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The Mets have to pay a player who retired in 2001 $1.2M today -- here's why it's actually a smart deal

Hey Mets Fans: Happy Bobby Bonilla Day!

Bobby Bonilla is 52 years old and hasn't played Major League Baseball since 2001. But the Mets will pay Bonilla $1.2 million today in the latest installment of what many consider one of the worst deals in sports history.

Following the 1999 season, the Mets wanted to buy out the final year of Bonilla's contract. But instead of paying him the $5.9 million he was owed, the two sides agreed to a deferred compensation deal with the Mets paying Bonilla 25 annual payments of $1.2 million starting on July 1, 2011.

On the surface the deal looks laughable for the Mets as the payments will total $29.8 million. However, it is not nearly that simple and the deal was actually a good one for the Mets.

See photos from Bobby Bonilla's career:

16 PHOTOS
Bobby Bonilla's career
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The Mets have to pay a player who retired in 2001 $1.2M today -- here's why it's actually a smart deal
1988: Shortstop Bobby Bonilla of the Pittsburgh Pirates in action at the plate. Mandatory Credit: Jonathan Daniel /Allsport
PITTSBURGH - 1990: Bobby Bonilla #25 of the Pittsburgh Pirates looks on as he waits for his at bat during a 1990 MLB season game at Three Rivers Stadium in Pittsburgh, Pennsylvania. (Photo by Rick Stewart/Getty Images)
1990: Infielder Bobby Bonilla of the Pittsburgh Pirates stands on base during a game. Mandatory Credit: Otto Greule /Allsport
25 Jul 1993: Infielder Bobby Bonilla of the New York Mets in action during a game against the Los Angeles Dodgers at Dodger Stadium in Los Angeles, California. Mandatory Credit: Stephen Dunn /Allsport
21 Jul 1993: Infielder Bobby Bonilla of the New York Mets in action during a game against the San Diego Padres at Shea Stadium in Flushing, New York. Mandatory Credit: Al Bello /Allsport
NEW YORK, NY - MAY 11: New York Mets Bobby Bonilla argues a called third strike with umpire Gary Darling in the first inning of the 10 May 1993 game against the Florida Marlins. Bonilla is mired in a slump as the Mets struggle, having lost 11 of their last 13 games. (Photo credit should read MARK D. PHILLIPS/AFP/Getty Images)
2 Jun 1996: Outfielder Bobby Bonilla of the Baltimore Orioles heads back to the dugout after an at-bat in the Orioles 14-1 victory over the California Angels at Anaheim Stadium in Anaheim, California. Mandatory Credit: Jed Jacobsohn/Allsport
6 Jul 1996: Outfielder Bobby Bonilla of the Baltimore Orioles (right) restrains his manager Davey Johnson during a confrontation with the umpire in a game against the the Boston Red Sox at Oriole Park at Camden Yards in Baltimore, Maryland. The Orioles won the game 4-3. Mandatory Credit: Doug Pensinger /Allsport
25 Feb 1997: Outfielder Bobby Bonilla of the Florida Marlins looks on during spring training in Melbourne, Florida. Mandatory Credit: Andy Lyons /Allsport
MIAMI, : Florida Marlins third baseman Bobby Bonilla throws from his knees to throw out San Francisco Giants player Darryl Hamilton 30 September during their National League Division Series game at Pro Player Stadium in Miami FL. AFP PHOTO/RHONA WISE (Photo credit should read RHONA WISE/AFP/Getty Images)
MIAMI, : Bobby Bonilla of the Florida Marlins lies on the infield grass after throwing out Marquis Gissom of the Cleveland Indians at first base in the seventh inning 25 October of game six of the World Series against the Florida Marlins at Pro Player Stadium in Miami, FL. AFP PHOTO/Timothy A. CLARY (Photo credit should read TIMOTHY A. CLARY/AFP/Getty Images)
16 May 1998: Bobby Bonilla #25 of the Los Angeles Dodgers looks on during a game against the Montreal Expos at the Doger Stadium in Los Angeles, California. The Dodgers defeated the Expos 9-4. Mandatory Credit: Tom Hauck /Allsport
20 May 1998: Bobby Bonilla #25 of the Los Angeles Dodgers in a game against the Chicago Cubs at Wrigley Field in Chicago, Illinois. The Cubs defeated the Dodgers 5-0. Mandatory Credit: Matthew Stockman /Allsport
19 Apr 1999: Bobby Bonilla #25 of the New York Mets looks on during the game against the Montreal Expos at the Shea Stadium in Flushing, New York. The Expos defeated the Mets 4-2.
4 Apr 2000: Outfielder Bobby Bonilla #23 of the Atlanta Braves watches his ball sail over the wall for a home run in the fourth inning against the Colorado Rockies at Turner Field in Atlanta, Georgia. Mandatory Credit: Jamie Squire/ALLSPORT
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If Bonilla had accepted the $5.9 million in 2000 and invested the entire amount at 8% interest, the original investment would have grown to $104.1 million by 2035* (blue line in chart below). If instead, Bonilla took his annual payment and invested it with an 8% annual return, he would have $95.2 million by 2035 (orange line in chart below).

In other words, Bonilla lost nearly $10 million in potential earnings by taking the payments instead of the lump sum.

But more importantly for the Mets, if they invested the $5.9 million at 8% interest in 2000, that money would have grown to more than $14 million before they had to make a single payment to Bonilla. That money would continue to draw interest even while they are making payments.

By 2035, the Mets would still have $8.9 million left over (red line in chart below).

Of course, this assumes that both sides would have invested the money wisely and considering the Mets' history, that is certainly questionable. But the deal itself was smart and if the money was invested wisely, the Mets would have actually profited from Bonilla's generosity and the contract wasn't so dumb after all.

Bobby Bonilla Contract

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