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Bobby Bonilla's 25-Year Contract with The New York Mets (2011)

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Re: Bobby Bonilla's 25-Year Contract with The New York Mets (2011)

#31

Post by sambroner »

thinkcontext wrote: post #17
the_watcher wrote: post #11

It was the worst negotiation in sports history, yes. But far worse contracts have been signed. A bad NBA contract (some that obviously bad at the moment of signing) can easily pay $30M in 2 years to a player who essentially doesn't play at all. Which the teams then pay to dump on other teams (the NBA salary cap creates a fascinating market).

My favorite is the NBA agreeing to pay a percentage of TV revenue in perpetuity to the owners of the ABA team Spirits of St. Louis when the leagues merged. The NBA gave the other ABA teams that they weren't taking $3M but the Spirits held out. The NBA paid out $300M before finally buying them out for $500M in 2014. https://www.forbes.com/sites/monteburke/2014/01/07/the-nba-f...

How'd you make your money?

> Oh, I own a basketball team.

Which?

> The St. Louis Spirits.

?!?!

Re: Bobby Bonilla's 25-Year Contract with The New York Mets (2011)

#32

Post by unreal37 »

the_watcher wrote: post #15
moate wrote: post #10

Earlier quoted context omitted.

Seems like it worked well for everyone. The Mets are paying out less than they would have if they'd paid the money at the time and because of the savings were able to acquire players that helped them go onto the WS. Bonilla keeps getting ~ a million dollars every year.

They turned $5.9M into almost ~$30M. How is that they are paying out less? It's possible that via time value they could make more than an 8% return, but definitely not assured.

The argument is that they immediately spent the $5.9 million on another player the next season (who they would not have been able to get due to the salary cap), who led them into the World Series. They traded that player away for another player who has become a superstar. So they did in fact turn the savings into something meaningful.

It worked out for both of them. There are win-win deals.

Re: Bobby Bonilla's 25-Year Contract with The New York Mets (2011)

#33

Post by moate »

matthewowen wrote: post #29
anoonmoose wrote: post #25

Earlier quoted context omitted.

At one point in time (2013), Bobby Bonilla and Jason Bay were the two highest paid outfielders for the Mets, and neither of them were on the team. This occurred in the middle of a six-year sub-0.500 stretch. They probably could have used the $1.2M better than that.

Probably not. $1.2MM doesn't buy you much baseball player.

Buys you 2 rookie contracts fwiw.

Re: Bobby Bonilla's 25-Year Contract with The New York Mets (2011)

#34

Post by moate »

the_watcher wrote: post #15
moate wrote: post #10

Earlier quoted context omitted.

Seems like it worked well for everyone. The Mets are paying out less than they would have if they'd paid the money at the time and because of the savings were able to acquire players that helped them go onto the WS. Bonilla keeps getting ~ a million dollars every year.

They turned $5.9M into almost ~$30M. How is that they are paying out less? It's possible that via time value they could make more than an 8% return, but definitely not assured.

https://fivethirtyeight.com/features/bobby-bonilla-was-more-...

Sorry, there's a whole lot of context that my previous statement leaves out, as well as me framing it very poorly.

No, the real value of the contract (because of interest) is greater than the amount he was owed (adjusted for inflation). By that math, the Mets payed more than they should have and you are correct.

Re: Bobby Bonilla's 25-Year Contract with The New York Mets (2011)

#35

Post by bluedino »

the_watcher wrote: post #11

It was the worst negotiation in sports history, yes. But far worse contracts have been signed. A bad NBA contract (some that obviously bad at the moment of signing) can easily pay $30M in 2 years to a player who essentially doesn't play at all. Which the teams then pay to dump on other teams (the NBA salary cap creates a fascinating market).

Imagine if a programming union formed with salary caps, max contracts, programmer-demanded trades, and franchise tags.

