Madoff's Curveball" by Jeffrey Toobin & other Wilpon stories

[seawolf17]

Jeebus, Greg, that's awesome.

[batmagadanleadoff]

Frayed Knot wrote: I'm not sayin' that Doubleday was a victim or a paragon of virtue. I didn't say any of that. But Nelson's my Exhibit A in the case against being able to do business with FW with a handshake alone. How so? When Doubleday the company sold the team to Doubleday the person a clause was triggered which allowed minority owner Wilpon to have right of first refusal to become an equal partner. I miss the part where the fact that Fred exercised that right makes him underhanded. If Nelson didn't know about the clause perhaps he should have (sound familiar?) and whether he did or not is hardly Fred's problem.

You�re right. It wasn�t Fred�s problem. It was Nelson�s. Doubleday was the recipient of bad lawyering, or sloppy lawyering -- or at the very least, a lawyer that couldn�t foresee all of the different ways that a team could be transferred from one entity to another. This lack of foresight prevented Doubleday�s lawyer from drafting the right of first refusal clause in a way that would�ve afforded Doubleday maximum protection and also, the precise protection Nelson wanted to have when the 1986 transfer occurred.

Again, you�re right to say that this wasn�t Fred�s problem. But it was never intended that Fred have the right to challenge the transfer from Doublday Corp. to Nelson: the imperfect clause that ultimately defined the co-owners' rights when ownership was transferred was inconsistent with the spirit of Fred and Nelson�s original understanding. But while Fred was legally in the right to enforce the letter of their agreement, the incident undermines the notion that one can deal with Fred with a simple handshake -- my point of contention.

It seems to me that Fred will honor the handshake so long as the handshake affords Fred greater rights than the contract. Otherwise, Fred will put the handshake back inside his pocket and claim that �a deal is a deal and I�ve got the writing to back me up�.

[MFS62]

This wouldn't be the first time a New York baseball owner did something like this to use as a smoke screen during a Legal and/or financial investigation.
Back in the 80's, I was in Tampa on business. The headlines down there were saying that one of Steinbrenner's companies was being investigated for major illegal dealings (Ship building? real estate? I don't recall which) with indictments being handed down shortly.
I wondered how the New York press would handle that news. When I got back to New York, the headlines screamed "Steinbrenner Blasts Winfield" (for lackluster play). Funny how news of the legal stuff wasn't being mentioned.

Later

[Frayed Knot]

"But it was never intended that Fred have the right to challenge the transfer from Doublday Corp. to Nelson: the imperfect clause that ultimately defined the co-owners' rights when ownership was transferred was inconsistent with the spirit of Fred and Nelson�s understanding."

I'll probably regret asking this because I really don't care about this long-buried situation - but where the fuck is this 'that wasn't the intent' coming from?
Rights of first refusal are hardly a rarity in business contracts but somehow only when discussing the Mets and the poor & lamented (we'll leave out bigoted and drunken for the time being while the beatification is going on) Nelson Doubleday do I hear this presented as if some sort of underhanded and sneaky form of robbery with the gun (one poster here described it as "a swindle").
I know it's national jump on Fred month, but I missed the part where Wilpon publicly pledged to never to try to increase his minority share and I certainly don't get this poor Nelson routine.

[ashie62]

MFS62 wrote: This wouldn't be the first time a New York baseball owner did something like this to use as a smoke screen during a Legal and/or financial investigation. Back in the 80's, I was in Tampa on business. The headlines down there were saying that one of Steinbrenner's companies was being investigated for major illegal dealings (Ship building? real estate? I don't recall which) with indictments being handed down shortly. I wondered how the New York press would handle that news. When I got back to New York, the headlines screamed "Steinbrenner Blasts Winfield" (for lackluster play). Funny how news of the legal stuff wasn't being mentioned. Later

Sounds familiar doesn't it?

[batmagadanleadoff]

I'll probably regret asking this because I really don't care about this long-buried situation - but where the fuck is this 'that wasn't the intent' coming from? Rights of first refusal are hardly a rarity in business contracts but somehow only when discussing the Mets and the poor & lamented (we'll leave out bigoted and drunken for the time being while the beatification is going on) Nelson Doubleday do I hear this presented as if some sort of underhanded and sneaky form of robbery with the gun (one poster here described it as "a swindle"). I know it's national jump on Fred month, but I missed the part where Wilpon publicly pledged to never to try to increase his minority share and I certainly don't get this poor Nelson routine.

Nelson didn't view the transfer from Doubleday Co. to himself as a real transfer. Costly mistake. You don't expect the Wilpon's version of their "understanding" to coincide with the Doubleday version, do you?

