Happy Bobby Bonilla Day

[BobC]

Originally Posted by Casey2296

Not only that, if you can avoid paying the government 20-80 cents on the dollar and give it to the player instead you’ve just cut your offer by that same percentage.

And that tax factor can possibly work to the player's benefit as well. You get $10M in one year, you get so much taxed at 10%, then so much taxed at 12%, and so on per the federal tax brackets in place up to where the balance of that $10M salary all gets taxed at the current top federal tax rate of 37%. Break that into ten years of $1M of salary though, and now you have 10 times the amount of salary being taxed at 10% instead of 37%, 10 times the amount taxed at 12% versus 37%, and so on. Unfortunately some of that savings is offset by the additional social security tax the player will also have to pay each of 10 years, but I believe the player still comes out ahead federal tax-wise by extending their salary through deferral.

[mrreality68]

Originally Posted by BobC

And that tax factor can possibly work to the player's benefit as well. You get $10M in one year, you get so much taxed at 10%, then so much taxed at 12%, and so on per the federal tax brackets in place up to where the balance of that $10M salary all gets taxed at the current top federal tax rate of 37%. Break that into ten years of $1M of salary though, and now you have 10 times the amount of salary being taxed at 10% instead of 37%, 10 times the amount taxed at 12% versus 37%, and so on. Unfortunately some of that savings is offset by the additional social security tax the player will also have to pay each of 10 years, but I believe the player still comes out ahead federal tax-wise by extending their salary through deferral.

very good point.
In the end it was a two decided agreement between the team and player so at the time it was good for each.
Potentially looking back maybe not

[Snapolit1]

Only reason this story even exists is because of financially unsophisticated people piling on the “same old Mets” for what they believe was an insanely stupid deal. The fact that this becomes a huge story every year is a testament to the degree of financial illiteracy in the country.

They basically gave him an annuity. The same thing state lotteries give you if you hit Powerball or a Vegas casino does if you are lucky enough to hit a massive slot machine. Or a structured settlement in a catastrophic injury law suit. It’s almost like there’s some advantage somewhere to holding on to the money you owe someone.

[Oscar_Stanage]

Originally Posted by Snapolit1

Only reason this story even exists is because of financially unsophisticated people piling on the “same old Mets” for what they believe was an insanely stupid deal. The fact that this becomes a huge story every year is a testament to the degree of financial illiteracy in the country.

They basically gave him an annuity. The same thing state lotteries give you if you hit Powerball or a Vegas casino does if you are lucky enough to hit a massive slot machine. Or a structured settlement in a catastrophic injury law suit. It’s almost like there’s some advantage somewhere to holding on to the money you owe someone.

its actually was a good deal for the team even though it gets press as if it were stupid. They paid 8% interest on the deal.. At the time (2000), 30yr Treasuries were 6-6.5%. Based on this data point, if they went to a bank for a 30-year loan to pay Bonilla the original $6mm, they would likely have had to pay more than 8% (Treasuries + 3-4%) and pledge collateral (which they did not have to with Bonilla) In addition, I am sure there are other benefits dealing directly with the player.

[jayshum]

Originally Posted by Oscar_Stanage

its actually was a good deal for the team even though it gets press as if it were stupid. They paid 8% interest on the deal.. At the time (2000), 30yr Treasuries were 6-6.5%. Based on this data point, if they went to a bank for a 30-year loan to pay Bonilla the original $6mm, they would likely have had to pay more than 8% (Treasuries + 3-4%) and pledge collateral (which they did not have to with Bonilla) In addition, I am sure there are other benefits dealing directly with the player.

I thought the reason the Mets did this was because their owners were big investors with Bernie Madoff at the time, and they expected to earn a lot more from the money they didn't pay Bonilla in the lump sum than what they agreed to pay him over so many years.

[BobC]

Originally Posted by Snapolit1

Only reason this story even exists is because of financially unsophisticated people piling on the “same old Mets” for what they believe was an insanely stupid deal. The fact that this becomes a huge story every year is a testament to the degree of financial illiteracy in the country.

They basically gave him an annuity. The same thing state lotteries give you if you hit Powerball or a Vegas casino does if you are lucky enough to hit a massive slot machine. Or a structured settlement in a catastrophic injury law suit. It’s almost like there’s some advantage somewhere to holding on to the money you owe someone.

A lot of those state lotteries give the winner the option of taking either a lump sum amount today, or spreading the payments out over a number of years as an annuity, like you said. The amount of money the person gets if they take the up front, lump sum, is a LOT less than they eventually get if they elect to take the deferred annuity, due to taxes?

Also, I've read where an estimated 90%+ of Powerball winners elect to take the lump sum option, and then about 70% of them end up broke within 7 years. Talk about financial illiteracy!

[Snapolit1]

I was amazed once in Vegas to read the fine print on a slot machine. I think it said something like any jackpot over $150,000 will paid off in 20 annual payments. what a buzz kill that is.

[FrankWakefield]

Bernie Madoff is a big reason the story exists today.

It was a combination of the economy at the moment The structure was set, the economics of MLB salary restrictions at the time, the money the Mets' owner thought he was getting from investments with Madoff... It's a bunch of stuff.

And ballpark food was gonna go way up anyway.

In 2001 A-Rod's pay goes from about 4 mil a year to 22 mil a year, as he joins Texas. I'm thinking there's 81 home games for Texas. If Texas was paying him out of ticket money from home games, and the Rangers averaged right at 35,000 a game.

