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

[metirish]

Ceetar wrote: 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.

No one thought they would ever find a minority investor,really? My memory is they had several to choose from.

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

this is the fear alright , they will do anything to keep the team.

[HahnSolo]

I continue to chuckle at the Gene Wilder pic.

[Ceetar]

batmagadanleadoff wrote: Ceetar wrote: No one thought they'd ever find a minority investor either. Ultimately they did though. How do you know?

Err? I was listening? Everyone said the same line "Why would someone want to give the Wilpons money if these are the circumstances..etc etc" They weren't right then, so why should I think they're right now, about a significantly smaller sum of money?

[Edgy MD]

I think the hotshot advisor did what he was paid to do, telling them was Einhorn's deal had them in a better-than-likely position of losing the team. So they balked.

I think they probably don't go Chapter 11. They just... shrink.

I mean... MLB's not calling their loans, and they're settling affairs so they have cash on hand to stay current with their other debt obligations whether the team is generating or not. Bud probably has more guys than Alderson embedded in the organization to ensure his creditor's are fiscally prudent, even if that means stinking up the joint.

David Howard was half-right in saying the team was getting lean like other organizations in this era. What he didn't include was that it was like other organizations that got stupid when things were good.

[Guest John Cougar Lunchbucket]

Edgy DC wrote: I think the hotshot advisor did what he was paid to do, telling them was Einhorn's deal had them in a better-than-likely position of losing the team. So they balked.

Then why announce it in the first place? It's obvious something changed in the inbetween.

[Edgy MD]

I figured absorbing the advisor's advice is what changed.

I think:

(1) They had a deal.

(2) It was seemingly sweet for them --- with the cash influx to get them good with their creditors and fund a competitive operational salary budget for a few years --- with the caveat that they lose the team if they don't meet their obligations.

(3) They arrogantly believed that the influx of money would be so steadying to the organization, and that they'd be so responsible, and the future was so bright, that there was no reasonable scenario where they would fail to meet their obligations.

(4) The advisor put his staff to work poring over the agreement.

(5) The staff told the advisor, and then the advisor told the Wilpons, "No way --- you're totally going to lose this team. You may have been the smartest guy on some other block. But this Einhorn guy is the smartest guy in every block he's ever lived on. See this clause? Now see this codicil? Got that? Now that doesn't seem too intimidating, right? But look at these revenue projections. THAT'S the optimistic set of projections, Mr. Wilpon. That's if everything goes right between now and 2016. Housing market returns by 2013. Your main stars don't get hurt. The president strikes a debt deal with Congress. The Avengers wins a half a dozen Oscars. Stevie Wonder wins a 'Where's Waldo?' contest. When was the last time everything went right? What I'm saying is that if you sign this deal you are signing away the Mets."

(6) The 'Pons went back to the table, saying, we just, you know, want to take a look at this clause and this codicil.

(7) Einhorn, being the smartest guy on the block, saw that their interest were cutting too much into his own, and realized that if he really wanted to own this team, he had a better chance giving the Wilpons a chance to collapse, and then sweeping in later.

(8) They agreed to disagree. They're differences were irreconcilable. They both, in the end, want control of the team.

The advisors probably recommended this bond-selling alternative as the less-risky way to get some cash. But bills come due. Oh, they do.

[batmagadanleadoff]

Ceetar wrote: Ceetar wrote: No one thought they'd ever find a minority investor either. Ultimately they did though. How do you know? Err? I was listening? Everyone said the same line "Why would someone want to give the Wilpons money if these are the circumstances..etc etc" They weren't right then, so why should I think they're right now, about a significantly smaller sum of money?

The Mets may indeed have sold some minority shares. But I don't know that. And I don't think that you know, either. You read the press simply questioning the value of the new offerings and then chose to jump to an optimistic conclusion. When the Mets open the books, or some minority shareholder comes forward to openly discuss his or her new acquisition, or we have some other compelling evidence, then we'll know. Until then, all we have is Jeff's say so.

