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Somebody wants to pick a fight for some reason. Bonilla's contract was a great one as I try to get through to you every single year.
Intead of getting 5.9 million dollars 20 years ago and probably blowing it on...whatever... Bonilla has set himself up for life.
You're arguing just for the sake of arguing at this stage.
It was simply an annuity nothing more or less. You pretending like it was something magical or great without doing a single ounce of analysis is silly. Him potentially blowing it is irrelevant in the analysis of it was a good financial deal
A day where we celebrate people boldly calling other people idiots while simultaneously making it clear that they don’t understand the time value of money.
a day where we celebrate people boldly calling other people idiots while simultaneously making it clear that they don’t understand the time value of money.
It’s that time again when the guy who has admittedly underperformed the market year after year for a long time(maybe this single year is an exception) giving up a ton of performance talks about what “good” financial deals are
It's not great that your money is relatively inaccessible. What ultimately decideds if the deal is good or bad would require the full term to expire. The fact that most athletes end up broke is a sidebar issue and not one that decides if the deal is good or bad
From today’s WSJ:
Mr. Bonilla agreed not to accept the money. In effect, he lent the Mets $5.9 million. The Mets are paying him back, with interest, over 35 years—similar to an amortizing loan like a mortgage. The interest and principal payments on the loan were zero for the first 10 years, and are $1.193 million for each of the next 25. That works out to an interest rate of 8%.
An 8% rate might sound high now—even after jumping substantially in the past year, a 30-year mortgage is still below 6%—but in early 2000 it wasn’t especially generous. At the time, the Fed’s overnight interest rate was 5.5%; the prime rate, a basis for a range of loans, was 8.5%.
Neither side would have known this at the time, but with hindsight Mr. Bonilla made a good trade (and the Mets a bad one). In the two decades since Mr. Bonilla last wore a Mets uniform, interest rates of all stripes—including yields on loans—have mostly sat near historic lows. That makes it very good to be the owner of a loan that pays you 8% a year.
Mr. Bonilla agreed not to accept the money. In effect, he lent the Mets $5.9 million. The Mets are paying him back, with interest, over 35 years—similar to an amortizing loan like a mortgage. The interest and principal payments on the loan were zero for the first 10 years, and are $1.193 million for each of the next 25. That works out to an interest rate of 8%.
An 8% rate might sound high now—even after jumping substantially in the past year, a 30-year mortgage is still below 6%—but in early 2000 it wasn’t especially generous. At the time, the Fed’s overnight interest rate was 5.5%; the prime rate, a basis for a range of loans, was 8.5%.
Neither side would have known this at the time, but with hindsight Mr. Bonilla made a good trade (and the Mets a bad one). In the two decades since Mr. Bonilla last wore a Mets uniform, interest rates of all stripes—including yields on loans—have mostly sat near historic lows. That makes it very good to be the owner of a loan that pays you 8% a year.
Sounds like a good deal for Bonilla to me.
Well the truth is he didn’t get 8% because he went years without getting anything, as said earlier in the thread it’s closer to 6-6.5% without accounting for taxes.
Just for reference the post you quoted is 5 years ago. Qqq is up 16% during that time spy 11%+, dia is up 10%+ annual avg
Since Jan 2000 DIA is up 7% on avg spy 6.4% qqq 6%. The reality is Booby was released from the Mets in 2000 iirc and didn’t get a payment until 2011. It looks like a big wash at this point frankly. Without this year spy was up 7.4%, Dia 7.6% and qqq 7.6%. Like I’ve said all along you have to have the contract play out to tell if it’s good or not, as of now it’s right around the market(shockingly the annuity company who wrote this is about on target)
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