Big News! (update: Mets Minority Stake For Sale)

[Frayed Knot]

batmagadanleadoff wrote: According to this Crain's Business article, the Mets exposure is the $48M surplus over and above their principal investment.

Makes a whole lot more sense than 1 billion

[batmagadanleadoff]

But according to this ESPN article, no one knows what the Mets exposure is:

At a time when Fred Wilpon is being targeted by others who lost money in the Bernie Madoff deal, the New York Mets are seeking new investors. Without knowing exactly how much money the Wilpons have, or what they stand to lose, we can't know exactly when or how this will be resolved. But it's safe to say that the Madoff scandal could, in the end, be viewed as a turning point in Mets history -- a domino that could eventually lead to change in the team's ownership

http://espn.go.com/mlb/blog/_/name/olney_buster/id/6071048/madoff-scandal-mets-turning-point


From Bloomberg's:

Sterling Equities Inc., the owner of the Mets, Mets LP and Fred and Jeff Wilpon were sued by the trustee liquidating the Madoff business, Irving Picard, on Dec. 7 in U.S. Bankruptcy Court in Manhattan. Picard, in court papers, said that Mets LP had two accounts with Madoff that involved taking out $47.8 million more than the Wilpons invested. Picard has followed the line that net winners are subject to lawsuits to claw back any surplus over their original principal. Picard has sued hundreds of Madoff investors who withdrew more from their accounts than they originally invested. Profit Unknown The suit, which was filed under seal, names dozens of people and entities related to Sterling Equities Inc. and the Wilpon family. It�s unclear how much profit they may have taken from the Madoff fraud or what Picard claims they must pay back. The New York Times, citing two lawyers involved in the case, said Picard is seeking more than $300 million from the owners of the Mets. The lawyers were not identified.

http://www.bloomberg.com/news/2011-01-28/mets-owner-wilpon-family-may-sell-stake-in-team-after-lawsuit-over-madoff.html


Mike Lupica: "No one is sure"

It was back in December that the trustee for other Madoff victims, Irving Picard, went after the Wilpons and Katz for big money. No one is sure how big. You even hear that Picard wants to get a billion dollars off the Wilpon family because he says they withdrew more money from Madoff accounts than they put in, and even though the real number probably isn't close.

http://www.nydailynews.com/sports/baseball/mets/2011/01/29/2011-01-29_wilpons_face_amazin_mess.html

[Frayed Knot]

But according to this ESPN article, no one knows what the Mets exposure is: At a time when Fred Wilpon is being targeted by others who lost money in the Bernie Madoff deal, the New York Mets are seeking new investors. Without knowing exactly how much money the Wilpons have, or what they stand to lose, we can't know exactly when or how this will be resolved. But it's safe to say that the Madoff scandal could, in the end, be viewed as a turning point in Mets history -- a domino that could eventually lead to change in the team's ownership http://espn.go.com/mlb/blog/_/name/olney_buster/id/6071048/madoff-scandal-mets-turning-point

All that says it that WE - as in we here at ESPN writing this excuse for an article - have no idea what the level of exposure is therefore we have no problem making the bold prediction that this may, or may not, affect the future of the Wilpon ownership depending on how things turn out. I'm surprised that they didn't also throw in that IF the Steelers win the turnover battle, and IF they stay out of too many 3rd-and-longs, and IF don't commit numerous costly penalties, and IF they control the line of scrimmage then they stand a good chance of winning the big game next Sunday.

Obviously whoever gets into this thing as a minority owner is going to have a helluva lot more knowledge of the finances before jumping in.

[batmagadanleadoff]

Well, yeah. Obviously the Mets know what their exposure is, their worst case scenario, and probably, the odds of actually sustaining those risks. No one is implying that the Mets don't know.

BTW, I edited my last post to add some other articles in addition to ESPN's Insider piece.

[Ceetar]

batmagadanleadoff wrote: Well, yeah. Obviously the Mets know what their exposure is, their worst case scenario, and probably, the odds of actually sustaining those risks. No one is implying that the Mets don't know. BTW, I edited my last post to add some other articles in addition to ESPN's Insider piece.

What seems to be getting glossed over is that A. the Wilpons aren't the only party being sued (So they'd never actually be responsiblefor the full 1billion, even if that ridiculous number was the number awarded) and 2. They're working on settlements to avoid the actual court stuff. They've said they might not even taket on a minority guy. Maybe that depends on the settlement amount. if it's favorable,t hey're okay.

[batmagadanleadoff]

I would guess that the sealed complaint is seeking to clawback Sterling's principal investment in the Madoff fund, as well as the surplus (Sterling's so called "profit"). With interest and penalties, that figure would approach $1 billion. Whether or not Sterling would be liable for anything above the surplus will depend on whether or not Sterling was an innocent investor, or whether the trustee can prove otherwise.