The Mets declined comment. [but] Mets COO Jeff Wilpon said the auction to sell the minority stakes was going very well.

Read more: http://www.nypost.com/p/news/business/mets_next_pitch_WTbeypwaj93Lp1Mb58gOQN#ixzz1dEM3pw6F

[Ceetar]

I'm not being optimistic about it, I'm simply pointing out that the Mets have little to gain from pretending to find minority investors or from only offering options that are completely unrealistic. Just because a bunch of sports writers don't think it's a good investment that anyone would want to take doesn't mean the millionaires and billionaires out there think the same way.

There is just so much murkiness and unknowns there, including not even knowing how the Madoff situation will be settled and for how much. Yes, it seems pretty likely they dropped payroll projections (at least, the numbers they talk about, it's yet to be determined) by 20+ million after they lost Einhorn, but that doesn't mean all is completely doomed and we're just in a waiting game here.

[Guest John Cougar Lunchbucket]

Why, there's every chance Jeff will find $200 million between the cushions on his couch.

[batmagadanleadoff]

Ceetar wrote: I'm not being optimistic about it, I'm simply pointing out that the Mets have little to gain from pretending to find minority investors ....

Not true. They have everything to gain from pretending that their situation is rosier than they know it to be. They're still selling tickets .. always selling tickets ... which generate parking revenues, and food and souvenir sales, yada yada. And they're still selling advertising. That's how the team makes the money.

The bleaker the picture, the less likelier it is that fans will commit to tickets now, before next season even starts.

This is a business. The Wilpons are in it to take your money, not to tell you the truth.

[Benjamin Grimm]

Well, yeah, but even if they tell us that they have a lot of interest from "minority investors", if their off-season moves are limited to things like coaxing Tom Hausman out of retirement, very few of us will be lulled into thinking everything is okay.

[Edgy MD]

Re-Sign Hausman NOW!!!

What?

[batmagadanleadoff]

Benjamin Grimm wrote: Well, yeah, but even if they tell us that they have a lot of interest from "minority investors", if their off-season moves are limited to things like coaxing Tom Hausman out of retirement, very few of us will be lulled into thinking everything is okay.

I don't know. Just because they can't fool you ....

[batmagadanleadoff]

Ceetar wrote: I'm not being optimistic about it, I'm simply pointing out that the Mets have little to gain from pretending to find minority investors or from only offering options that are completely unrealistic. Just because a bunch of sports writers don't think it's a good investment that anyone would want to take doesn't mean the millionaires and billionaires out there think the same way. There is just so much murkiness and unknowns there, including not even knowing how the Madoff situation will be settled and for how much. Yes, it seems pretty likely they dropped payroll projections (at least, the numbers they talk about, it's yet to be determined) by 20+ million after they lost Einhorn, but that doesn't mean all is completely doomed and we're just in a waiting game here.

And another thing. (As John Madden used to say). The Mets never specifically said that they obtained any additional financing through this plan to sell small shares to investors. They merely said that things were going well, or other words to that effect --- words so vague and open-ended that they could be taken to mean anything. When pressed by the press for more specific information, charming Jeff Wilpon fell back on the privacy bs, essentially stating that it wasn't any of our business to know. So if the Mets did obtain more financing, why wouldn't they come out and say it?

[batmagadanleadoff]

batmagadanleadoff wrote: Ceetar wrote: I'm not being optimistic about it, I'm simply pointing out that the Mets have little to gain from pretending to find minority investors or from only offering options that are completely unrealistic. Just because a bunch of sports writers don't think it's a good investment that anyone would want to take doesn't mean the millionaires and billionaires out there think the same way. There is just so much murkiness and unknowns there, including not even knowing how the Madoff situation will be settled and for how much. Yes, it seems pretty likely they dropped payroll projections (at least, the numbers they talk about, it's yet to be determined) by 20+ million after they lost Einhorn, but that doesn't mean all is completely doomed and we're just in a waiting game here. And another thing. (As John Madden used to say). The Mets never specifically said that they obtained any additional financing through this plan to sell small shares to investors. They merely said that things were going well, or other words to that effect --- words so vague and open-ended that they could be taken to mean anything. When pressed by the press for more specific information, charming Jeff Wilpon fell back on the privacy bs, essentially stating that it wasn't any of our business to know. So if the Mets did obtain more financing, why wouldn't they come out and say it?

