The Bobby Bonilla story is one of the most amazing sports contract stories ever. It is also one of the most amazing stories about the power of compounded interest for protecting wealth and retirement assets.
Bobby combined earnings from his two contracts with the Mets, to turn a small portion of it into an income stream of $1.19 million every July 1st, which is known as Bobby Bonilla Day. He played third base and right field, ending his career with batting average of .279, 287 home runs and 1,173 RBIs. He was a six-time All-Star, three-time Silver Slugger and a World Series Champion in 1997.
At the end of the 1991 season, Bobby became a free agent and signed by the New York Mets with a five-year, $29.5 million contract over 5 year time period. Dennis put together a way for Bobby to receive an income stream of $1.1.9 Million per year. Believe it or not, earning around $6 million per year in 1991 (roughly $12 million in today’s dollars) was enough to make Bobby the highest-paid baseball player in history up to that point and the highest-paid athlete in the world.
Four highest-paid athletes in the world in 1992:
- Bobby Bonilla – $5.9 million
- Patrick Ewing – $5.5 million
- Dan Marino – $5 million
- Wayne Gretzky – $3.1 million
Unfortunately, the Mets still owed Bobby $5.9 million.
The most amazing sports contract ever?
Bobby and his agent Dennis J Gilbert recognized that part of Bobby’s contract was to offer a deferred income stream. Dennis and Bobby were aware that when players retire, it was so important to set up streams of income so they would not put themselves in a position of being unprepared for unforeseen financial challenges.
Instead of paying him $5.9 million that he was owed the following year, Dennis and Bobby decided to defer 8% interest. Dennis strategically created a unique income deferment solution for Bobby to provide an income stream after he retired. When the Mets traded back for Bobby, Dennis created a partially deferred contract, and added it to the original contract.
So in other words, $1.2 million per year every year, starting in 2001 and ending in 2035. Every July 1 he earns another $1.2 Million. This is why July 1 is called “Bobby Bonilla Day.” (CBS Morning News)