BTW, I sense hostility and also anger in your posts to me. All of them. Am I imaging things? Because I'm starting to get a complex whenever you address my posts.

[Frayed Knot]

Nelson didn't view the transfer from Doubleday Co. to himself as a real transfer.

Don't know why. It required MLB clearance just like a real transfer.

Costly mistake.

Yup. And, again, Doubleday's problem not Wilpon's.

You don't expect the Wilpon's version of their "understanding" to coincide with the Doubleday version, do you?

Don't see why not. And even if Nelson didn't see it that way it hardly makes what Wilpon did scheming and underhanded as you are clearly claiming.

BTW, I sense hostility and also anger in your posts to me. All of them. Am I imaging things? Because I'm starting to get a complex whenever you address my posts.

Yup. Everyone's picking on you again.
It's all organized, we discussed the whole thing at the last meeting you weren't invited to.

[batmagadanleadoff]

Frayed Knot wrote: Everyone's picking on you.... It's all organized, we discussed the whole thing at the last meeting you weren't invited to.

So now you speak for everybody?

I guess I was imagining all of that hostility and anger.

Obviously.

[G-Fafif]

One of the tidbits I learned (besides Fred being more mental than I would have suspected) was he hung around Shea in the late '70s with his pal Joe Torre while his other pal Joe Pignatano got Jeffy a BP catching job. It never occurred to me that Fred went to Mets games before owning the team.

Also, those deep Brooklyn roots and great friendships didn't stop him from sanctioning the dismissals of the Joes a couple of years into his part-ownership.

[Edgy MD]

MFS62 wrote: This wouldn't be the first time a New York baseball owner did something like this to use as a smoke screen during a Legal and/or financial investigation. Back in the 80's, I was in Tampa on business. The headlines down there were saying that one of Steinbrenner's companies was being investigated for major illegal dealings (Ship building? real estate? I don't recall which) with indictments being handed down shortly. I wondered how the New York press would handle that news. When I got back to New York, the headlines screamed "Steinbrenner Blasts Winfield" (for lackluster play). Funny how news of the legal stuff wasn't being mentioned. Later

I don't believe this for a minute, and I have trouble believing you do.

[Edgy MD]

G-Fafif wrote: One of the tidbits I learned (besides Fred being more mental than I would have suspected) was he hung around Shea in the late '70s with his pal Joe Torre while his other pal Joe Pignatano got Jeffy a BP catching job. It never occurred to me that Fred went to Mets games before owning the team. Also, those deep Brooklyn roots and great friendships didn't stop him from sanctioning the dismissals of the Joes a couple of years into his part-ownership.

I don't really expect him to have more loyalty than necessary here, do you? He wasn't senior partner in this decision. Managers get fired and Torre had a longer tenure than most, and a longer tenure than virtually all who've lost as consistently as him.

[G-Fafif]

Edgy DC wrote: G-Fafif wrote: One of the tidbits I learned (besides Fred being more mental than I would have suspected) was he hung around Shea in the late '70s with his pal Joe Torre while his other pal Joe Pignatano got Jeffy a BP catching job. It never occurred to me that Fred went to Mets games before owning the team. Also, those deep Brooklyn roots and great friendships didn't stop him from sanctioning the dismissals of the Joes a couple of years into his part-ownership. I don't really expect him to have more loyalty than necessary here, do you? He wasn't senior partner in this decision. Managers get fired and Torre had a longer tenure than most, and a longer tenure than virtually all who've lost as consistently as him.

No, not really. I imagine the friendships Toobin wrote about (in this case and others) were more likely glorified acquaintanceships.

[Edgy MD]

Sounds right. Billy Crystal/Richard Nixon/MC Hammer-type special-access-for-rich-and-powerful-guys relationships.

[metirish]

If like me you heard the name Toobin before but couldn't place him then you might be surprised like I was that he's the CNN legal correspondent.

oh , that's who he is.

[Ceetar]

I'd actually never heard the name before.

Where's the KTE? I want to talk baseball!

[metirish]

Linked from JCL on Twitter

[youtube:1revit8b]NY0BAMgrucE&feature=share[/youtube:1revit8b]

[Edgy MD]

Freddie (of Freddie and the Dreamers) holds a strange fascination for me. He briefly served as a bridge between Buddy Holly and Elvis Costello --- bespectacled, awkward, twitchy, and somehow someone able to assemble those uncool traits to present a character folks would identify with.

[batmagadanleadoff]

"Dad, why can't we say that it was Omar, disguised as you, that made all those controversial statements to Toobin? "And if Omar doesn't go along with my plan, we'll fire him".

Dad ... instead of selling 10 two percent shares for $20 million each, we could offer 200 two percent shares at just two million dollars each. We simply increase the supply and demand by a couple of octaves.

