The Genius of MLB Deferred Contracts
Americans celebrate Independence Day each year on July 4th with cookouts and fireworks. Baseball fans, particularly New York Mets fans, now celebrate “Bobby Bonilla Day” three days earlier on July 1st with little more than sarcasm. Bonilla himself is the one who celebrates the most because the Mets issue him a check for $1.19 million every July 1st. This annual payment began in 2011. Bonilla will get his last $1.19 million payment on July 1, 2035. The former Met will be 72 years old at the time of the last payment.
For those not aware of who Bobby Bonilla is, he is a former Major League Baseball player who played for eight MLB teams, including the New York Mets. Bonilla had a batting average of .279, had an OPS (On-base plus slugging percentage) of .829, hit 287 home runs, and drove in 1,173 runs during his 16-year career. He was also a key member of the 1997 World Series Champion Florida Marlins ball club. Bonilla played in the big leagues from 1986-2001. He last played for the New York Mets in 1999…
So why would the New York Mets cut 25 checks of over a million bucks when he’s not even playing for them anymore??? Two words: Deferred payments.
The Mets agreed to buy out the rest of a then almost 37-year-old Bonilla after the 1999 season. That was a season where he hit only .160 with 4 home runs in just 60 games for the Mets. Bonilla was owed $5.9 million for the 2000 season. Instead of paying Bonilla the $5.9 million he was owed in 2000, the Mets then-ownership decided to defer his salary payment until 2011 and issue him the now famous 25 annual payments of $1.19 million. The owners thought they could take that $5.9 million and invest it for a huge profit with some guy named Bernie Madoff.
Yeah, about that…
It also freed up money for the Mets to acquire pitcher and 1999 N.L. Cy Young Finalist Mike Hampton to a deal in 2000. Fun fact: when Hampton left the Mets in free agency, the club received a compensatory pick in the MLB amateur draft. With that pick the Mets selected third baseman David Wright, who went on to play in New York for 14 seasons and was selected to 7 MLB All-Star games. I guess it wasn’t ALL bad for the Mets.
Bonilla continues to be the big winner in the deal. Instead of the Mets profiting from the last year of his deal, they put themselves in a situation where they are giving an extra $20 million to a guy who hasn’t played for them since the turn of the century. Oops! At least current Mets owner Steven Cohen has had a sense of humor regarding the situation. He’s the guy that inherited the responsibility of issuing the annual checks to Bonilla. He’s even talked about bringing Bobby Bonilla back to New York to honor him and present his check on July 1st!
July 1st is a date that many current and former baseball players have circled on their calendars each year. That date is when signing bonuses are paid to current players and deferred salary payments are paid to former players. Bobby Bonilla isn’t the only former player to cash in these deferred payments long after he last donned an MLB uniform. His deal with the Mets happens to be the most famous one.
Here are some of the other former MLB stars who have cashed in big…
The Atlanta Braves and then-owner Ted Turner signed the late Hall-of-Fame closer ahead of the 1985 season to a 6-year, $9.1 million deal. His contract called for $4.8 million of the $9.1 million to deferred until after the contract expired in 1990. It would then be paid at 13 percent interest over a 36-year period. Sutter began receiving annual payments of $1.3 million per year in 1991 until the Braves paid him a final lump sum of $9.1 million (the total value of his original deal) in 2022. Sutter managed to turn $4.8 million into $46.8 million. Perhaps we should consider Sutter, the Godfather of deferred contract payments.
Bobby Bonilla (AGAIN?!?)
You gotta be kidding me! This guy has not one, but TWO deferred contract payment deals??? I need to have whoever negotiated Bonilla’s deals become my financial advisor. Seriously. The Baltimore Orioles also issue a check to Bobby Bonilla every July 1st. His deal with the O’s pays him $500,000 annually from 2004-2028. The man will have made an extra $42.3 million in his lifetime from two MLB teams AFTER his playing career was over. Well done, sir!