[Frayed Knot]

batmagadanleadoff wrote: Well, yeah. Obviously the Mets know what their exposure is, their worst case scenario, and probably, the odds of actually sustaining those risks. No one is implying that the Mets don't know. BTW, I edited my last post to add some other articles in addition to ESPN's Insider piece.

My only point was that the ESPN piece was speculative to the point of being a useless waste of cyber-ink. It seems to exist only so as to say "see, we said so way back on day one" if this does turn out to cost the Wilpons control of the team, or "we said there was no way of knowing" if it doesn't ... and therefore we were right either way, a trait that network seems to have carried over from their specialty of endless and useless pre-analysis of football games.

[batmagadanleadoff]

Another way to arrive at or close to the $1Billion damages figure is to take the $300 million that the New York Times claims is the amount being sought by Picard, and triple it (treble damages). Of course, the trustee would have to establish wrongdoing on Sterling's part to obtain treble damages. Two factors that will probably work against Sterling here are a) that Wilpon and Madoff were friends; and that Katz and Wilpon will be deemed to be sophisticated investors.

[metirish]

Marti Silver from Georgi Vodka had a press conference today replete with Mets girls saying he wants in with the Wilpon's but only if he has a say in the day to day operations.

[batmagadanleadoff]

According to this theory of Sterling's exposure to the Picard lawsuit, reported in the New York Post, the $48 million surplus over and above the $523M principal investment in the Madoff fund, does not represent Sterling's total Madoff surplus, but instead, Sterling's surplus from investments made solely on behalf of the Mets --- and that Sterling's total surplus might be in the hundreds of millions.

Excerpt:

Picard has said the Mets made nearly $48 million in Madoff's scam. He said the Mets Limited Partnership originally invested about $523 million -- but eventually withdrew about $571 million from the accounts. Yet, the Wilpon and Katz families, who own 100 percent of the team, are seeking four times that amount in a sale, leading to speculation that the [Wilpon and Katz] families made hundreds of millions in other non-Mets accounts and could owe much more to Madoff victims.

[ashie62]

It seems Wilpon want to consider a roughly 250 million dollar investment in the team but the minority owner will have no voting rights or say in day to day matters.

That would be one hell of a "speculative" investment.

[Benjamin Grimm]

Benjamin Grimm on Friday wrote: I bet Ed Kranepool is looking in his sofa cushions for as much loose change as he can find.

So! I was right! The part that I didn't anticipate was that he'd be teaming up with... Martin Luther King!

Martin Luther King III has a dream: to buy the New York Mets. The son of the late civil-rights leader is uniting with heavy hitters, including Mets legend Ed Kranepool; entrepreneur Donn Clendenon Jr., son of the 1969 Met World Series MVP; TV executive Larry Meli; and a number of unnamed deep-pocketed investors, the New York Post reported Sunday. "It's fitting with the legacy of Jackie Robinson essentially transferring to the Mets. What better place to have African-American ownership than with the Mets?" Meli said, noting that Major League Baseball has no African-American owners. "The time and place are right for it. It just seems to be the right mix of people." According to Meli, King, 53, who runs the King Center in Atlanta, is scheduled to come to New York this week to set up a meeting with the Wilpons, who announced Friday they are looking to sell up to 25 percent of the team because of financial woes created by the Bernie Madoff mess. King declined to comment on the particulars, but Meli said he and his group are looking to purchase at least 50 percent of the club. That could be a roadblock, but Meli said he hopes the two sides can work together. "I think in order for it to make sense it would have to be at least a 50-50 arrangement," said Meli, a trusted friend of King. Kranepool, 66, who is in the credit-card processing business, said: "Hopefully, something can be worked out. I certainly think I can be an asset to that organization. It depends on what they are looking for and how we can structure a deal that's good for everybody." Clendenon added he's "excited" about the venture. "I was born a Met," he said. The Wilpons have done much to honor the legacy of Jackie Robinson, so you would think they would be willing to work with the son of another African-American icon. King is a big sports fan, noted Meli, 58. King threw out the ceremonial first pitch at the Civil Rights Game in Atlanta in 2008. "What professional athlete wouldn't want to play baseball for Martin Luther King III?" Meli said. The Mets are worth $858 million, Forbes estimated last year. The King group claims to have more than $1 billion in assets.

[ashie62]

From "Ya Gotta Believe" to "I have a dream."

[MFS62]

Ashie62 wrote: From "Ya Gotta Believe" to "I have a dream."

... to "I have a team"?

IIIRC, Donn Sr. was a good businessman in his own right. I think I read that after baseball, he became a VP at a large, famous corporation. (Bic?)

I wonder how many people will find the CPF when they google Ed?

Later

[Guest LeiterWagnerFasterStrongr]

Ashie62 wrote: It seems Wilpon want to consider a roughly 250 million dollar investment in the team but the minority owner will have no voting rights or say in day to day matters. That would be one hell of a "speculative" investment.

