BOBBY BONILLA DAY ARRIVES ON HEELS OF HISTORIC OHTANI DEFERRAL
Bonilla wasn’t the first MLB player to postpone salary and the sum was not the largest however it was most well-known before Ohtani’s $600 million deferral.
By Kurt Badenhausen
Jan. 1, 2024 at 11:32 am
Shohei Ohtani and his CAA agents shocked the sports world in December with news of his free-agent contract with the Los Angeles Dodgers. The $700 million headline number smashed the previous MLB record contract—$426.5 million for Mike Trout—and then there was the second stunner: All but $20 million of the deal was deferred.
Don’t forget Bobby Bonilla, there is an incoming coach in the clubhouse who is responsible for the most well-known salary deferrals in the history of baseball.
Bonilla who was the six-time All-Star was the highest-paid baseball player at one point. However, 23 years after his retirement the slugger may be remembered for his contract deferral that occurred at the end of his playing career.
In his second stint as a player for his second team, the New York Mets and a disappointing 1999, team removed Bonilla however, they owe his $5.9 millions for the year 2000. Bonilla and his agent Dennis Gilbert, offered to put off the amount for a decade, and spread the payment over 25 years with an 8 percent interest rate. Mets manager Fred Wilpon accepted the deal believing that his double-digit return on investment with Ponzi scammer Bernie Madoff would continue. The interest rate was high, which meant an $1.19 million pay-out every July 1 beginning in until 2035, at which point Wilpon will turn 72 years old. of age, which equates to a payment in the amount of $29.8 million.
“I always spoke to players about deferring part of their earnings,” Gilbert said in an interview on video. “It’s taking money from the current bank and depositing it into the future’s bank.”
Gilbert established his life insurance and financial advisory company before co-founding his Beverly Hills Sports Council agency along with Rick Thurman to represent MLB players in their contracts. They represented players such as George Brett, Jose Canseco, Barry Bonds, Mike Piazza, Curt Schilling, Rickey Henderson, and Trevor Hoffman. Gilbert has sold his share during BHSC in 1999, but continued to assist players in the areas of their estate and insurance planning. Gilbert is also the director for Perfect Game, which hosts youth softball and baseball tournaments as well as showcase events.
Bonilla was not the only MLB player to include deferrals as part of his contract. In 1984 the relief pitcher Bruce Sutter signed a six-year, $9.1 million contract with the Atlanta Braves that would ultimately make $47 million because of a 12.3 percent interest rate. Prior to Bonilla and the Mets signed a deferred agreement that they signed with pitcher Bret Saberhagen. The deal would pay $250,000 a year for a period of 25 years. In 2000. Ken Griffey Jr. had the majority of the $112.5 million extension of his contract along with Cincinnati Reds deferred at 4 percent interest. It was $5 million a year beginning in 2009, with the final payment due in this year according to his long-time Agent Brian Goldberg; only four players on the Reds 2024 roster will earn more. Chris Davis retired in 2021 and his deferrals that don’t include interest began in the year before and will amount to $59 million until 2037.
Deferrals have become a common feature in numerous nine-figure MLB deals in the past decade. For example, in 2015 Max Scherzer delayed payment on the half of the $210 million contract in The Washington Nationals. Jacob deGrom ($52.5 million), Chris Sale ($50 million) and Nolan Arenado ($50 million) all faced deferrals during recent agreements.
It is believed that the Dodgers are the team that has been most aggressive in deferrals. Mookie Betts was able to have one-half of the $115million he earned from his 365 million Dodgers agreement deferred. For 2022 Freddie Freeman signed for $162 million. This included $57 million that was deferred. Then, in March of this year Will Smith signed a $140 million extension that included the option of deferring $50 million. Ohtani will get $68 million per year from the Dodgers beginning in 2034.
The major distinction between these deals and Bonilla’s is the amount of interest for the deferral. It’s not common for the latest deferrals to have interest, but Stephen Strasburg’s Nationals contract being an exception. It has an interest rate of 1% on the salary deferred. Deferrals without interest mean the luxury tax is reduced for teams. And while owners must fund the future payments but they can do it in a discounted manner under the assumption that these payments are expected to increase in the investment accounts.
For athletes, deferrals can provide potential tax advantages if the income is repaid after their career when they are able to reside in a state that has less tax rates or with no tax on income from the state in any way. The Ohtani case has brought awareness to this loophole in California where there is the highest state marginal tax rate, which is 14.4 percent for people earning over $1 million. State lawmakers would like Congress to stop this loophole.
Bonilla as well as Griffey both reside in Florida and do not have a tax on income for the state.
The Mets aren’t the sole MLB team that is still giving Bonilla the check. In addition, he still gets an unpaid salary deferred during his time as a player with the Baltimore Orioles worth $500,000 each year from 2004 until 2028.
Gilbert says that he is grateful to the long-time journalist for sports business Darren Rovell for calling attention to Bonilla’s annual salary and declaring July 1 to be Bobby Bonilla Day. Steve Cohen, who bought the Mets from the Wilpons in 2020, has indicated several occasions that he would like to mark Bonilla Day at Citi Field in the near future by presenting a large check to Bonilla. The Mets do not have plans for this year’s celebration according to the spokesperson.
Gilbert remains working in the insurance industry and assists athletes to safeguard their wealth. “Athletes are able to live a certain lifestyle and their expenses tend to stay the same, however the income doesn’t increase but it decreases,” Gilbert said. “It’s not about what you earn the most, but what you save. That’s it.”