22 mil / 81 games = $271.6k a game.

$271.6k / 35,000 = about $7.75 per each butt in a seat.


1981 average ticket price about $5
1994 average ticket price about $10
1999 average ticket price about $15
2004 average ticket price about $20
2021 average ticket price passes $35

By the early 1970s I had a car and could drive 300 miles to St. Louis to the the Cardinals. I'd write off, send a SASE, and get a pocket schedule. I could pick a few games, and mail a check, and would get back in the mail 4 tickets for each of the several games I had picked. I was lifeguarding and DJing in the summer, as a game got close I'd ask friends about going, and once there were 4 of us I'd quit asking. We'd drive to St. Louis, watch a game (or two if a double header) then we'd drive back, getting home about 2:30 or 3:00 am. I remember going when there was the oil embargo / gas shortage, the national guard flew armed helicopters along the Interstate highway, because there was occasional trouble with truckers and others. A ticket was maybe $2.75, gas was maybe $18 and we'd divide that, food and drink was $7 to $10... I could go see a ball game for under $20.

I recall filling up our Suburban at lunch on a Thursday work day, the day before we were leaving early Friday morning. This was around 2001... It cost just over $100 to fill the tank. That annoyed me a bit. Tickets were $37.50 each, 6 tickets for me, wife, 3 kids and daughter in law. I'd gotten 2 rooms at a hotel close to the ballpark, that was just under $900 for 2 nights. After getting the gas and back to work that Thursday, someone asks me if I'm excited to be going to see baseball games the coming weekend. I looked at them and said "no." Surprised, they asked why. I told them as a teenager I could drive 300 miles to St Louis and see a game for about $20; but now, I've already spent about $1000 and I haven't even left the driveway.

It's a lot of stuff... stuff costs more now, the economy, greater ticket prices, beer (for the cost of a nowadays beer I could have bought 2 cases back in the 70s)... and on top of all of those factors there's the Bernie Madoff factor with Bonilla, the Mets owner thought he'd be getting money there that would more than pay the future Bonilla payments.

[Casey2296]

Originally Posted by FrankWakefield

Bernie Madoff is a big reason the story exists today.

It was a combination of the economy at the moment The structure was set, the economics of MLB salary restrictions at the time, the money the Mets' owner thought he was getting from investments with Madoff... It's a bunch of stuff.

And ballpark food was gonna go way up anyway.

In 2001 A-Rod's pay goes from about 4 mil a year to 22 mil a year, as he joins Texas. I'm thinking there's 81 home games for Texas. If Texas was paying him out of ticket money from home games, and the Rangers averaged right at 35,000 a game.

22 mil / 81 games = $271.6k a game.

$271.6k / 35,000 = about $7.75 per each butt in a seat.


1981 average ticket price about $5
1994 average ticket price about $10
1999 average ticket price about $15
2004 average ticket price about $20
2021 average ticket price passes $35

By the early 1970s I had a car and could drive 300 miles to St. Louis to the the Cardinals. I'd write off, send a SASE, and get a pocket schedule. I could pick a few games, and mail a check, and would get back in the mail 4 tickets for each of the several games I had picked. I was lifeguarding and DJing in the summer, as a game got close I'd ask friends about going, and once there were 4 of us I'd quit asking. We'd drive to St. Louis, watch a game (or two if a double header) then we'd drive back, getting home about 2:30 or 3:00 am. I remember going when there was the oil embargo / gas shortage, the national guard flew armed helicopters along the Interstate highway, because there was occasional trouble with truckers and others. A ticket was maybe $2.75, gas was maybe $18 and we'd divide that, food and drink was $7 to $10... I could go see a ball game for under $20.

I recall filling up our Suburban at lunch on a Thursday work day, the day before we were leaving early Friday morning. This was around 2001... It cost just over $100 to fill the tank. That annoyed me a bit. Tickets were $37.50 each, 6 tickets for me, wife, 3 kids and daughter in law. I'd gotten 2 rooms at a hotel close to the ballpark, that was just under $900 for 2 nights. After getting the gas and back to work that Thursday, someone asks me if I'm excited to be going to see baseball games the coming weekend. I looked at them and said "no." Surprised, they asked why. I told them as a teenager I could drive 300 miles to St Louis and see a game for about $20; but now, I've already spent about $1000 and I haven't even left the driveway.

It's a lot of stuff... stuff costs more now, the economy, greater ticket prices, beer (for the cost of a nowadays beer I could have bought 2 cases back in the 70s)... and on top of all of those factors there's the Bernie Madoff factor with Bonilla, the Mets owner thought he'd be getting money there that would more than pay the future Bonilla payments.

Frank, your story makes me thank the baseball gods that we have a minor league park within driving distance. Haven't been there since Covid but tickets were 7 bucks, 14 if you wanted front row, parking was less than 10, "Beer Batter" specials where if a chosen opposing batter struck out beers were .25 cents until the start of the next inning, we sang Neil Diamond "Sweet Caroline" for the 7th inning stretch, kids can run the bases after the game, my sons little league team could run them between innings, you can catch a fly ball in your 12 dollar BBQ plate off the left field line, my kid can wait outside the locker room door and get the signature of some guy who will never see the bigs but who cares, that's baseball, and it gets harder to find every day.

[FrankWakefield]

Winning over $150k and waiting for those annual payments would give me a bit of a buzz...

[Snapolit1]

https://www.bloomberg.com/news/featu...-new-york-mets