This Retired MLB All-Star's Surprising Financial Decision Earns Him Over $1,500,000 In Annual Passive Income

Most Americans BBQ and enjoy fireworks or fun with friends on the 4th of July, but former MLB all-star Bobby Bonilla might kick the celebrations off a few days earlier. Bonilla prepared for retirement by making outstanding financial moves, earning him over $1.5 million in annual passive income. Keep reading to discover why baseball fans refer to July 1 as Bobby Bonilla Day.

Bobby Bonilla was a high-quality third baseman and outfielder for several major league teams through the 1990s and early 2000s. After breaking through with the Chicago White Sox, Bonilla was traded to Pittsburgh, where he formed a potent outfield duo with Barry Bonds. However, Pittsburgh was a small-market team, which left it unable to compete with the big-money offers from larger-market clubs.   

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Bonilla left in free agency by signing a lucrative deal with the New York Mets. He remained a solid player for the next several years and won a world championship with the Florida Marlins. In 1999, an aging Bonilla signed a two-year contract to return to his hometown and play for the New York Mets. 

Bonilla's second stint with the Mets was, for all intents and purposes, a deep disappointment. By 1999, Bonilla was 36 and injuries allowed him to play only 42 out of 162 games. This led the Mets to buy out the remaining year of Bonilla's contract for $5.9 million. That's where the fun starts.

The Mets had overspent quite significantly and paying players like Bonilla to leave while still paying the active players on its 2000 roster was straining the club's finances to the limit. 

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Sensing an opportunity, Bonilla and his agent gave the Mets an option to defer the $5.9 million they owed him and pay it in installments with 8% annual interest. The Mets accepted the proposal and the rest is history. 

As a result, the New York Mets pay Bonilla an annual lump-sum installment payment of $1.19 million every July 1 from 2011 to 2035. When the notoriously tough New York sports media caught wind of the arrangement, they immediately re-christened July 1 as "Bobby Bonilla Day." By the time the Mets are finished making payments, the $5.9 million Bonilla deferred will be worth $29.8 million. 

Incidentally, Bonilla also deferred another year of his salary with the Baltimore Orioles and he earns an additional $500,000 per year from that franchise. Bobby Bonilla Day might be a running joke in the media, but Bonilla's decision to defer his compensation and earn interest was very astute. It also illustrated that the former slugger understood deferred gratification as the cornerstone of good investing. In this case, he invested in himself. 

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