Quote:
Originally Posted by Jim65
They are called deferred contracts, a lot of teams do it, the Braves are still paying Bruce Sutter. I guess Atlanta is stupid too?
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Correct. In fact Bonilla is also getting deferred salary from the Baltimore Orioles.
The Mets owed him 5.9 million when they bought out the last year of his contract. The Mets and Bonilla worked out a deal where the he would defer the payment of the 5.9 million for 10 years. Then, the Mets would pay him 1.19 million every year for 20 years. While that sounds like a lot more than the 5.9 million, due to compound interest, etc, the 2 payment scenarios (the 5.9 million right away or the 1.19 million/year after 10 years) have the same value when calculated at 8% interest annually.
The market has increased an average of about 7.4% annually since 1/1/2000.
So, not a bad financial decision.
Mike