The New York Times is reporting that the Mets borrowed another $40 million on top of the existing debt against the team. The Mets already borrowed $25 million from Major League Baseball last year and haven’t been able to repay MLB despite the reported due date being last June. Bank of America issued this latest loan and it was approved by MLB and the lenders that already hold a majority of the debt against the Mets.
The Mets spokesman did acknowledge the loan and described it as a bridge loan. Presumably, the bridge references the Mets attempt to sell small pieces of the team to investors after the deal with David Einhorn fell apart this summer. The Mets appear to be struggling to maintain liquidity. There were reports in the past month that Fred Wilpon and Saul Katz had to put $38 million of their own into the team recently to keep it afloat.
This latest loan and appearance of financial desperation will lead to further calls from Mets fans for the Wilpons to sell the team. Recent poor performances and reducing the payroll instead of investing in the on-field product is leading fans to, rightfully, lose faith in the financial ability of the Wilpons to field a winning team at any point in the near future.
According to the NY Post, the Mets owners had a conference call with the group of banks that have approximately $500 million outstanding in loans to the team. Fred Wilpon and banker Steve Greenberg expressed confidence that they would be able to sell several “smaller” shares of the team by the end of 2011 after David Einhorn pulled out of deal to invest $200 million last week. [The picture at the right is Wilpon and Einhorn in happier days].
A couple of months ago, JP Morgan sent a tersely worded letter to Wilpon stating that some covenants of the loan had been breached by Wilpon. The letter didn’t say Wilpon was in default. But you know where this was headed.
During the call, Greenberg also told the lenders that their potential exposure to the Madoff lawsuit had been reduced recently. And it came out that Wilpon and Saul Katz had kicked in some amount under $50 million of their own money to keep the team running.
It sounds like the tone of the call was that everything was great as far as the Mets owners are concerned. They’re still going to take on minority investors by the end of the year, the Madoff lawsuit isn’t as bad as it could have been, and the lenders should be assured that there aren’t any immediate financial problems. We’ll see if that turns out to be the case.
In this week’s Mets Weekly Report video, Kerel Cooper of On The Black and I talk about some of the latest news from the Mets this week. Primarily, Johan Santana pitched 2 inning for the St. Lucie Mets and he may even make a start in the Majors this season. We talk about whether we want to see Santana pitching with the Mets this season or if the Mets should hold him back with an eye toward 2012.
We also talk about the deal that fell through last week for David Einhorn to buy a minority stake in the Mets. It seemed like a done deal in June when the Mets introduced Einhorn to the media as the next part-owner of the team. But delays in consummating the deal ensued and it ended up falling apart last week. We talk about why the deal fell apart and what that means to the Mets financially going forward.
It looks like the Wilpons have won round 1 in a legal battle against Irving Picard.
According to Mark DeCambre of the New York Post, Picard dropped his damages claims against the Wilpons and Sterling Equities. DeCambre says that profits that were made by the Wilpons are being sought in bankruptcy court. DeCambre also says that Picard dropped the claim against the Wilpons because he was told that it won’t hold up in court without any evidence.
Adam Rubin of ESPN New York said on his twitter page that the Mets could now be liable for $300 million dollars instead of the original $1 billion dollar estimate back when this whole fiasco started.
This is good news for the Mets and the Wilpons. I know I am not an economic anaylst or expert, but this actually is good simply because the Wilpons will probably pay a lot less then what they would have paid (if the damage claim held up), and now the Mets will probably be less affected by this for the future to come.
The only other question in this whole saga is whether or not the Wilpons will be found guilty of making profits off of Madoff. If the Mets get away with that claim, the Mets will get their hands out of this mess, and (if a deal is in place) the new minority owner David Einhorn will be stuck as the minority owner. All in all, this is still good news. We’ll have to wait and see what happens in court.
ESPN is reporting that the real motivation for David Einhorn to invest in the Mets is coming to light. We were all wondering what Einhorn was really getting for his $200 million dollar investment. Apparently, he doesn’t get much, if any, say in the running of the Mets. That will still be up to the Wilpon whether we like it or not.
The report states that Einhorn is buying 33% of the Mets for his $200 million. In three years, Einhorn will have the option to increase his percentage of ownership to 60%. But the Wilpons can block that move by giving Einhorn his $200 million back while allowing him to maintain 33% ownership.
If the ESPN story is true, it sheds some light on Einhorn’s real motivation. He’s allowing the Wilpons to use his money for three years and if they can’t pay it back at that time, he can take over the team. It’s a nice move by Einhorn and a risky one for the Wilpons. That lawsuit by the Madoff trustee should be settled within the next three years and determine the future ownership of the Mets.
The Mets honed in on the hedge fund guys right from the start as a particular sector of people that have enough disposable cash to make an impact on the Mets organization. David Einhorn is making a $200 million investment in the Mets as a minority owner with, apparently, no say in running the team. He’s satisfied to leave the daily operations to “The Schmuck” and his offspring.
There are several takes on this story that have been delved into all over the Internet. But the angle that I’m most interested in is that Einhorn is another one of Bud Selig’s cronies that has been placed within the Mets organization.
It’s a well known fact that Fred “The Schmuck” Wilpon and Selig are close. But over the last year Selig has effectively placed Sandy Alderson as the team’s GM and now Einhorn as the minority owner. Einhorn was born in Jersey but moved to Milwaukee as a child and has been there ever since. He even grew up as a neighbor of Selig’s.
You can hear the full conference call that Einhorn had with reporters below. But it’ll probably leave you dissatisfied. He really doesn’t say much since the deal hasn’t been consummated. Maybe it’s better to have Selig running the Mets now? The Schmuck certainly hasn’t been winning championships in the last 25 years. So maybe it’s time that we give Selig a chance to turn the Mets into winners again.