STUMP » Articles » Mornings with Meep: Happy Bobby Bonilla (and Bruce Sutter) Day! » 1 July 2018, 12:17

Oh, I love Bobby Bonilla Day, and thanks to a reader, I know about somebody else I should keep tabs on.

But first, the video:

A direct link to the video is here.

THIS YEAR’S BOBBY BONILLA COVERAGE

IT’S JULY 1, AND THAT MEANS BOBBY BONILLA IS GETTING PAID BY THE METS

Sunday is July 1, which means it is Bobby Bonilla’s day to get paid by the New York Mets.

The Mets, as part of a buyout agreement with Bonilla, will cut the former All-Star a check for $1,193,248.20 on July 1 every year from 2011-35. This is Bonilla’s eighth annual payment.

Why are the Mets still paying Bonilla, who hasn’t played since 2001? It’s a little complicated.

The team released Bonilla in January 2000 even though they still owed him $5.9 million in salary. Rather than accept the $5.9 million up front, Bonilla agreed to defer the money in exchange for 8 percent interest.

By time 2011 rolled around, the first year Bonilla was paid under the deferment agreement, the $5.9 million had grown to $29.8 million. Spread that $29.8 million across 25 years from 2011-35 and you get that $1,193,248.20 annual payment. It’s good work if you can get it.

Guaranteeing 8% interest for 35 years?

That’s a damn valuable guarantee.

To give you an idea — If I put in $1000 today, and earned 8% for 35 years, I would end up with: (1.08)^35 * 1000 = $14,785.

Almost 15 times the original amount.

Prior Bobby Bonilla post from 2016: Happy Bobby Bonilla Day! and more Americana

Bobby Bonilla will be 72 when he gets his last payment, and CBS Sports created a bobblehead graphic for that day…

Hey now, 72 is a bit young for a cane with tennis balls. Nice pension, nevertheless.

OTHER LONG TERM CONTRACTS

Atlanta Braves Morning Chop: A Bad Contract Still Being Paid – from 2015

The worst has got to be the one the Atlanta Braves have going with Bruce Sutter. Allow me to quote from a lengthy LA Times article from 1985 – the year that this monstrosity was set up:

“Sutter will receive a $750,000 salary for each of the next six years and a minimum of $1.12 million a year for the remaining 30 years of the contract. In addition, he will get the $9.1 million in so-called “principal” at the end.”

Let’s spell that out:

1985-1991: $750,000 each year (6 years)
1992-2021: $1.12 million every year (30 years)
2021: $9.1 million, which represents the ‘principal’ dollars that were supposedly placed in a 12.3% interest-bearing annuity back in 1985.

By those numbers, that adds up to $45 million over the 36 year life of the deal. Bonilla’s deferment arrangement totals only $29.8 million.

The LA Times piece is written all about the ‘risk’ to the player, but frankly, most of the risk seems to have been on the club. The interest rates in that era were crazy-high, and could have escalated within the contract’s terms. At this point, of course, the minimum 12.3% figure looks like a steal for Sutter.

I added the emphasis.

I also saw Bronson Arroyo and Ken Griffey, Jr.

Seems it’s not only public pensions offering annuities at 8%… the 12.3% one is eye-popping, though.

Let me make a similar quick calculation — 12.3% for 36 years – let’s say I put in $1000 at the beginning

$1000*1.123^36 = $65,114

….

That is quite a lot more than merely 15 times the original amount.

LAST WEEK’S POSTS

• Memory Monday: Third Week of June 1918 — BUY WAR SAVINGS STAMPS
• Taxing Tuesday: Tax ALLLL the Internet! and New Jersey Puts Out Dumbass Idea
• Geeking Out: Public Pension Mortality Assumptions
• SCOTUS Doings: Public Employee Union Dues and Justice Kennedy Retiring
• Around the Pension-o-Sphere: Divestment, Janus, and More

It just keeps going…

BONUS MATERIAL

Here, have our ducks going from their pen to their coop.

See you next week!