Bobby Bonilla Day

Podcast Transcript

Every July 1st, retired Major League Baseball player Bobby Bonilla receives a direct deposit from the New York Mets despite not having played for the franchise for a quarter of a century.

Sports fans celebrate this date with a mix of hilarity and absolute bewilderment as “Bobby Bonilla Day,” universally mocking it as the ultimate symbol of front-office incompetence.

However, that’s not quite true.

This contract wasn’t a classic Mets blunder; it was a highly calculated financial maneuver backed by standard accounting logic.

Learn more about Bobby Bonilla Day on this episode of Everything Everywhere Daily.

At the height of his career, Bobby Bonilla was one of the best players in baseball. Paired with Barry Bonds, Bonilla was an anchor of the legendary “Killer B’s” lineup of the Pittsburgh Pirates.

He played almost every day, hit for contact, averaged 25 home runs a year, routinely drove in 100 runs, and led the league in doubles. He was one of the best players in baseball when he became a free agent in 1991.

The New York Mets, eager to recapture the glory of their 1986 World Series win, won an intense bidding war for his services and made Bonilla the highest-paid player in Major League Baseball history at that time.

Not only was he the highest-paid player in baseball, but he was briefly the highest-paid athlete in American sports, making more per season than Michael Jordan!

Mets fans were ecstatic; they signed the best free agent in the sport, and to top it all off, Bonilla was a New Yorker, born in the Bronx. The front office put Bonilla on a roster, which already featured two Cy Young Award-winning pitchers in Doc Gooden and Frank Viola.

Mets fans expected a championship.

Bonilla was a microcosm of the New York Mets; the organization made a major financial commitment to the roster and fielded a team with the third-highest payroll in baseball.

Despite outspending everyone else in their division, the team finished second-to-last in Bonilla’s inaugural season. Bonilla’s numbers declined, but he remained a formidable middle-of-the-order hitter for the Mets, although he failed to live up to his status as the highest-paid player in American Sports.

Bonilla’s 1992 Mets were so disappointing that they inspired an unflattering book by New York sports writers Bob Klapisch and John Harper, The Worst Team Money Could Buy: The Collapse of the 1992 NY Mets.

He bounced back in 1993, put together a 34-home run season, and hit for power throughout the rest of his tenure. The Mets traded Bonilla to the Baltimore Orioles at the 1995 trade deadline. His value had skyrocketed, given a strong start to the first half of the 1995 season.

The trade netted the Mets two of the better outfield prospects in baseball in Alex Ochoa and Damon Buford. Bonilla played strong the rest of the year and helped lead the Orioles to the postseason.

Blaming Bonilla for the Mets’ collapse during his tenure is simply unfair; his performance was only slightly below the norms he established in Pittsburgh, and he made the All-Star team with New York in 1993.

Following his trade to the Orioles, Bonilla put together several productive seasons before fading. Despite his declining performance, Bonilla returned to New York for the 1999 season.

In 1997, the New York Mets brought reliever Mel Rojas to New York from the Montreal Expos. He had a big arm, and the Mets thought they could rejuvenate his career. The Rojas experiment was a disaster; in fact, late in 1998, the Mets wanted to move him so badly that they traded him to the Dodgers for a rapidly declining Bobby Bonilla and his nearly 6 million contract.

The Mets thought that the 35-year-old Bonilla could recapture his previous power. However, the Mets were wrong…very wrong. Bonilla’s 1999 season was a disaster.

Not only did he fail to play at his previous high level, but Bonilla produced at levels so low that they almost defy explanation. Through 60 games, Bonilla hit a remarkably bad .160 with 4 home runs and played defense so poorly that it became difficult to play him.

Bobby Valentine, an old-school manager, managed the 1999 New York Mets. He was known for his brilliant baseball mind and his highly charismatic, volatile leadership style. Bonilla and Valentine frequently clashed.

New York was the worst place for the “Clash of the Bobbys” to take place, as the media scrutiny of their feud was relentless. With Bonilla’s on-field performance cratering, Valentine had no choice but to bench him, and Bonilla did not take it well. During an extra-inning win against the Toronto Blue Jays, Bonilla refused to go into the game as a pinch hitter.

The confrontation between Valentine and Bonilla continued to simmer, reaching a boiling point in 1999, when, during the deciding game of the 1999 NLCS against the Atlanta Braves, Bobby Bonilla and Rickey Henderson retreated to the clubhouse to play cards rather than watch the game from the dugout.

According to Bonilla, the cards distracted a furious Henderson after Valentine pulled him from the game several innings earlier

Regardless of why Bonilla and Henderson ended up in the clubhouse playing cards, the damage was done; Bonilla had become a pariah on the team. With a toxic relationship with the manager, and an obviously declining skillset, Bonilla gave the Mets every reason to move on immediately.

The Mets explored a possible buyout of the deal at the end of the season, but the card game accelerated their urgency. Knowing the organization wanted a buyout, Bonilla’s agent, Dennis Gilbert, proposed a unique solution.

To free up cash now and avoid dead money on the roster, Gilbert suggested deferring payments in an annuity-like structure. Gilbert had a long history in the insurance business, and deferring the payment made sense for both his client and the Mets organization.

Bonilla had made nearly 50 million during his playing career, and given his flexibility, Gilbert knew his client could live comfortably until the deferments kicked in.

Gilbert approached the Mets with a unique offer: take the 5.9 million base salary, add 8% interest each year, and begin payments in 2011, spread over 25 years.

