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IRS to auction off Darryl Strawberry's deferred Mets contract in Jan 2015

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X

XiaNaphryz

LATIN, MATRIPEDICABUS, DO YOU SPEAK IT
http://espn.go.com/new-york/mlb/sto...ion-new-york-mets-deal-owed-darryl-strawberry

Darryl Strawberry did the work, but now you can collect his money from the New York Mets.

Next month, the Internal Revenue Service is auctioning off the remaining annuity from the deferred compensation Strawberry agreed to when he signed a six-year contract with the Mets almost 30 years ago, according to an online posting on the U.S. Department of Treasury website.

The total value of the contract, which covered his 1985 through 1990 seasons, was $7.1 million, but nearly 40 percent of his $1.8 million team option in 1990 ($700,000) was deferred and put into an annuity with a 5.1 percent annual interest rate.

On Jan. 20, the IRS will auction off the right to collect what will amount to roughly $1.28 million paid by Sterling Mets LP, parent company of the Mets, in 223 monthly installments, assuming a realistic sale close date of May 1. As this sale is required through the court system, the winning bid, which cannot be less than $550,000, has to be approved by a judge before the buyer starts collecting.

How a fan could even buy what was originally due to the Mets slugger is a complicated story.

Strawberry was forced to give a portion of the deferred money account to his wife, Charisse, as part of their divorce settlement in 2006, but the payments were never made. In 2010, his ex-wife filed for Chapter 7 bankruptcy protection and, as part of the proceedings, asked for what was owed. But in September of this year, a judge in the Northern District of Florida ruled that the annuity was the property of the IRS, not Charisse, because Darryl still had not settled his tax debt owed for 1989, 1990, 2003 and 2004.

From 1987 to 1990, Strawberry failed to pay $542,572 in taxes, according to court documents. As of November 2013, Strawberry owed at least $80,000 from his tax liability from missed payments in 2003 and 2004.

"Seizure and sale is the last thing we at the IRS want to do," said Michael Devine, spokesman for the IRS' division of Property Appraisal and Liquidation Specialists. "This happens when a person doesn't dispute that they owe the money but can't or won't liquidate the property."

Devine said, in this case, it has reached the point of a judge requiring the IRS to sell what was originally owed to Strawberry in his contract.

It was common practice for the Mets to defer money in contracts. The Mets famously bought out the final year of Bobby Bonilla's contract in January 2000 and deferred the $5.9 million deal into 25 payments of $1,193,248.20 that began in 2011 and ends in 2035. By deferring, Bonilla turned the $5.9 million into $29.8 million after negotiating an 8 percent interest rate on the deferral.
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G

ggnoobIGN

Banned
So Mets will be paying some no name scrub with no baseball ability? I guess that's not any different then what they're doing now.
 
S

Sho_Nuff82

Member
It was common practice for the Mets to defer money in contracts. The Mets famously bought out the final year of Bobby Bonilla's contract in January 2000 and deferred the $5.9 million deal into 25 payments of $1,193,248.20 that began in 2011 and ends in 2035. By deferring, Bonilla turned the $5.9 million into $29.8 million after negotiating an 8 percent interest rate on the deferral.
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I'm no financial expert, but isn't this really, really stupid on behalf of the Mets? How does the person who agrees to these deals have a job?
 
Link

Link

The Autumn Wind
So the Mets will have both Darryl Strawberry and Bobby Bonilla on the payroll? That would be great if this were 1992.
 
A

ahoyhoy

Unconfirmed Member
Sho_Nuff82 said:
I'm no financial expert, but isn't this really, really stupid on behalf of the Mets? How does the person who agrees to these deals have a job?
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Short-sighted decisions seem to be the hallmark of many major league sports teams, at least according to their fans
 
S

StMeph

Member
Even for the minimum bid, $550,000 to buy $1.3 million paid over 18.5 years is a pretty miserable annual return of 4.76%.
 
M

Mr.Mike

Member
It will almost certainly be sold off for more than 550k. I'd imagine that it will end up selling for a price that would cause the annual return over 18 years to be just a little bit above the average rate of return of US corporate bonds. You could probably estimate the final sale price to within a few thousand dollars pretty easily, but I can't be bothered to do that math.

Unless of course, some fan ends up paying more than it's worth.
 
D

Deleted member 47027

Unconfirmed Member
Strawberry is guilty of not paying his taxes.
As a matter of fact, ALL of you are guilty!
98nJtm7.jpg
 
terrisus

terrisus

Member
Mr.Mike said:
It will almost certainly be sold of for more than 550k. I'd imagine that it will end up selling for a price that would cause the annual return over 18 years to be just a little bit above the average rate of return of US corporate bonds. You could probably estimate the final sale price to withing a few thousand dollars pretty easily, but I can't be bothered to do that math.

Unless of course, some fan ends up paying more than it's worth.
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Bobby Bonilla likes this.
 
D

DoktorEvil

Banned
StMeph said:
Even for the minimum bid, $550,000 to buy $1.3 million paid over 18.5 years is a pretty miserable annual return of 4.76%.
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The DJIA Yearly return was around 9% the last time I was in finance class.

You'd receive half of the Dow return with minimal risk.

That sounds very nice on paper.

Too bad someone is going to eventually overbid the actual payout cost.
 
L

Lubricus

Member
DoktorEvil said:
The DJIA Yearly return was around 9% the last time I was in finance class.

You'd receive half of the Dow return with minimal risk.

That sounds very nice on paper.

Too bad someone is going to eventually overbid the actual payout cost.
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How much tax on the profit? Anyway to shelter it?
 
D

DoktorEvil

Banned
Lubricus said:
How much tax on the profit? Anyway to shelter it?
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I'd have to see how the contract payout was negotiated to figure that out, but I'm no financial adviser. It could be a dividend or an interest payment.

I also don't believe the Mets will disappear in 18.5 years, which is why I'd see it as a somewhat sound investment.
 
Q

Qblivion

Member
I'm confused. They're auctioning off a contract that pays out money, which is essentially auctioning off money, right?
 
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