As the Mets shed low-level employees, the Wilpons cast about for high-level help By Howard Megdal 1:18 pm Nov. 8, 2011 Ever since the collapse of a deal between Mets owner Fred Wilpon and Greenlight Capital's David Einhorn back in September, it's been clear that there would be negative financial consequences for the team's ownership group. It just wasn't clear what those consequences were going to be. After all, Einhorn's pact�which called for the hedge-fund manager to pay $200 million to receive a 33 percent stake in the team, with the right to increase that stake to majority ownership in five years for a token amount�was mostly about providing a means for Mets ownership to pay off short-term debts, such as a loan from Major League Baseball and the team's estimated $70 million in 2011 losses. But a pair of news items from late last week detailed exactly how rocky the short term will be for the New York Mets without David Einhorn's money. Late Friday afternoon, it was reported that the Mets were laying off approximately 10 percent of their staff. And the New York Post's Josh Kosman laid out the terms for minority-ownership stakes being offered by the team in hopes of attracting a replacement for Einhorn's investment. The first piece of news provides anecdotal insight into why retaining star player Jose Reyes this off-season will be so difficult for the Mets�a team cutting approximately 15 low-paying jobs would seem unlikely to turn around and invest $20 million per season in a shortstop. But it is the second piece of news that provides a fuller picture of just what a tough winter the ownership group of the New York Mets may be in for. The team is trying to sell minority shares of the team based upon a valuation of $950 million. While that may be high (Forbes had the team at $747 million as of April 2011, and the intervening events since certainly haven't increased that value), let's suppose for a moment that the figure is legit. It would mean that an investment of $20 million would be worth a little more than a two percent share in the team, while $30 million would get a minority owner a little more than three percent. While shares in a team that lost $50 million in 2010 and $70 million in 2011 (and which can expect a further drop in revenue next year if it doesn't have Jose Reyes to draw fans) may not seem like a great investment, the Mets are offering a sweetener that's the equivalent of a CD�three percent a year annually, now through 2017, paid back on top of the initial investment. The investor also has the option to keep the team stake, but forfeit the three percent annual interest. If the Mets, who have dropped in value from $912 million in April 2009 to $747 million in April 2011�a nearly 20 percent drop�continue to lose value, that minority stake would be worth significantly less over a six-year run with Wilpon ownership. The chances of receiving that three percent interest, on top of a return of principal, are not good. The buyer is required to believe that Wilpon and his partners will have money left over to pay interest in 2017, even though they still owe $430 million against the team, with the principal of that loan due in June 2014, and another $450 million against SNY, with the principal of that loan due in June 2015. A judgment or settlement with the trustee for the Bernie Madoff victims Irving Picard, who is suing the Met owners for $386 million, (and potentially far more on appeal), would almost certainly also come in line ahead of any deal made with new minority owners now. Simply put, the Wilpon group's proposition calls to mind the one offered by Groucho Marx to the ambassador from Sylvania in Duck Soup: GROUCHO: Now, how about loaning this country 20 million dollars, you old skinflint? AMBASSADOR: 20 million dollars is a lot of money. I shall have to take it up with my minister of finance. GROUCHO: Well, in the meantime, could you let me have 12 dollars until payday? AMBASSADOR: 12 dollars? GROUCHO: Don't be scared, you'll get it back. I'll give you my personal note for 90 days. If it isn't paid by then, you can...keep the note. As much as the Mets' owners need someone to take them up on their offer, it's hard to see what anyone would, on anything like the terms they're talking about. While making payroll isn't currently a consideration, since it is the off-season, the Mets have a revenue-sharing payment due to Major League Baseball by the end of November of between $15-20 million, and owe around $26 million in their twice-annual debt payments on Citi Field to the city of New York on December 15. To date, MLB has been patient and forgiving of the Mets�a loan of $25 million due back at the end of the 2011 season hasn't been paid back yet, but Commissioner Bud Selig continues to support this ownership group publicly, if vaguely. But chances are the city of New York won't be as patient or forgiving, potentially triggering a rush from the other lenders to get what money they can now. Notice who the Kosman piece says Met ownership had to reassure about its minority owner plan�its other lenders. This head-just-above-water routine will continue for as long as the owners can keep it going. It was the decision to invest so much of their money with Bernie Madoff that put Wilpon and his partners in their current financial predicament; it may end up having been their decision to sabotage the Einhorn deal that drags them under.

http://www.capitalnewyork.com/article/culture/2011/11/4062883/mets-shed-low-level-employees-wilpons-cast-about-high-level-help

[Fman99]

Fuck. This article was the first thing that made me really believe in my heart that Jose Reyes would not be back in 2012.

