Quote:
Originally Posted by Snapolit1
Ok. They were stupid for arranging a smart deal that would have allowed them to make a profit absent someone else's fraud. Got it.
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Well, OK, just to play Devil's advocate lets say they didn't squander it on the Madoff pyramid scheme and invested it wisely instead. They still wouldn't have come out ahead. During the decade between the deal in 2000 and the first payment in 2010 the S & P 500 had an annual return of negative 1%. This is because of the combined effects of 9/11 and the 2008 crash. So that 8% annual return they allegedly would have made according to that Business Insider article, even if they hadn't lost it on Madoff, wouldn't have come close to happening anyway.
And of course Bonilla, if he had taken the 5.9 Million up front and invested it wisely in a diversified portfolio, would have likely found himself with about the same amount or slightly less in 2010. Because he didn't do that though, he is instead coming out way on top with annual payments of over 1 million $ for 25 years, way more than he would have likely ended up with if he had taken the 5.9 in 2000.
I realize this is all being evaluated with the benefit of hindsight, but I don't think you can say it was a smart deal for the Mets even at the time. The same stupidity that led the guy to invest in the Madoff scam led him to commit to the Bonilla deal because he unrealistically expected the returns on the ponzi scheme to go on indefinitely, without which the Bonilla deal wouldn't have made sense. That itself was a stupid judgment, even at the time.
And of course, the stupidity of the deal doesn't just relate to the deferred payment plan, but also to the wisdom of having signed him for that much in the first place.