Today is Bobby Bonilla Day. What does that mean? It means the New York Mets are paying former Mets outfielder Bonilla $1,193,248.20 today, like they have every July 1 since 2011, and will until their final payment on July 1, 2035.
But why are they doing this? Why did the Mets make such a horrible financial decision that has lasted for decades? Buckle up. This one’s a wild ride.
When the Mets Spent Money They Didn’t Have
In 2000, The Mets agreed to buy out the remaining $5.9 million of Bonilla’s contract. But, they hedged their bets. At the time of the Bonilla deal, the Mets were invested in a Bernie Madoff account that was meant to yield significant double-digit returns.
With that in mind, the New York Mets owners and general manager signed off on something interesting. Instead of paying that out up front, they agreed to pay out just under $1.2 million for 25 years, including an 8 percent interest rate. This, obviously, is not a normal way to handle a contract buyout or a long-term contract.
That said, leaning into trusting a real estate mogul is…a choice. Any Mets fan will tell you that they were glad Fred Wilpon, Jeff Wilpon and company sold to Steve Cohen. It has helped to reinvigorate the team’s product on the field, but it also was the end of a really weird era for the Mets.
Citi Field should be a place in which high-value free agents long to smash home runs or vie for a perfect game. It shouldn’t be a place in which a hedge fund manager who was ultimately jailed for an elaborate Ponzi Scheme is looming overhead. And yet, that baseball team from Queens was one among many of Bernard Madoff’s victims.
Madoff and the Mets: An Unlimited Bankroll
The Madoff scandal truly came to light in 2008. But the Wall Street executive had alarms sounding against him for some time before authorities took him into custody. From the time of issues first being raised in 1999 (and likely well before) to his conviction in 2009, Madoff’s Ponzi Scheme made a fool of many. At his highest, Madoff was Chairman of NASDAQ. At his lowest, he was charged with securities fraud, investment advisor trust fraud, mail fraud, wire fraud, money laundering, false statements, perjury, making false filings with the SEC, and theft from an employee benefit plan.
Let’s rewind. What exactly was this fraudulent scheme, and how did it come to envelop New York City’s National League team in its wrongdoing?
Investigators believe Madoff’s malpractice began as early as the 1970s. He had gotten his firm off the ground in the ’60s, and by the early ’90s he was being lauded for his success by the likes of the Wall Street Journal. Essentially, he created a practice that lured investors in by promising extraordinarily high returns. This is quite literally the definition of a Ponzi Scheme.
Why is it called a Ponzi Scheme? Because a man named Charles Ponzi was a con artist who promised investors 50 percent returns that he was not able to fulfill. When found out, he ended up serving a 14-year sentence. And that was in 1920.
Essentially what was happening was Madoff was promising high returns and collecting investments. He then would lure in new investors and pay them with the investment from the previous ones. So instead of that money yielding legitimate returns, it was continuously being passed down the line.
Fast forward 70 years and you’d think that the world had found ways to identify such fraud. And yet, an MLB team found itself wrapped up in all of it because they, like many, trusted the source.
According to the Associated Press, many investors trusted Madoff because he was Jewish. They truly leaned into the stereotype, thus allowing him to dig deeper and his bank accounts to grow larger.
Ultimately, Madoff wasn’t going to be able to pay it off when investors came calling, and that became his undoing when the market went south in 2008. As his victims tried to make their investments liquid, the river had run dry.
Bobby Bonilla’s Annuity Funded by Madoff’s Scheme
So it’s interesting that, at a time in which the Mets were to compete with the Yankees in a Subway Series World Series, they made the choice to not pay out Bonilla in the way their outfielder/first baseman/third baseman needed. They were able to top the Marlins, Phillies and Expos in the division, but the Braves finished above them by one game. So they were a Wildcard team that found their way to winning the pennant and competing for the ultimate prize.
And yet, they trusted in Madoff. So instead of paying $5.9 million at the time, they spread it out, in hopes that would all come out in the wash and the annuity would take the burden off the team’s payroll. Instead, they ended up committing to nearly $24 million more than they had originally anticipated. By the time they make their last payment to Bonilla, he will be 72 years old.
That’s just one example of the effects Madoff had on his investors. In the long run, the New York Mets are a franchise that has been able to find its way. And, really, it’s pennies to them in comparison to what it could be for others. It became the job of Massachusetts native Attorney Irving Picard to dive into things and help recover the billions of dollars that were lost in Madoff’s scheme.
The Meet the Financial Mess of New York Town
New York City sort of defines the concept of the American Dream. The Bronx and Queens hold long-term ties to baseball, as did Brooklyn before the Dodgers found their way to Los Angeles. And Manhattan has always been the center of attention. Wall Street represents this ability to earn and grow beyond anything you could imagine. The New York Times tells you everything you need to know.
When you look at who can get caught up in a scheme like Madoff’s, you expect a lot of the ?little people? to fall victim. You wouldn’t expect a major league franchise worth nearly half a billion dollars to be caught with their pants down, too. And yet, that’s just what happened to the Mets.
I’m sure Sandy Alderson and Billy Eppler would rather just be funneling salary to his sluggers or his prized shortstop, Francisco Lindor. But instead, thanks to Bernie Madoff, a small chunk of that money is still finding its way into Bobby Bonilla’s pocket. So what does he do? He leans into it.
Here we are over a decade from that first deferred payment and over two decades from when the deal was made. From now until 2035 we can always check the calendar, see it’s July 1, and wish everyone in Queens a happy Bobby Bonilla Day.