Financial Lessons From Bobby Bonilla Day And Did The Mets Get The Better Deal?

On July 1st, Mets fans wish each other Happy Bobby Bonilla Day. Why? Because on July 1st, Bobby collects a check of $1.19 million every year from 2011 to 2035. And he has not played for the Mets since 1999.

Instead of receiving a one-time payment for $5.9 million, Bobby negotiated one of the best retirement packages in history.

And what are the financial lessons for all of us? Read on.

In case you are wondering how he got such a sweetheart deal.

Why does Bobby get the $1.2M paycheck each year? Let us delve into the Bobby Bonilla Contract. In 2000, Bobby and the management realized that they were not a great match. The Mets wanted to get substitute Bobby Bonilla. But they still owed him $5.9M on his contract.

The Mets agreed to buy out the amount on his contract. But the Mets also needed the money to bring a new player. So instead of paying Bobby the $5.9M in 2000, the Mets agreed to defer the payment to the future. They would make annual payments of nearly $1.2 million for 25 years starting July 1st, 2011, including a negotiated 8% interest.

While we may not agree with everything he says, there are nine decades of wisdom buried in Warren Buffett’s quotes.

The Mets were confident that this was a great deal for them since, at that time, they were investing with Bernie Madoff. Even with a low 10% return from Bernie Madoff, they expected to end up ahead.

With the historical context around the Bobby Bonilla Contract what are the financial lessons we can take from Bobby Bonilla Day? Have A Trusted and Knowledgeable Advisor Financial details are complex and messy. All of us have a day job. Make sure you have someone on your team who understands the nuances. This is the reason why I use a CPA even though they make mistakes.

Opt for Annual Payments Instead of a Lumpsum Taxes are calculated on annual income; If you make $1 Million in a year, then you will lose almost half of it to taxes. The IRS doesn’t care if you earn no money for the rest of your life.

Tax Planning Flexibility Playing for the Mets, Bobby Bonilla lived in New York. From a taxation standpoint, as a California resident, I believe New York is worse because they have city taxes and state and local taxes.

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