[zaroth]

Einstein something, something, compound interest.

Amazing what saving money at an 8% interest rate will do for your future self! The S&P has only returned 4.8% CAGR [1] from 2000-2018 so that was a pretty tremendous ROI for Bonilla.

[1] - http://www.moneychimp.com/features/market_cagr.htm

[papln]

The relevant comparison is to 6.41% (nominal), not 4.8% (inflation adjusted) Bonilla's contract was 8% nominal.

a 1.59% premium for 25 yeras AND trading market risk for Mets solvency risk is a pretty good deal, though. Mets/MLB may be headed down in the future, but the are likely to be solvent for much to all of that 25 years.

[pitt1980]

I guess the real comparison is whether the Mets could have raised $5.9 in debt back in 1999 on better terms

[rsync]

"The S&P has only returned 4.8% CAGR [1] from 2000-2018 so that was a pretty tremendous ROI for Bonilla."

Anytime I read about this contract (and it comes up every year or so, somewhere) I wonder if Bonilla sold off his interest in the contract in return for a lump payment.

That's a very common arrangement and I never hear whether or not he did that ...

[dmix]

So it started compounding in 2011 + the next 25yrs? Not when he signed the contract? Which means he’d need to not touch the money to get the full $29M amount

8% over 25yrs is a crazy good deal for anyone, not to mention on top of millions.

[the_watcher]

Spotrac has the details of the payments: https://www.spotrac.com/mlb/new-york-mets/bobby-bonilla-1188...

[dmix]

That doesn’t show the interest rates. But based on that it also looks like he got 5x yrs of $500k from the Orioles also starting in 2011. I’m guessing he signed a similar deal with them since he stopped playing in 2000…

This man makes smart financial decisions.

[astura]

The key to making smart financial decisions for MLB players is having an excellent agent.

Bonilla's agent was Dennis Gilbert, who was previously involved in the life insurance industry.

[the_watcher]

Part of a subsequent deal (or related deal, don't remember the details) involved trading him to the Orioles, who became responsible for a portion of his salary, which they then deferred. It's part of the same original contract though, IIRC.

And I know it doesn't show the interest rates, but it does show that the payments he will receive from the Mets total roughly $30M, which is what the article reported.

[billfruit]

Interest rate in India has been largely in the 8-9% in the last 15 years. I hear it was in the double digits in the early 90s.

[zaroth]

Real or nominal?

[billfruit]

Nominal.