and inherited Bobby Bonilla’s pension in the process.
Unlike the Wilpons, Cohen leaned into it, adopting the famous adage that press is bad press. When a Twitter fan asked about this in 2020, Cohen dismissed the idea of buying out Bonilla’s contract and instead offered a more interesting solution. He said: Let’s vote. How about having a Bobby Bonilla Day every year? I handed him a large check and took him for a walk around the stadium. It might be fun.
Every July 1st, the baseball world turns its attention to Bobby Bonilla and his infamous contract.
Today, these acting contracts have become more common, best illustrated by Shohei Ohtani’s historic contract with the Los Angeles Dodgers. Ohtani’s contract expires in 2033, but he will be paid an incredible $680 million in the future, with $68 million distributed annually from 2034 to 2043. Considering his performance, it seems that Dodgers fans will not have a hard time with Ohtani’s performance.
Bobby Bonilla Day endures because it’s more than just a quirky baseball contract. It’s a story about money, patience, risk, and the strange ways that financial decisions can outlast careers and owners.
For Bobby Bonilla, this ended up being one of the smartest trades ever made by an athlete. For the Mets, it’s become an annual reminder that some of the most memorable moments in sports history sometimes happen not on the field but in the fine print.
