July 1 is Bobby Bonilla day. That’s the day that the Mets have to pay Bobby Bonilla $1.2 million per their deferred compensation deal with him struck after the 1999 season. The deal: rather than pay Bonilla the $5.9 million he was still owed, the Mets offered to pay him $1.2 million a year every year from 2011 through 2036. The deal paid Bonilla eight percent interest.
Bonilla is certainly getting a good deal out of it. Long-term payments which make planning better and a pretty favorable interest rate compared to where rates have gone since the time the deal was struck. The Mets, however, have been mocked for years for having to continue to pay Bonilla even though he hasn’t suited up for a game since 2001.
I love a good “LOL Mets!” joke more than your average person, but I’ve never gotten on board with mocking the Mets for paying Bonilla each July 1. Mostly because the deal was and is not really silly at all. Indeed, there are far, far worse deferred compensation deals around.
Here’s the bullet point version:
- Essentially this is deferred compensation. Deferred compensation was not super common 20 years ago but it’s par for the course on big contracts now. Max Scherzer’s seven-year deal with the Nats pays him over 14 years and he’ll be making WAY more per year after he’s done pitching than Bonilla will in his 25 years of deferred money combined. There are many, many other players who have signed big deals in recent years who have similar structures.
- One of the things that makes Bonilla’s deal stick out is the interest he’s getting: 8%. That’s high, but as The Bad Economist pointed out a few years back, the prime rate when Bonilla signed the deal was 8.5%. The Mets probably should’ve made his interest a floating figure rather than fixing it at 8% — Bonilla is getting a windfall on the interest — but that’s down to the Mets’ owners’ well-documented bad financial instincts and their misguided belief that they’d make 10-15% on their investments in perpetuity based on the Ponzi scheme from which they were benefitting, not the silliness of the structure itself.
- The Mets got use of the $5.9 million Bonilla deferred for years. And, legal or not, they probably DID get 15% on it because the Ponzi scheme hadn’t collapsed yet. But even if they had put that in a totally legal, interest-bearing account, they would’ve made money on it. They got something for it. Even conservatively invested, a good half of the $30 million or so Bonilla is getting after interest will have been paid for.
- And they got more than just the investment. As Dan Lewis pointed out five years ago, the $5.9 that was freed up for 2000 was used to bite off a huge chunk of the salaries owed to Mike Hampton and Derek Bell, for whom they traded and who helped them reach the World Series that year. When Hampton walked to take advantage of the good schools in the Denver area, they used the compensation pick to draft a kid named David Wright. None of that happens without deferring Bonilla’s salary given their payroll crunch at the time. It ended up working for them in the short term, and working very well.
So mock the Mets all you want. Mock them for trading for Bonilla in the first place (though they didn’t give up anything of real value for him). Mock them for their choice on the interest rate. Mock the Wilpons for being involved in a Ponzi scheme. But don’t mock them for deferring Bonilla’s salary, because it was a good move for them at the time that allowed them to make moves they wouldn’t have otherwise made, including a move that helped them win a pennant.
And, as I noted in an article five years ago, if you must mock the Mets on this point, make sure you mock the Braves, the Red Sox, the Cardinals and a bunch of other teams with similar deferred-comp deals with long-retired stars. ESPECIALLY mock the Braves, who are still paying Bruce Sutter, who they signed before the 1985 season. Under his deal Sutter got a $750,000 salary for six years -- in the event he ended up playing only three seasons over a span of four years for the Braves -- and got payments totaling $44 million over the next 36 years. The structure of that: $1.12 million a year for 30 years and then a $9.1 million balloon payment at the end. That payment will come in 2022.
Again: Bruce Sutter, who was inducted into the Hall of Fame when my current high-school aged children were in diapers and who was last an effective reliever during Ronald Reagan’s first term, will get $9.1 million from the Braves two years from now. If it counted, he’ll likely be one of baseball’s highest-paid relievers that season. A season during which he’ll turn 69 years-old.
So, yeah, let’s celebrate Bruce Sutter Day instead of Bobby Bonilla Day. It’s way more festive in my view.