Wednesday, July 3, 2013

Long Goodbye: Contracts That Keep on Giving feat. Rick DiPietro & Bobby Bonilla

Rick DiPietro in the A.H.L. in March.
He signed a 15-year, $67.5 million deal with the Islanders in 2006.

Long Goodbye: Contracts That Keep on Giving
by Jeff Klein & Mary Pilon

Rick DiPietro is a 31-year-old goalie who has had surgery on both knees, a hip, his groin and his face, and has sustained more than his share of concussions. He was waived Tuesday by the Islanders.

As a parting gift, the team will pay him $1.5 million a year for the next 16 years.

A day earlier, the former slugger Bobby Bonilla received his annual $1.2 million payment from the Mets. They have to pay him every year until his contract expires in 2035. He is 50 years old, and his career ended in 2001.

DiPietro’s paychecks will keep coming until 2029, when he’s 47. By then, the Islanders will be deep into their second decade in Brooklyn — they are scheduled to move there from Nassau County as soon as 2014.

It was purely happenstance, but two contracts that are widely regarded as among the worst in sports history — or the best, from the perspective of the athletes — intersected on the calendar this week. Only in New York.

It’s the golden rocking chair, a peculiar sports-world deal that keeps an athlete cashing his team’s checks decades past his playing days, making a golden parachute seem unsatisfying.

Depending on the idiosyncrasies of a league’s salary structure, teams may be motivated to clear a big contract off their books to make room for another player — or many other players.

Bobby Bonilla in 1999.
The Mets will be paying him $1.2 million
a year until 2035, even though his career ended in 2001.
Bonilla has what might be the most famous of these contracts. His lasts so long into the future that the Mets official who sends his final check two decades from now may well have been in diapers when Bonilla last wore a Mets uniform.

Who were the shrewd agents who pulled off these spectacular arrangements for the athletes? Working on Bonilla’s behalf was an insurance maven who represented some of baseball’s biggest stars. DiPietro represented himself at the negotiating table, with his father looking over his shoulder.

“I’m in real estate management,” his father, Rick DiPietro Sr., said in a telephone interview Tuesday. “I work with contracts and stuff, but not that big a contract.”

Charles Wang, the Islanders’ owner, agreed to the original 15-year, $67.5 million contract, which was widely criticized. After one standout year in college, the Islanders had selected DiPietro first over all in the 2000 draft. But his early years with the team were middling.

“What do you tell a kid who says, ‘I want to be an Islander for life?’ ” Wang said Friday in an interview when asked about the 15-year deal.

“If things had worked out, if Rick didn’t get hurt, it would have been the smartest thing.”

DiPietro is down & out due to hernia surgery

DiPietro’s long payout is the result of the N.H.L.’s new collective-bargaining agreement, which arose out of the four-month-long owners’ lockout last season. Under the agreement’s terms, a team can rid itself of up to two contracts by paying two-thirds of their value, through what are known as amnesty buyouts.

DiPietro still has $36 million left on his contract. But by buying out his contract, the Islanders owe him only $24 million, and can extend the annual payments until 2029.

Assuming he clears waivers at noon Wednesday — no team is expected to claim him, given his injury history and his expensive contract — the Islanders can make the buyout.

The benefit to DiPietro is that he becomes an unrestricted free agent and can sign with another team. No matter what contract he ends up signing elsewhere, he will continue to receive his annual payments from the Islanders.

Bonilla, meanwhile, now works for the players’ union. He has financial security, thanks to the crafty work of one of his agents, Dennis Gilbert.

In 1999 the Mets owed Bonilla $5.9 million and were eager to part with him, seeking to end a tumultuous relationship and clear more salary space for the 2000 roster. Gilbert helped forged a deal for his client that was structured in a manner similar to the financial products that Gilbert was familiar with in his work in the life insurance business: an annuity that paid Bonilla 25 yearly payments of $1.2 million, from 2011 through 2035.

Swimming in money
In total, Bonilla will receive $29.8 million.

“We did get the accountants involved and worked out the math,” Gilbert said in a phone interview Tuesday from Beverly Hills, Calif., where he now works at a specialty advisory firm focused on insurance. “And we were obliged to do it.”

While the buyout process can often be a tortured experience, Gilbert said the only disagreement he had with the Mets was over the interest rate. (He declined to comment on the rate.)

Bonilla needed no convincing that the deal was worthwhile, Gilbert said.

Nor, at the time, did the Mets, who have long said the deal benefited both sides.

Bonilla was something of an outcast and a distraction. His play did not measure up to great expectations from the earlier years of his career, which included a 1997 World Series title when Bonilla played for the Florida Marlins.

“It was their idea,” Gilbert said of the Mets. “They needed relief to sign some other free agents at the time. They came to us and asked if we would consider it. Bobby, being somewhat frugal, he didn’t need as much money as he was making to live on. He actually liked the idea and the interest rate ended up being appropriate.”

Gilbert said that he negotiated a similar deal with the Mets and Bret Saberhagen involving deferred payments.

In their 2000 season, the Mets traded for Mike Hampton and Derek Bell and assembled a team that led to their only World Series appearance in the past 27 years.

The joy did not last for long, and in recent years the organization has been embroiled in other financial difficulties. Bonilla’s deal, Gilbert said, was left unscathed in the turmoil that resulted from losses incurred to the team’s owners when Bernard L. Madoff’s Ponzi scheme collapsed in 2008.

And as for the actual delivery method of Bonilla’s annual payment?

“I think it either comes as a check or they may have a wiring thing,” Gilbert said.

Now Wang will similarly have to send annual payments to a player not on his team.

“This won’t change how I behave,” Wang said. “At end of day you have to look at yourself in the mirror and feel like you did the right thing.” – The New York Times

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