New York - City of Losers

[mikemb]

Originally Posted by Jim65

They are called deferred contracts, a lot of teams do it, the Braves are still paying Bruce Sutter. I guess Atlanta is stupid too?

Correct. In fact Bonilla is also getting deferred salary from the Baltimore Orioles.

The Mets owed him 5.9 million when they bought out the last year of his contract. The Mets and Bonilla worked out a deal where the he would defer the payment of the 5.9 million for 10 years. Then, the Mets would pay him 1.19 million every year for 20 years. While that sounds like a lot more than the 5.9 million, due to compound interest, etc, the 2 payment scenarios (the 5.9 million right away or the 1.19 million/year after 10 years) have the same value when calculated at 8% interest annually.

The market has increased an average of about 7.4% annually since 1/1/2000.

So, not a bad financial decision.

Mike

[Jim65]

Originally Posted by mikemb

Correct. In fact Bonilla is also getting deferred salary from the Baltimore Orioles.

The Mets owed him 5.9 million when they bought out the last year of his contract. The Mets and Bonilla worked out a deal where the he would defer the payment of the 5.9 million for 10 years. Then, the Mets would pay him 1.19 million every year for 20 years. While that sounds like a lot more than the 5.9 million, due to compound interest, etc, the 2 payment scenarios (the 5.9 million right away or the 1.19 million/year after 10 years) have the same value when calculated at 8% interest annually.

The market has increased an average of about 7.4% annually since 1/1/2000.

So, not a bad financial decision.

Mike

The money deferred by Bonilla allowed the Mets to trade for and pay Mike Hampton, who won the NLCS MVP and when Hampton signed in Colorado, the Mets received a compensation draft pick which they used to draft David Wright. Funny how things work out sometimes.