Ken Griffey, Jr.
Here’s another reason why “Junior” is a Hall-of-Famer. He’s still getting paid by the Cincinnati Reds even though he hasn’t played for the club since 2008. After being traded to the Cincinnati Reds in 2000, Griffey signed a 9-year, $116.5 million extension to remain in Cincy long-term. Part of that deal called for deferred payments to be paid to Griffey between 2010-2025. As a result, Ken Griffey, Jr. is the Reds’ third-highest-paid player on the ballclub this season at $3.59 million. Just a reminder: Griffey isn’t actually playing for the Reds this season. The 53-year-old Hall-of-Famer retired in 2010 and started to cash the first of his 15 deferred payments totaling $53.9 million.
Ramirez signed an 8-year, $160 million contract to join the Boston Red Sox in 2001. Terms of the deal included, you guessed it, deferred salary payments. Those payments began in 2011. Ramirez will be cashing checks each July 1st for $1.968 million until 2026. All in all that’s a total of $31.5 million for a guy who helped break the Red Sox curse and helped Boston win the World Series in 2004 and again in 2007.
Bobby Bonilla isn’t the former ballplayer still chasing checks from the Mets well after his playing days. Saberhagen was traded to the New York Mets prior to the 1992 season and hasn’t played for the club since 1995. He last played for the Boston Red Sox in 2001. Still, the Mets have issued the two-time A.L. Cy Young Award winner checks of $250,000 since 2004 and will continue to do so until 2028. That’s a cool $6.25 million in total payments. Why couldn’t the Mets sign me to a contract in the 90s???
This may be the pièce de resistance among the deferred salary payments for former baseball players so far. Chris Davis had a monster season for the Baltimore Orioles in 2015, hitting 47 home runs with 117 runs batted in. Two seasons prior to that, he hit 53 homers. Baltimore re-signed the then-29-year-old Davis to a 7-year, $161 million deal. Let’s just say it wasn’t money well spent. Davis’s production took a quick nosedive, and injuries forced him to retire in 2021. He was still owed $17 million for the 2022 season, but the Orioles instead will pay Davis in deferred salary over the next 14 years.
$9.16 million annually from 2023-2025
$3.5 million annually from 2026-2032
$1.4 million annually from 2033-2037
That $17 million turned into $59 million! Forget the Mets! Why couldn’t I get THIS deal? It’s bad enough that Davis never lived up to the big money deal. Now the Orioles are going to pay him even more for not living up to the contract he signed after the 2015 season.
There are other retired players who are collecting deferred salary checks, like former Rockies first baseman Todd Helton, former Mariners outfielder Ichiro Suzuki, and Cardinals outfielder Matt Holiday. The practice of teams playing deferred salary will continue with current players after their playing days are over. Most of these don’t include interest, but still, a pretty sweet deal to be cashing big checks after one’s playing days are through:
The Washington Nationals will pay pitchers Max Scherzer (now with the Mets) and Stephen Strasberg through 2028.
The Mets (not them again!) will pay Francisco Lindor, $5 million/year from 2032 through 2041. They will also be paying closer Edwin Diaz $2.65 million/year from 2033-2042.
Christian Yelich will case checks of around $2.5 million per year between 2031-2042.
Freddie Freeman’s contract defers $57 million to be paid between 2028-2040.
The Red Sox will pay Chris Sale $10 million annually from 2035-2039.
Rafael Devers just signed an extension with the Boston Red Sox for 10 years, $331 million. $75 million of that contract will be paid out between 2034 and 2044.
There are many others with deferred salary payment deals. Some include interest. Others are simply planned as a nice retirement income (you think?). It’s a pretty sweet deal if you can get it. No matter what, though, we can guarantee three things. There are a number of former ballplayers who look forward to July 1st each year. Those deferred salary payment checks will be taxed. The other…
The New York Mets will continue to offer and pay out deferred salaries until the end of time. Get on their payroll now if you can!
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