Wisdom for Life

If you’re a baseball fan, or if you simply follow “ESPN” on major social media networks, you have probably heard of Bobby Bonilla. Why? Not because he was a great player. In fact, while he did have a good playing career (he was a 6 time All-Star), his career production was likely not enough for him to ever get inducted into the Hall of Fame.

No, instead of his play on the field, his unique contract buyout (at the time) in 2000 led to much more notoriety. You see, in 2000, the New York Mets owed him $5.9 million on his contract. They went to Bobby Bonilla and his agent, and offered them an alternative: they’ll pay him nearly $1.2 million annually from July 1, 2011 until 2035, including 8% interest on those payments. Bobby agreed to it, and he’s slated to get his 16th payment from the New York Mets in a few days.

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In the words of Paul Harvey, here’s the rest of the story…

Why on earth would the owners of the New York Mets (at the time, Fred Wilpon and his business partner Nelson Doubleday Jr.) want to pay someone $1.2 million for 25 years instead of the $5.9 million they owed him at the time?

Put simply: greed.

Fred Wilpon thought he had the smartest financial advisor on the planet. He received annual reports showing 15% returns (on a portfolio of $500 million) year after year after year. So, who cares if he had to pay Bonilla 8% interest per year down the road? That was nothing compared to the returns he was getting on his investments!

And then everything changed. Per the Washington Post:​

“Then, in 2008, Wilpon got a call. His investment guy, Bernard L. Madoff, had been arrested for running a $65 billion securities fraud and would later plead guilty to running the biggest Ponzi scheme in history. Wilpon’s $500 million? Gone. The Mets had to take an emergency $25 million loan from Major League Baseball just to stay afloat, and with the team slashing payroll and unable to compete in free agency, it made the playoffs twice in a dozen years.”

A truly remarkable story. On July 1, 2026, Bobby Bonilla will get his annual payment. And today, Fred Wilpon is 89 years old, having sold the Mets in 2020 to Steve Cohen.

What can we learn from this?

• The more attractive an investment opportunity appears, the more carefully it should be scrutinized.

Fred Wilpon wasn’t dumb. He had built a fortune through real estate before buying the New York Mets. But he let greed get the better of him, and he was blinded by the returns he saw in his investment portfolio. The problem of course was that the returns were entirely fabricated by Bernie Madoff, because there was not (and still isn’t) an investment on earth that produced the returns he was boasting about that came with no volatility.

• Intelligence doesn’t protect us from overconfidence. Humility does.

Overconfidence led Wilpon to make an incredibly short-sighted deal based on the false assumption that his outsized investment returns would continue indefinitely. Instead, he exchanged a liability of $5.9 million into a much larger liability of close to $30 million over a 25-year period. The mistake is obvious in hindsight, but it clearly wasn’t obvious enough to him in the moment.

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Thanks for reading,

Jack O'Connor, CFP®