Ah yes, Bobby Bonilla Day. That day every year when Met fans celebrate one of the BEST baseball decisions the Wilpons ever made. (I said BASEBALL decisions. Financially, not so much.)
First, the backstory. At the end of the 1999 season, it was clear that Bobby Bonilla had worn out his welcome with the Mets. (Who can forget Mets/Braves Game 6, both teams struggling mightily in extra innings, and Bonilla is playing cards in the clubhouse with Ricky Henderson?) Problem was, Mets still owed Bonilla one year's salary at about $6M. The parties agreed to pay it off in the form of a deferred annuity which would commence in 2011 and run through 2035. This was not unusual. Bret Saberhagen is still collecting under a similar agreement.
So why was it such a good baseball decision?
- With the immediate savings, the Wilpons created budget room to acquire Mike Hampton, who helped the Mets get to the World Series.
- When Hampton left as a free agent at season end, the Mets used the compensatory draft pick to select David Wright.
The interest rate used in determining the stream of future payments was 8%. Back then, that rate was not crazy. The assumption was that the endless stream of Madoff money would more than cover these payments. Oh well.
