by John Darer CLU ChFC MSSC CeFT RSP CLTC
If you really think about it, you too may find it quite odd that some promoting annuities, including structured settlement annuities, persist with the lack of awareness in using the joke that is Bobby Bonilla Day in their annuity marketing.
Does Bobby Bonilla Have An Annuity, or Something Else?
Was what Bobby Bonilla agreed to an annuity, or was it actually unfunded deferred compensation? Let's discuss...
What is an Annuity in New York?
"An annuity is a contract between a purchaser and an insurance company in which the purchaser agrees to make a lump sum payment or series of payments in return for regular disbursements, beginning either immediately (within 12 months) or at some future date". Source: New York Department of Financial Services
Is/Was the New York Mets an Insurance Company?
Is the New York Mets an insurance company? Hmm, we'll revisit that later in this post.
Bobby Bonilla Day | "In Good Fun" Picking The Scabs Of Victims of a Crime Every July 1st?
Marketers seemingly can't help themselves in making Bernie Madoff part of the Bobby Bonilla "annuity" story. in marketing materials and news articles on an annual basis. The repetiton of the story and the Madoff connection, is disprespectful to victims of the Madoff Ponzi scheme, . Among Madoff's victims were director Steven Spielberg, actors Kevin Bacon and Kyra Segwick, Nobel Peace Prize winner and Holocaust survivor the late Elie Wiesel, Hall of Fame pitcher Sandy Koufax, in addition to former Mets owners Fred Wilpon, Jeff Wilpon and Saul Katz who were major investors, not to mention others who were not celebrities.
"As a side note, the Mets had significant investments at the time with Bernie Madoff and believed they were poised to rake in large profits to offset some contract moves. We all know that did not work out very well (more on market volatility later)". -Boston area structured settlement brokerage firm Chronovo "How an Annuity Turned $6M into $30M!!!" June 30, 2022 (and still posted on its website June 20, 2023)
Too bad they didn't read this, or if they did read it, didn't give it much thought:
- "Some victims, including those who could barely afford to invest in the first place, lost their entire life savings and several later committed suicide as a result". Source: Daily Mail April 14, 2021
- For Madoff Victims, Scars Remain 10 Years Later : NPR
- "It was disbelief. It was distrust. I mean this man was highly recommended,” said Ilene Kent of Columbus, Georgia, who said her elderly parents lost three-quarters of their net worth in the $65 billion fraud". CNBC December 10, 2018
- For Bernie Madoff victims, 'betrayal still hurts' years later | CUOMO | Watch (msn.com) January 11, 2023
Must people keep picking at these people's scabs as a reason to hock annuities, to party, or in one case, offer mobile phone service? Was this "Eephus Pitch" about something that wasn't even an annuity, as defined by New York's insurance regulator? Would it be enough without the embellishment of a financial term and the tie in by sales people and reporters to a dead crook? Perhaps not. Please read on.
Fact or Fiction? Bobby Bonilla Day| Was It Really an Annuity, or Just Unfunded Deferred Compensation?
This 2020 article by NBC Sports explains deferred compensation. Reminder: Bobby Bonilla's payments from the Mets aren't mockworthy - MLB | NBC Sports
Had the Mets actually purchased an annuity to fund their obligation to Bobby Bonnilla from the outset, their cost would have fixed at effective discount rate in the annuity purchase cost at the time the deal closed. But they would have had to put up the cash to buy the annuity which they were using for other things. They would have locked-in the prevailing rate at the time of the contracted agreement and instead of getting squeezed as interest rates dropped, the present value of the payments would have done the opposite.
Interest rates/ Discount rates rise means lower present value. Conversely interest rates/ discount rates drop means higher present value.
So... if the New York Mets were/are not an insurance company as that is defined under New York law and had the New York Mets owners had actually funded their obligation to Bobby Bonilla by buying an annuity, they would not have found themselves in the financial predicament they found themselves in. And, if it wasn't an annuity and all the only logical conclusion putting together these clues, then it undermines the entire sales pitch of those that make a meal out of "Bobby Bonilla Day"
Bobby Bonilla Deal Referred to as Deferred Payment Agreement NOT an Annuity
Deferred-money deals have been going on for a long time, but the Mets did more of them than most, according to a 2016 report by ESPN. The first deferred-money deal we know about is Darryl Strawberry's 1985 contract, in which the Mets deferred 40 percent of his 1990 $1.8 million team option ($700,000) at a 5.1 percent interest rate. The deal, which pays out $1.64 million from 2004 to 2033, was obtained through a life insurance company.
