Bobby Bonilla was trending on Twitter early Friday (as it tends to this time of year), because July 1 marks the annual $1.2 million payday for the former third baseman — an event that has increasingly attracted interest from average Americans, even some who don’t know anything about baseball.
That’s because Bonilla and his agent, Dennis Gilbert, engineered a contract payout that has become one of the more talked-about feats of finance in sporting history.
On Friday, Bonilla, now 58, will collect a check for $1,193,248.20 from the New York Mets, as he has and will every July 1 since 2011 and running through 2035, as ESPN has detailed.
Commentary: How to have your own Bobby Bonilla Day
Some have described Bonilla’s payout as one of the great examples of compound interest, because the baseball player opted to defer a $5.9 million payment in 2000 in favor of spreading payments out over 24 years, starting in 2011, with an 8% annual interest rate. Compounding is when you earn interest on your earned interest, which can have a powerful impact over time.
The net payment for Bonilla (and his agent) will be about $30 million when the baseball player turns 72. That amounts to a heck of a retirement plan if you are fortunate (or smart) enough to score it.
To be sure, we have written about this time and time again, but it is worth reiterating, as compounding is a key concept for investors, including those investing in equities or even in such stock benchmarks as the Dow Jones Industrial Average
the S&P 500 index
and the Nasdaq Composite
even with stocks getting crushed in recent months as inflation and rising interest rates buffet markets.
Compounding holds true regardless of whether you are a Mets fan or loved or hated Bonilla.
This article was originally published in July 2021, and has been updated for Bobby Bonilla Day.