Re: Bobby Bonilla's 25-Year Contract with The New York Mets (2011)

#36

Post by zerocrates »

unreal37 wrote: post #32
the_watcher wrote: post #15

Earlier quoted context omitted.

They turned $5.9M into almost ~$30M. How is that they are paying out less? It's possible that via time value they could make more than an 8% return, but definitely not assured.

The argument is that they immediately spent the $5.9 million on another player the next season (who they would not have been able to get due to the salary cap), who led them into the World Series. They traded that player away for another player who has become a superstar. So they did in fact turn the savings into something meaningful. It worked out for both of them. There are win-win deals.

There is no salary cap in MLB. At the time even the "luxury" tax on particularly high payrolls had just been eliminated.

Re: Bobby Bonilla's 25-Year Contract with The New York Mets (2011)

#37

Post by pitt1980 »

moate wrote: post #33
matthewowen wrote: post #29

Earlier quoted context omitted.

Probably not. $1.2MM doesn't buy you much baseball player.

Buys you 2 rookie contracts fwiw.

but the market for rookie contracts is closed,

you either already drafted and developed two rookies worth paying 1.2 million or you didn't

your 1.2 million in cash doesn't mean you can convert it into (useful) rookies

Re: Bobby Bonilla's 25-Year Contract with The New York Mets (2011)

#38

Post by slg »

moate wrote: post #33
matthewowen wrote: post #29

Earlier quoted context omitted.

Probably not. $1.2MM doesn't buy you much baseball player.

Buys you 2 rookie contracts fwiw.

A slight pedantic response, it pays for 2 rookie contracts but it wouldn't really allow you buy the contracts of 2 rookies. Baseball rules are designed to suppress the salary of rookies below their free market rates in order to benefit both veteran players and less wealthy teams. The end result is that any decent rookie has a lot of surplus value attached to their contract and they become an asset rather than a liability. Teams generally need to give up multiple millions in value in order to "buy" a rookie from another team and gain the right to pay that player half a million dollars.

Re: Bobby Bonilla's 25-Year Contract with The New York Mets (2011)

#39

Post by the_watcher »

dmix wrote: post #18
the_watcher wrote: post #16

Earlier quoted context omitted.

Spotrac has the details of the payments: https://www.spotrac.com/mlb/new-york-mets/bobby-bonilla-1188...

That doesn’t show the interest rates. But based on that it also looks like he got 5x yrs of $500k from the Orioles also starting in 2011. I’m guessing he signed a similar deal with them since he stopped playing in 2000… This man makes smart financial decisions.

Part of a subsequent deal (or related deal, don't remember the details) involved trading him to the Orioles, who became responsible for a portion of his salary, which they then deferred. It's part of the same original contract though, IIRC.

And I know it doesn't show the interest rates, but it does show that the payments he will receive from the Mets total roughly $30M, which is what the article reported.

Re: Bobby Bonilla's 25-Year Contract with The New York Mets (2011)

#40

Post by the_watcher »

unreal37 wrote: post #32
the_watcher wrote: post #15

Earlier quoted context omitted.

They turned $5.9M into almost ~$30M. How is that they are paying out less? It's possible that via time value they could make more than an 8% return, but definitely not assured.

The argument is that they immediately spent the $5.9 million on another player the next season (who they would not have been able to get due to the salary cap), who led them into the World Series. They traded that player away for another player who has become a superstar. So they did in fact turn the savings into something meaningful. It worked out for both of them. There are win-win deals.

I both agree and disagree. From a purely financial standpoint, this was almost assuredly a bad deal for the Mets over the course of the payments.

That said, the whole point of owning a sports franchise is to get to and win a championship, so in that sense, yes, this was almost definitely worth it. Also, I don't know the economics for baseball in 2000, but I know that in the NBA, each home playoff game is generally considered worth several million dollars, so if Bonilla buyout for Hampton was causal to reaching the WS, they may have made the money back in 2000 alone.

Plus, there's the whole "Bobby Bonilla seemed like he was a gigantic pain to the organization" aspect.

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