I had to know why myself. Looks like per the googles it's because he deferred his buyout. Pretty crazy.redline248 said:
How is this still going on?
aggieactor01 said:I had to know why myself. Looks like per the googles it's because he deferred his buyout. Pretty crazy.redline248 said:
How is this still going on?
https://www.cbssports.com/mlb/news/july-1-is-bobby-bonilla-day-why-the-mets-are-still-on-the-hook-for-1-19-million-until-hes-72-years-old/
Quote:
Rather than accept the $5.9 million up front, Bonilla agreed to defer the money in exchange for 8 percent interest.
Quote:
Bonilla will bank an extra $23.9 million through interest by waiting a decade for his first payment.
AgDoc03 said:
https://www.espn.com/mlb/story/_/id/27078321/happy-bobby-bonilla-day-why-mets-pay-119m-every-july-1
According to this also had something to do with a Bernie Madoff account that didn't pay out well for Mets.
mathguy86 said:
As crazy as it sounded at the time, its generally accepted as a good move for both parties.
Quote:
If Bonilla had accepted the $5.9 million in 2000 and invested the entire amount at 8% interest, the original investment would have grown to $104.1 million by 2035* (blue line in chart below). If instead, Bonilla takes his annual payment and invests that with an 8% annual return, he would have $95.2 million by 2035 (orange line in chart below).
But more importantly to the Mets, if they invested the $5.9 million at 8% interest in 2000. That money would have grown to more than $14 million before they had to make a single payment. And that money would continue to draw interest even while they are making payments.
By 2035, the Mets would still have $8.9 million left over (red line in chart below).
In other words, if invested at a standard rate, the Mets would have actually profited from Bonilla's generosity and the contract wasn't so dumb after all.
amercer said:
I wish I could count on 8% a year....
From 1999 to 2017 the S&P 500 did 3.4% a year (2001/2008 were not good years)
It's an interesting argument though. Like taking the lump sum or the annual payment from the lottery. Math says take the money up front. Psychology says take the payments.