Just remember this little tale when deciding on whether to begin or defer Social Security payments.
“Laughing all the way to the bank” is often said, but only one person is actually doing it. That would be baseball great Bobby Bonilla, and July 1 is unofficially named for his greatest career win.
Bonilla receives a check for $1,193,248.20 from the New York Mets annually on this date and will continue to do so every July 1 through 2035.
What some call the “greatest retirement plan in history” in a roundabout way involves Bernie Madoff’s Ponzi scheme.
Although Bonilla last played for the Mets in 1999 and retired from baseball in 2001, the 56-year-old is making more from the organization than recent All-Stars Pete Alonso and Jeff McNeil—COMBINED!
“Nobody really knew about it until it came due,” Bonilla told Yahoo Finance recently. “All of a sudden, people had realized that me and Dennis had put this away 15, 20 years ago. So it was pretty funny that all of a sudden now it became this thing. And every time I look at Dennis, I say, ‘thank you.’”
“Dennis” would be Bonilla’s agent Dennis Gilbert, who negotiated the deal with the Mets that bought out the final year and $5.9 million due Bonilla for the 2000 season after a disastrous 1999 season where he batted just .160 in 60 games.
The Mets needed money immediately to pursue free agents, so they released Bonilla in January 2000.
But instead of accepting the $5.9 million upfront, Gilbert and Bonilla agreed to defer the money for a little more than a decade in exchange for a guaranteed 8% interest rate.
By 2011, the $5.9 million had grown to $29.8 million. Spread across 25 years until 2035 results in the $1,193,248.20 annual payment. Bonilla is expected to bank an extra $23.9 million by waiting a decade for his first payment.
Not a bad little retirement plan, which will pay him that $1.19 million every July until he is 72 years old.
Bonilla, a six-time MLB all-star and winner of three Silver Slugger awards over the course of his illustrious career, rejoined the Mets in 1999 via trade after a couple of seasons with the Dodgers following the Marlins’ talent purge in 1998 (Bonilla won his only World Series with the Marlins in 1997).
Bonilla called that 1999 season with the Mets his “most difficult year in baseball,” and his struggles on the field extended to rifts with Mets management and the notoriously difficult New York media.
Because Mets owner Fred Wilpon was heavily invested in Bernie Madoff’s historic Ponzi scheme, which was promising 10%-15% yearly returns, Wilpon was amenable to the salary deferral idea proposed by Gilbert and Bonilla.
Wilpon and the Mets figured they’d make a significant profit if the Madoff investment delivered as promised—which, of course, it didn’t. Madoff pleaded guilty to his scheme in 2009 after defrauding thousands of investors out of tens of billions of dollars.
But in spite of all this, the Bonilla “retirement” deal wasn’t all bad news for the Mets. Releasing Bonilla allowed the team to sign ace pitcher Mike Hampton, who would be named the 2000 NLCS MVP and help the Mets to the World Series that year (which they lost to the Yankees).
When Hampton then signed as a free agent with the Colorado Rockies after that season, the Mets received a supplemental draft choice for the 2001 MLB draft, which they turned into Mets legend David Wright, who played his entire 14-year MLB career with the team.
The big win
In baseball, deferred compensation deals are not all that uncommon—and Bonilla’s wasn’t even the first one for the Mets.
Former star pitcher Bret Saberhagen receives $250,000 a year from the Mets for 25 years with payments that started in 2004. That deal was the original inspiration for Bonilla’s deal.
Former Boston Red Sox star outfielder Manny Ramirez has a deferred compensation contract, where the Red Sox owe him $31 million dollars through 2027.