SD Padres give Fernando Tatis longest contract in MLB history

[samhexum]

The Padres have agreed to a historic 14-year deal with Fernando Tatis Jr., according to Kevin Acee of the San Diego Union-Tribune (via Twitter). It is worth a guaranteed $340MM, Robert Murray of Fansided adds on Twitter.

[samhexum]

I guess now he'll be known for more than being the answer to the trivia question Whose father once hit 2 grand slams in one inning off the same pitcher (Chan Ho Park)?

[Smurof]

That's pretty impressive for a guy who was injured half his rookie season, and won the prestigious "bat flip of the year" honors in 2020.

 

For those non sports-minded folk, a bat flip is a show-off move some batters do after hitting a baseball very hard, usually over a fence.

[samhexum]

That's pretty impressive for a guy who was injured half his rookie season, and won the prestigious "bat flip of the year" honors in 2020

And was acquired from the White Sox for James Shields... and now, a moment of silence so all forum members from Chicago can weep.

[+ purplekow]

The Mets had a longer contract with Bobby Bonilla. Well at least the were obligated to pay him for more than 14 years. He signed a 29 million dollar contract with the Mets in 1991. That contract was the largest contract up until that time. He is now receiving deferred payments of 1.2 million dollars a year until 2035. He is one of the highest paid Mets and he has not played for them in decades.

This contact is often used to chide the Mets franchise that has been linked to ineptitude since their inception in 1962. There have been the occasional miracles though and that is why Mets fans such as I are among the more faithful fans around.

[samhexum]

The Mets had a longer contract with Bobby Bonilla. Well at least the were obligated to pay him for more than 14 years. He signed a 29 million dollar contract with the Mets in 1991. That contract was the largest contract up until that time. He is now receiving deferred payments of 1.2 million dollars a year until 2035. He is one of the highest paid Mets and he has not played for them in decades.

This contact is often used to chide the Mets franchise that has been linked to ineptitude since their inception in 1962. There have been the occasional miracles though and that is why Mets fans such as I are among the more faithful fans around.

A true Mets fan would never have raised this dreaded subject or at least would have used the smallest possible font to admit it.

[samhexum]

To be accurate: Bonilla's situation is not because of the contract he signed to play for the Mets, it's because of the buy-out arrangement they made to get out of that contract.

 

In 2000, the Mets agreed to buy out Bonilla's remaining $5.9 million contract.

 

Instead of paying that cash up-front, the team agreed to give Bonilla $1.19 million per year for 25 years. The payments were deferred, starting in 2011. His annual pay includes a guaranteed 8% interest rate.

 

Bonilla's deal is extremely lucrative for two reasons. For one, the Mets are paying Bonilla nearly $29.8 million, which is the sum of all his annual payments. That's more than double the $12.7 million value Bonilla's contract would have had at the time he started getting paid in 2011. Further, an 8% guaranteed interest rate is especially generous. It's the equivalent of an 8% return on an investment every year, and without the volatility or risk present in the stock market.

 

Since the Federal Reserve slashed interest rates to near zero during the Great Recession, savers can't get a comparable return on traditionally safe investments like cash or bonds.

 

But Bonilla's deal is better yet, since his heirs would also continue getting paid each year if he were to pass away.

 

For context, if the Mets paid a lower interest rate — 3%, for example — the team would have paid Bonilla about $455,000 each year (instead of $1.2 million), for a total value of about $11.4 million (instead of $29.8 million).

 

Of course, the Mets didn't necessarily completely lose out on the deal. For one, they were able to free up cash by deferring pay, according to some observers.

 

But the team did fall victim to a somewhat risky form of investment arbitrage involving Bernie Madoff.

 

Mets owners believed they would easily be able to finance an 8% interest rate, since they were supposedly getting a higher return on an investment they'd made with Madoff.