Every year on July 1, the world celebrates a day with quiet reserve. In some circles it is whispered about in hushed breaths as if speaking about it out loud would upset the lady of the house and the dignity with which she keeps her home.
For others it is celebrated loudly. Drinks are poured and toasts are made. Bowed heads, moments of silence and a memory of a simpler time.
A time when making money was as easy for a baseball team as starting your own network, or investing in the latest tech IPO, or getting in good with your buddy Bernard who had his own hedge fund that was returning a modest 40% annually.
Bobby Bonilla Day.
The celebration of the greatest contract of all time. You might actually rate the passage of time as BBC and ABC. That would be “Before Bonilla’s Contract” and “After Bonilla’s Contract”. The contract itself is so famous it was sold at an auction this year for $180,000.
Imagine you are Bobby Bonilla. You know that baseball isn’t going to last forever and at some point the game is going to tell you that you have played your last. How do you stretch out the financial security over the long run?
Approach your employers with a deal. They need flexible money now and you need money for the rest of your life.
“Hey Fred? I know you owe me about $6,000,000. I have an idea. Don’t pay me now.”
“What?”
“Pay me in 10 years. But here’s the thing, I want you to pay me for 25 years after that too.”
Fred goes back to his buddy Bernard.
“Bernie, if I give you 6 million dollars now, how much will that be in ten years?”
“$173,500,000… more or less.”
“So I could afford to pay Bobby $1,193,248 a year starting in 10 years for 25 years?”
“Sure, what’s the worst that could happen? You find out I’m running a Ponzi scheme and I go to prison and you can barely afford to keep the team afloat at a time when the stadium is crumbling to the ground and you are losing your fan base to the cross town rivals? Never happen.”
Every year on July 1, Bobby Bonilla gets paid.
Think long term, my friends.