The Beauty of the Deferred Contract

Osamu Honda, Associated Press, USAToday

By: Dominic Choroski

July 1st was the unofficial holiday that is Bobby Bonilla Day. That day refers to the annual $1.19 million the Mets pay Bonilla. Sidenote: The Mets will continue to pay him this amount every July 1st until the year 2035, even though he has not played for the Mets since 1999. While this is the most popular deferred contract it is not the only one, nor is it the most expensive. Some other notable contracts are Kevin Garnett, who has been receiving $5 million a year from the Celtics since 2016 and will end in the 2021-2022 season, and Ichiro Suzuki who retired in 2019 will receive portions of his remaining $25 million from the Seattle Mariners up to the year 2032. So what is so great about deferred contracts?

First, we must look at how they work. Deferred contracts occur for a couple of different reasons. Buy-outs, a player retiring while they still have guaranteed money left on their deal, but the most common reason is due to a restructuring of a player’s contract. The team and player negotiate and basically move a portion of the money the player is owed for the current season, or the next couple of seasons and spread that money out over a longer period of time. This can set up players to receive money from the team well after they have retired or moved on from the team.

It is important to note that not every sport allows for these types of delayed payouts. Both the NHL and NFL have their salary caps set up in a way that doesn’t allow deferred contracts. These types of deals are most common in the MLB where there is no salary cap. However, with there being such an emphasis on player safety deferred contracts are a tool that should be implemented in every major sports league.

This leads me to the beauty of deferred contracts. They are built-in safety nets. Here are some facts, approximately 60% of NBA players and 78% of NFL players deal with some sort of financial struggles with their first 2-5 years out of the league. Receiving large lump sums of money can be tempting but it also makes it easy to blow said money. We like to believe athletes are different from us. The truth is many have the same struggles we do, especially when it comes to managing finances.

The deferred contract helps ensure that athletes have a steady, reliable income well after their playing days are over. Lengthening the life of the contract, even if it means taking less money up front, should be the goal of every athlete and agent. Protect As for the team, while it means you have a player on your books for longer, it is at a smaller rate and gives the team more flexibility cap-wise to build the roster they need to win. Seems like a win-win for everyone involved.

The most recent mega-deal to be announced was the Patrick Mahomes 10-year extension that will pay Mahomes up to $503 million. While not exactly the same as a deferred contract the length of this contract is very unusual for the NFL. Could it be a step towards getting the deferred option in the NFL? Possibly. But what we do know is that around this time next year Bobby Bonilla will be looking at a fresh $1.19 million in his bank account.

Dominic Choroski
About Dominic Choroski 8 Articles
Dominic B. Choroski was born May 20, 1997, outside of Chicago, Illinois. He is a recent graduate of Georgia State University, with a major in journalism and aspires to one day host his own sports talk show. The GSU grad was Student Ambassador for ESPN's Keri Potts, and has covered events such as the SEC Championship Game and the College Football Awards. Most importantly he is the eldest brother to his two brothers and sister.

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