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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)

#41

Post by the_watcher »

bluedino wrote: post #35
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.

Don't forget trade exceptions, luxury taxes, unlikely incentives, waivers, stretch provisions... This would actually be entertaining to model out , at least to... the small handful of people whose interests collide in the Venn Diagram of tech and NBA salary cap nonsense.

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

#42

Post by billfruit »

zaroth wrote: post #5

Einstein something, something, compound interest. Amazing what saving money at an 8% interest rate will do for your future self! The S&P has only returned 4.8% CAGR [1] from 2000-2018 so that was a pretty tremendous ROI for Bonilla. [1] - http://www.moneychimp.com/features/market_cagr.htm

Interest rate in India has been largely in the 8-9% in the last 15 years. I hear it was in the double digits in the early 90s.

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

#43

Post by VWWHFSfQ »

sokoloff wrote: post #30
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).

I don't see how it was even a particularly bad contract, let alone the "worst in sports history". Borrowing money at 8% is a pretty reasonable commercial lending rate for the time (30-year fixed mortgages were only a couple points lower). So, they took out a $5.9MM loan from Bonilla to pay Bonilla, accrued interest for 11 years without making any payments, and then started paying it off on a 25 year amortization sche…

It was bad for Bobby Bonilla.

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

#44

Post by sokoloff »

VWWHFSfQ wrote: post #43
sokoloff wrote: post #30

Earlier quoted context omitted.

I don't see how it was even a particularly bad contract, let alone the "worst in sports history". Borrowing money at 8% is a pretty reasonable commercial lending rate for the time (30-year fixed mortgages were only a couple points lower). So, they took out a $5.9MM loan from Bonilla to pay Bonilla, accrued interest for 11 years without making any payments, and then started paying it off on a 25 year amortization sche…

It was bad for Bobby Bonilla.

Given that he had ample access to professional advisers and voluntarily entered into the agreement, I think he would have disagreed with that assessment at the time. (I think it was a fairly balanced contract, not outlandishly good nor bad for either side, with an interest rate lower than the Mets' likely marginal cost of capital and higher than Bonilla could have secured on a deferred annuity.)

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

#45

Post by astura »

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.

The key to making smart financial decisions for MLB players is having an excellent agent.

Bonilla's agent was Dennis Gilbert, who was previously involved in the life insurance industry.

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

#46

Post by moate »

slg wrote: post #38
moate wrote: post #33

Earlier quoted context omitted.

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 liabi…

If I'm "Joe Small Market Team" and I'm running my team with a self imposed cap of X, having 1.2 million dollars off my payroll means I have the ability to call up rookies I might not have been able to if I did have that 1.2 million on my books.

Are there infinitely more factors in play (namely playing time BS in order to maintain team control prior to free agency) in these types of decisions? Of course. Do I believe that this hypothetical scenario would ever come up: No.

But, 1.2 million dollars = 2 Rookie Contracts with beer money left over. Them's facts.

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

#47

Post by moate »

pitt1980 wrote: post #37
moate wrote: post #33

Earlier quoted context omitted.

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

Let's say I'm a terrible baseball owner, and I'm completely out of available cash because I'm still paying a 1.2 million dollar contract. I literally cannot get a single extra dollar from anywhere.

Having that contract on my books prevents me from calling up 2 rookies this season, because I'm unable to pay their salaries. Yes, I'm technically buying them from "myself" by pulling them from my team's MiLB affiliates, but we're just arguing the semantics of what "buying" means here, not what the going rate of a rookie is ($555,555 USD in 2019)

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

#48

Post by moate »

pitt1980 wrote: post #19

fwiw Mets Payroll in 1999 - 71,506,427 5,900,000/71,506,427 = 8.25% of payroll --------- Mets Payroll 2011 120,147,310 1,193,248/120,147,310 = 0.99% of payroll ---------- Mets Payroll 2018 $154.61M 1,193,248/154,610,000 = 0.77% of payroll ------- also fwiw, not sure we can trace exactly how efficiently the Mets spent the $5.9 million they saved in 1999, but the Mets won 97 games that year, the next year they won 94 a…

When you look at it as a cost as a % of their salary, it's not as bad as what you look at what the Mets paid per WAR.

It's a probably a bad contract overall, and the NY sports media effect is why it gets the hyperbole boost. If nothing else, it's a really fun example of how value is determined (as it relates to baseball players).

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

#49

Post by walshemj »

bluedino wrote: post #35
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.

MM so you'd get star programmers moving to Holland to work for PSV Eindhoven (To take advantage of the Bosman ruling) and Philips would be come a challenger to Google.

PSV Eindhoven started out as Phillips employees team

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

#50

Post by slg »

moate wrote: post #46
slg wrote: post #38

Earlier quoted context omitted.

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 liabi…

If I'm "Joe Small Market Team" and I'm running my team with a self imposed cap of X, having 1.2 million dollars off my payroll means I have the ability to call up rookies I might not have been able to if I did have that 1.2 million on my books. Are there infinitely more factors in play (namely playing time BS in order to maintain team control prior to free agency) in these types of decisions? Of course. Do I believe…

I generally agree, which is why I made the distinction between "pay" and "buy". Although you also have to factor in that rosters have a limited size. If you are calling up a player, you need to get rid of a player. Veterans have guaranteed contracts, so adding a young player to replace a veteran will increase payroll like you suggested. However a young player's salary doesn't have the same guarantee if they are removed from the roster. Therefore shuffling out one young player for another generally has little to no impact on the overall payroll.
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