The New York Times is reporting that the Mets are looking to move debt away from the team to SNY to get more favorable debt terms. Plus, they may rearrange the debt and take a dividend for themselves along the way.
I wish that Fred Wilpon and Saul Katz were more interested in improving the Mets roster with their available credit. You might have noticed the 2012 74-win, fourth place Mets had the biggest payroll decrease in MLB history this year with a $50 million reduction from 2011.
It continues to be a sad state of affairs in Queens.
Even CNNMoney is getting in on the Mets-Madoff story now. They correctly point out that the Mets’ financial situation could get more desperate quickly as their first player payroll is due on April 15 and debt payments come due not long after that.
There isn’t much in the video that we didn’t already know. But it’s interesting to see the Wilpon’s faces and tone of voice as they made a statement last month about the situation.
We also got a glimpse into what the Mets-owned SNY response would be last night during the opening game telecast. Clearly, Gary Cohen and Keith Hernandez were reading prepared statements about the Madoff lawsuit. Their prepared statements gave no indication of their true feelings, thoughts, or concerns about the situation. As employees of the Mets-owned TV station, I would expect nothing less if they want to keep their jobs.
Although Fred and Jeff Wilpon and Saul Katz are wealthy, they don’t know very much about investing their money or how it’s handled. At least that’s their story in a legal filing attempting to dismiss the Madoff trustee lawsuit against them for more than $1 billion.
The defendants have consistently stated that the trustee’s lawsuit is a work of fiction. But reading through the legal filing from the Mets owners tonight, I’d have to say that their side of the story doesn’t come across well.
I find it hard to believe that the Wilpons and Katz aren’t sophisticated investors and that’s the argument that they’re making. Anyone that controls billions of dollars makes it their business to be a sophisticated investor. Casting themselves as bumbling fools that happened to make more money than most people see in their lives is ridiculous.
The Mets owners need to get serious about settling this case. This stunt of a dismissal motion is nothing more than a PR tactic being used to try to fight the lawsuit through the media. If they don’t get serious about settling the case and solidifying their ownership position with the Mets, it’s going to continue to hurt the team in multiple ways. Notably, the players will have to continue to answer questions day after day about the team’s finances instead of the game on the field.
This “uncertainty” is going to continue as long as the owners continue to make statements like the following from Saul Katz:
“I don’t do well in the markets, the stock market,” Katz said. “I’m not good at it, it’s not my business. I don’t have an active account anywhere.”
Fred Wilpon was asked in a deposition if he knew how Madoff was able to make money investing:
“I’m not an investment person…so I wouldn’t have any kind of expertise.”
If this is the strategy that the Wilpons and Katz plan to employ, they’re in bigger trouble with this lawsuit than I thought they were. Playing dumb is never a good defense and for people that built an empire in New York it’s a really bad idea.
Sterling Equities is reportedly a victim of fraud, allegedly at the hands of Bernard Madoff. Sterling was founded and is managed by New York Mets owners Fred Wilpon and Saul Katz.
The amount of money lost is unknown but has been reported to be in the $300 million range. The effect on the operation of the Mets is debatable but the Mets issued a statement to the press yesterday:
This news does not affect the day-to-day operations and long-term plans of the Mets organization and the Citi Field project.
You can read a full report on the Ponzi scheme and it’s impact on the Mets from Darren Rovell at CNBC.
My initial thought is that the Mets won’t be impacted because $300 million isn’t a huge sum compared to the annual revenue of the Mets. Plus Sterling Equities is a separate entity from the Mets. If things got really bad, Wilpon and Katz could always sell off pieces of the Mets to minority owners to raise cash. We’ll have to keep an eye on that going forward.