Not to mention a potential pool of legal liability. Sign me up!

[batmagadanleadoff]

BTW, did anybody else catch on that the reason that the Picard complaint against Sterling Equities is sealed is because Sterling --not the trustee-- asked the Court to seal it?

[Guest LeiterWagnerFasterStrongr]

Yup.

Really, I'm not sure what the point of the conference was, other than to get in front of the story among the general public. Nothing they said/didn't say about their solicitations made it sound at all enticing to actual investors.

[MFS62]

I remember when the Hunt Brothers were trying to corner the silver market about 30 years ago.
The price went up to over $50 an ounce, until the Fed stepped in.
Then, the price dropped like an anchor, to as little as $2 an ounce.
Many people bought when the price was rising.
If some smart people got out before the drop, were the people who bought high and had to sell low able to sue the ones who got out with a profit?
Hardly.
That's why it was an investment - they were hoping to make a profit. But there is always risk in an investment.
Unless the Wilpons can be proven to have been in on, or part of, the scheme, they should not be liable.
Think of what would happen to all the financial markets if this suit were to be allowed. Anyone who lost money on an investment would be able to sue anyone who made a profit. It would result in total chaos.

Later

[Frayed Knot]

The difference here is that money won or lost had little to do with how smart you were or when you got in or got out and a lot to do with how and when and IF Madoff credited you with "gains" on "investments" that were never made. It's the early investors who usually make out in Ponzi schemes not because they were more timely or smarter but solely on account of being first; you can't screw the first wave because then you'll never get the second and third waves on which the whole scheme depends.

The trustee's goal here is to go after those who did get paid and spread those never-real "profits" around to soften the blow among those who lost a lot or even everything.

[Ceetar]

LeiterWagnerFasterStrongr wrote: Yup. Really, I'm not sure what the point of the conference was, other than to get in front of the story among the general public. Nothing they said/didn't say about their solicitations made it sound at all enticing to actual investors.

Haven't they been criticized for not being in front of the story before? at least from a baseball aspect?

I wonder if keeping the numbers sealed helps them work out a settlement out of court?

[Gwreck]

Ceetar wrote: I wonder if keeping the numbers sealed helps them work out a settlement out of court?

It has no effect. The only thing that "unsealing" numbers would do would be to expose them to new, additional liability (presumably for breaking a confidentiality agreement).

[MFS62]

Frayed Knot wrote: The difference here is that money won or lost had little to do with how smart you were or when you got in or got out and a lot to do with how and when and IF Madoff credited you with "gains" on "investments" that were never made. It's the early investors who usually make out in Ponzi schemes not because they were more timely or smarter but solely on account of being first; you can't screw the first wave because then you'll never get the second and third waves on which the whole scheme depends.

Right. Then a lot will depend on whether the Wilpons asked for some money back (for whatever reason) or it was a contracturally scheduled payment, or if it was just given to them by Madoff to attract future investors.
The devil will be in the details.

Later

[Edgy MD]

MFS62 wrote: IIIRC, Donn Sr. was a good businessman in his own right. I think I read that after baseball, he became a VP at a large, famous corporation. (Bic?)

Scripto, baby.

[Edgy MD]

metsguyinmichigan wrote: batmagadanleadoff wrote: So opening a new stadium made them worth LESS???

More likely, the economy tanking did.

[metirish]

batmagadanleadoff wrote: BTW, did anybody else catch on that the reason that the Picard complaint against Sterling Equities is sealed is because Sterling --not the trustee-- asked the Court to seal it?

Various news outlets are going to court to unseal it....hearing is soon IIRC.

[Edgy MD]

So, on a scale of 0-100 (100 indicating 100% certainty), what percentage describes your opinon that the 'Pons were getting their money out with advance knowledge that they were caught in an illegal scheme?

[metirish]

Edgy DC wrote: So, on a scale of 0-100 (100 indicating 100% certainty), what percentage describes your opinon that the 'Pons were getting their money out with advance knowledge that they were caught in an illegal scheme?

Geez , their families were friends right? , good friends apparently....I'd say I am 65% convinced that the Wilpon's and Katz knew something was funny with the money.

[Edgy MD]

That's some pretty high certainty. And if that turns out to be true, their fortune is certainly vulnerable.

[Guest John Cougar Lunchbucket]

Edgy DC wrote: So, on a scale of 0-100 (100 indicating 100% certainty), what percentage describes your opinon that the 'Pons were getting their money out with advance knowledge that they were caught in an illegal scheme?

Even the alleged "victims" of this crime had to know there was something very fishy about Madoff. From what I understand any amount of prior research could have pointed you to the fact the funds were previously questioned as such. The investors were generally super wealthy and didn't get that way by being careless with their money. They are all licking their wounds now but I'm sure it was 99% a case of "I don;t wanna know how you do it Bernie, just give me those annual returns."

[Edgy MD]

I don't know where I stand. I'm just trying to see all the angles.