Bonilla's agent, Dennis Gilbert, was an insurance agent at the same time he developed into a superagent (Gilbert's clients included Bonilla,Barry Bonds, Jose Canseco and Danny Tartabull), so he was more uniquely prepared to understand annuity-type payouts than other agents. Source: ESPN " Why the Mets Pay Bobby Bonilla" June 30, 2016
And the definitive from Bloomberg, citing Dennis Gilbert, Bobby Bonilla's frickin agent...
"Nothing about this Bonilla contract seems so bad so far, right? No talent squandered, no flotsam acquired in return. Just a rich family’s pocket change. Who cares? It’s not your money. Most accounts of the Bonilla deal describe it as a bold innovation gone awry, but it wasn’t in either respect. It was just an annuity. (Technically, Gilbert clarified for me, it was “nonqualified deferred compensation.” Annuities pay out for life.) See Bobby Bonilla Contract Was Good for Baseball’s New York Mets - Bloomberg by Devin Gordon March 16, 2021
Time to Switch Up The Narrative and Pinch Hit For Bobby Bonilla as an "Annuity" Example
Bobby Bonilla made a good deal. But enough already. As I've previously proved in prior writing, Bonilla's stats and his "annuity" was well eclipsed by more than capable former baseball players.
In 2022, I highlighted how a Boston area company opted to promote Bobby Bonilla Day 2022. despite local legend Manny Ramirez having a far more impressive career, better stats and a better "annuity", or deferred payment agreement, I also cite Ken Griffey, Jr. and others who are better examples. See Chronovo Could be Promoting Annuities Using Red Sox Legend Instead of Bobby Bonilla, NY Mets Madoff Misery - Structured Settlements 4Real® Blog: Structured Settlements | Settlement Planning News and Commentary (typepad.com August 4, 2022
What about Babe Ruth (1895-1948) who played for the Boston Braves and the New York Yankees?
Babe Ruth DID have annuities and actually bought annuities. For example, see 1923 Babe Ruth Annuity from Equitable Life Assurance Society
The image from the auction house includes authentication "The policy (12 x 17 inches),which is not signed by Ruth, displays one horizontal and two vertical folds (as issued), as well as a few small edge tears and tiny stains. In Very Good to Excellent condition overall. Accompanied by a second-generation photo (10 x 8 inches; of Babe Ruth (late in life) shaking hands with an unidentified insurance executive and vintage newspaper clippings documenting his annuities with the Equitable Life Insurance Society"
" I may take risks in life, but I will never risk my money, I use annuities and I never have to worry about my money"-Babe Ruth
The inscription on Babe Ruth's grave at Gates of Heaven cemetery in Valhalla New York reads
"May the divine spirit that animated Babe Ruth to win the crucial game of life inspire the youth of America!"- Cardinal Spellman Source: Find-a-Grave.com
What About NBA legend Shaquille O'Neal on Annuities? Shaq actually bought annuities
Shaq: “He was very successful and he had saved a lot of money, so I asked him how he and his family did so well. He told me, “We have annuities.” I asked, “What the hell is that?” He explained to me, “It’s when you pay a life insurance company a single premium, which they will pay back years later in the form of a fixed sum.” That sounded like something I needed. When I started making all the big bucks and I had more money than I could spend, I put big hunks of it into annuities. I bought them for myself, my parents, for my brother, and for my two sisters. What it meant was when I turned forty years old, which back then seemed like light-years into the future, I would receive a nice monthly sum for the rest of my life that would keep me in excellent financial shape. Thanks, Lester.” (Lester was Shaq's accountant) Read the full story here Having blown $1,000,000 in 1 day, Shaquille O'Neal Sought Accountant's Help to Prevent Going 'Broke' in the Future - The SportsRush April 19, 2023
Other NBA Players and Annuities
Football Players and Annuities
What About Steve Young, Former USFL Quarterback "The Happiest Annuity Story Ever"?
A Witty Story About The Rolling Stones and the Alliance for Lifetime Income
Writers and Annuities
"Buy an annuity cheap, and make your life interesting to yourself and everybody else that watches the speculation".
Time to sunset the Bobby Bonilla Day false narrative. It may be a story for deferred compensation, but when Dennis Gilbert Bonilla's agent says it was a deferred payment agreement, it takes the wind right out of the sails from those pushing the Bobby Bonilla annuity false narrative. Think about it!