[metirish]

That made for grim reading , do the Mets pay into pension funds for former players or only for employees like Pete Flynn?

[batmagadanleadoff]

Fman99 wrote: Fuck. This article was the first thing that made me really believe in my heart that Jose Reyes would not be back in 2012.

Dude, the Mets are preparing you for a 2012 payroll that might now all of a sudden be as low as $90M, not $100M or $110M. $90M. Because (according to them) they'll need the wiggle room to make (big giggle) mid season pennant chase moves. That's $90M ... and about 60% of the $90M will go to three guys (Santana, Bay and Wright) -- two of which might reasonably suck big time next year. They also will forego on Reyes because, among other reasons, they now admit that they don't see themselves contending in 2012 even though they need to get down to $90M to contend better. Because to contend, they need to jettison perhaps baseball's best shortstop, who's still only 28 years old. The team speaks from three or four sides of its mouth. They're fucking broke is what it is and any other explanation from them, though understandable, is still insulting.

[batmagadanleadoff]

Ah, unfortunately the breakfast scones will be replaced by breakfast
muffins. Additionally, meeting cantaloupe will unfortunately be
eliminated. You're asked to bring in your own fruit, ah, perhaps even
something handheld. Maybe that's an apple, ah for some that might be
a banana. Alright, let's just keep it rollin, rollin, rollin. Page
79, um, unfortunately I'm called upon to review the dry erase board
rules.

[MFS62]

batmagadanleadoff wrote: Ah, unfortunately the breakfast scones will be replaced by breakfast muffins. Additionally, meeting cantaloupe will unfortunately be eliminated. You're asked to bring in your own fruit, ah, perhaps even something handheld. Maybe that's an apple, ah for some that might be a banana. Alright, let's just keep it rollin, rollin, rollin. Page 79, um, unfortunately I'm called upon to review the dry erase board rules.

If you took a vote of WFAN callers, they would say the Wilpons should continue to eat cantaloupe.

Later

[HahnSolo]

As much as the Mets' owners need someone to take them up on their offer, it's hard to see what anyone would, on anything like the terms they're talking about. While making payroll isn't currently a consideration, since it is the off-season, the Mets have a revenue-sharing payment due to Major League Baseball by the end of November of between $15-20 million, and owe around $26 million in their twice-annual debt payments on Citi Field to the city of New York on December 15.

To date, MLB has been patient and forgiving of the Mets�a loan of $25 million due back at the end of the 2011 season hasn't been paid back yet, but Commissioner Bud Selig continues to support this ownership group publicly, if vaguely. But chances are the city of New York won't be as patient or forgiving, potentially triggering a rush from the other lenders to get what money they can now. Notice who the Kosman piece says Met ownership had to reassure about its minority owner plan�its other lenders.

This head-just-above-water routine will continue for as long as the owners can keep it going. It was the decision to invest so much of their money with Bernie Madoff that put Wilpon and his partners in their current financial predicament; it may end up having been their decision to sabotage the Einhorn deal that drags them under.


Sad, grim, pathetic. Ladies and Gentlemen, Your 2012 New York Mets!

[Guest John Cougar Lunchbucket]

I think the sooner the Mets go Chapter 11 the better, but I'm afraid it could be a long, slow spiral.

[HahnSolo]

John Cougar Lunchbucket wrote: I think the sooner the Mets go Chapter 11 the better, but I'm afraid it could be a long, slow spiral.

Is this the Megdal piece you referred to a while back in the other thread?

[Ceetar]

No one thought they'd ever find a minority investor either. Ultimately they did though. Wouldn't they have reached an agreement if they were desperate? after all, it wasn't Einhorn (supposedly) that caused it to fail. And the Mets didn't then turn to a second bidder, but choice an alternative solution.

[Guest John Cougar Lunchbucket]

How's that alternative solution coming along?

I think the real question here is what part if any did that hotshot advisor they hired played in the dissolving of the Einhorn deal. These guys don't get paid millions to make deals that unravel before they're ever consummated.

[batmagadanleadoff]

Ceetar wrote: Wouldn't [the Mets] have reached an agreement if they were desperate? after all, it wasn't Einhorn (supposedly) that caused it tfail.

I'm guessing that, contrary to the MetSpeak, it was Einhorn that broke off the deal, not the Mets. I'm guessing that in the end, Einhorn found the Wilpons to be untrustworthy, making promises on the one hand, and then on the other hand, working behind Einhorn's back to undermine those same promises.

[batmagadanleadoff]

Ceetar wrote: No one thought they'd ever find a minority investor either. Ultimately they did though.

How do you know?