Tomorrow is Bobby Bonilla Day. Hi, I’m Bette Hochberger, CPA, CGMA. Today’s business quickie is going to be a bit different because tomorrow is Bobby Bonilla Day. Bobby Bonilla is a former player in Major League Baseball who played in the major leagues from 1986 to 2001. This day is celebrated by the sports and financial world! Why? Because the Mets pay Bonilla $1,193,248.20 every July 1 from 2011 until 2035. Watch my video below where I get into the details.
Bobby Bonilla was a Mets All-Star player, the new manager changing the team in 2000 releases him because Bonilla was at the end of his career. Bobby had been hurt, and it was now starting to show in his performance. They owe him $5.9 million on contract. They want to use the money from Bonilla’s contract to pay other players, so they negotiate with his agent a deferred money contract based on an 8% interest rate of money 10-year deferral. A great day for the finance world but a terrible day for the Mets. Every July 1st, the Mets write a check to Bonilla 1.2 million until the year 2035.
But the mythos is that the total payout (1.2M for 25 years) is $30 Million for a 6 Million dollar debt. And since the Mets pay him $1.2 Million every July 1st, the sports world and financial world celebrate Bobby Bonilla Day. The sports world mainly uses it to poke fun at the Mets but we financial people really like recognizing the magic that is compound interest. We also like to look to this as a lesson, and really hope the Mets hired a new financial advisor.
Guess where Bobby “Bo” decided to retire? That’s right, Bobby Bonilla is retired in Florida, keeping New York from taxing his earnings. So, it looks like Bobby wasn’t only good at baseball but great at finance and tax planning also.