Gilbert’s proposal increased the total value of the remaining contract to nearly 30 million, while providing the Mets with flexibility to use the money immediately to improve a roster that nearly made the World Series.

It offered a win-win situation for everyone. Bonilla would receive a yearly payment of 1.2 million from 2011 through 2035. The Mets would pay Bonilla for the work he did in his 30s until he turned 72. The payment is received every year on July 1.

When asked about the decision to defer the payments in a 2008 interview with the New York Post, Bonilla described it clearly: It’s a beautiful thing.

An obscure detail about the Mets’ Bobby Bonilla Day is that he and Gilbert also secured a similar arrangement from the Baltimore Orioles. Unlike the Mets deal, the Orioles contract didn’t stem from a buyout after a performance crash. It formed part of his original contract when he joined the Orioles.

In 1995, Bonilla and the Orioles agreed to restructure the 6 million owed for his 1996 season into a deferred agreement, with payments of 500,000 due every July 1st from 2004 to 2028.

When all is said and done, Bonilla will have earned more than $42 million from deferred contract payments and accrued interest on about $12 million in base salary.

So why did the Mets find this deal attractive? It all had to do with the 8% interest that the deal assumed. Mets co-owner and primary decision-maker Fred Wilpon was earning returns of 10% or higher every year. He was able to get such returns because of his brilliant investment manager…..Bernie Madoff.

Wilpon figured he could take that 5.9 million and put it into Madoff’s hands, and that after the contract’s duration, the investment would generate several hundred million dollars based on the returns Madoff had promised him.

The Mets also knew they had nearly reached the World Series, and they could repurpose that 6 million in salary to improve the ballclub.

The Mets actually came close to their goals. The Mets targeted American League Cy Young runner-up Mike Hampton in a blockbuster 5-player trade. To offset the salary increase, the Mets allocated part of the Bonilla Buyout.

Mike Hampton was coming off one of the best pitching performances in recent memory. He finished 22-4 with a 2.89 ERA and provided exactly what the Mets needed at the top of their rotation.

Hampton didn’t disappoint; he pitched extremely well in the 2000 season, leading the Mets to the World Series on the back of a remarkable playoff performance.

The Mets’ brilliant 2000 season ended with a loss to the Yankees in the famous Subway Series. I actually attended Game 5, the final game of the World Series at Shea Stadium that year.

The Hampton experience continued to reap rewards for the Mets. He turned down a lucrative contract offer from the Mets in the offseason after the World Series and signed a blockbuster deal with the Rockies.

As a result, the Mets got a draft pick in return from the Rockies in the next MLB draft. Hampton’s departure gave the Mets the 38th pick in the 2001 draft, which was used to draft David Wright.

He played for the Mets for 14 years and became a fixture on the Mets roster. From a baseball perspective, the Bonilla deferment actually worked to the Mets’ advantage, and they did manage to win a National League Championship.

Financially, the situation was quite a bit different.

As you probably know, Bernie Madoff wasn’t the investing genius everyone thought he was. He was literally running a classic Ponzi scheme. In 2008, Madoff’s scheme fell apart, crippling the Wilpon family fortune and, by extension, the Mets.

To complicate matters, a series of lawsuits in 2011 alleged that Mets owners Fred Wilpon and Saul Katz fueled the fraud by ignoring the obvious red flags of Madoff’s scheme. In 2012, both sides settled the lawsuit out of court for $162 million.

The terms of the suit created a complicated, byzantine framework that limited Wilpon’s liability but severely damaged the Mets’ financial stability. The settlement saved the Wilpon family from bankruptcy but had massive implications for the Mets’ finances.

In the wake of the decision, the Mets slashed payroll by unprecedented amounts and began selling off the team in 4% blocks to raise revenue. Hedge fund manager Steve Cohen stepped in as one of the early investors. Cohen bought a 4% stake for $20 million. Ownership sold these blocks to give the Mets the financial flexibility to stay afloat while the damaged management team sought to save their investment.

Cohen gradually bought additional stakes, culminating in a breakthrough deal following the Wilpons’ 2020 auction of the team. Cohen purchased the Mets for 2.4 billion dollars and, in the process, inherited the Bobby Bonilla annuity.

Unlike the Wilpons, Cohen has leaned into it, adopting the famous adage that no press is bad press. When asked about it in 2020 by a fan on Twitter, Cohen dismissed a buyout of Bonilla’s contract and instead offered a more hilarious solution. He said: Let’s take a vote. How about we have a Bobby Bonilla Day every year? Hand him an oversized check and drive a lap around the stadium. Could be fun.

Every July 1st, the baseball world takes note of Bobby Bonilla and his infamous contracts.

Today, these deferred contracts have become more common, best illustrated by the historic deal Shohei Ohtani signed with the Los Angeles Dodgers. While his contract expires in 2033, it pushes an astonishing 680 million dollars into the future, distributing 68 million dollars annually from 2034 through 2043. Given his performance, Dodgers fans likely won’t struggle with Ohtani’s deferments.

Bobby Bonilla Day endures because it is more than just a quirky baseball contract. It is a story about money, patience, risk, and the strange ways that financial decisions can outlast careers and owners.

For Bobby Bonilla, it became one of the smartest deals any athlete ever made. For the Mets, it became an annual reminder that sometimes the most memorable moments in sports history happen not on the field, but in the fine print.