Plan B to Raise $200 Million for Mets Is Going Slowly

The New York Times wrote: Just over two months ago, the Mets watched the $200 million they sorely needed vanish. Their deal to sell one-third of the team to the hedge fund manager David Einhorn had fallen apart after months of negotiations. Confidently, they put Plan B into action, and their investment banker on the sale even stated that this was the way they should have raised money from the start. This time, they would not look for a single powerful buyer. This time, they would raise the $200 million by selling 10 limited partnership units, or shares, in the Mets for $20 million apiece. So, 10 weeks later, how is that plan going? The answer is slowly. At this point, none of the units have been sold, said two people briefed on the status of the sales who spoke on the condition of anonymity. They added that there were strong buyer commitments for as many as seven of the shares. However, until there are equally firm offers for the other units, it is possible that none of them will be sold. �These things can drag on for months and months,� said Robert Boland, a sports business professor at New York University�s Tisch Center. �Usually, it�s about the parameters of the contract.� Earlier this month, Jeff Wilpon, the Mets� chief operating officer, said that the team had an �internal timetable� for completing the sales that it was not going to share with the public. �There�s not a deadline,� he said. �There�s not a date circled, or anything like that.� If the Mets are successful in finding buyers for all 10 units, there is talk they could even sell two more, raising their take to $240 million. But for the moment at least, the large cash infusion that the Mets have needed since early this year remains out of reach. And all of this is occurring as the Mets contemplate how much they might be willing, or able, to spend to keep the free-agent shortstop Jose Reyes in a Mets uniform. Would the Mets be more aggressive on the Reyes front if the sales of the limited partnerships had already been completed? That�s not clear. What is certain is that the Mets have had three straight losing seasons at Citi Field, marked by continually declining attendance. And without Reyes � and any expectations that 2012 will be a more competitive season � ticket sales could plummet further. Meanwhile, Major League Baseball has been waiting patiently for the Mets to get a handle on their financial problems. To a considerable degree, the office of Commissioner Bud Selig has been preoccupied lately with the more serious, and sensational, financial problems of the Los Angeles Dodgers and their owner, Frank McCourt, who has now agreed to sell the team. Nonetheless, the Mets still owe baseball $25 million that they borrowed a year ago, when they had a cash shortage. They were told to repay the loan by the end of June, when, they presumably believed, they would have the $200 million in hand from Einhorn. They have now been delinquent for more than four months, but baseball has not chosen to respond by deducting any of the Mets� share of national income from such revenue sources as television and licensing. By selling units costing $20 million each, the Mets have been betting that they could attract wealthy investors who are also fans and who would be intrigued by investing a large amount of money � but not $200 million � to be part of ownership. Those in the pool of possible investors rounded up by the Mets� adviser, Allen & Company, can buy a full unit or a partial one in conjunction with several other people. �My sense is the Wilpons, who used stakes and options to get control of the team, would prefer to have a lot of small partners than one big one,� Boland said. Several sports business experts said that it would be prudent for Allen & Company to wait until all 10 units are accounted for before selling them so as to avoid any negative implications that they can�t raise all the money they need. Marc Ganis, president of SportsCorp, a Chicago-based consulting firm, said he doubted Major League Baseball would even approve a piecemeal approach. �In order to assure the Mets have sufficient liquidity to address their financial problems fully and avoid having another cash-flow problem next year,� Ganis said, �it�s unlikely M.L.B. will allow a sale of interests unless the minimum needed, which they�ve said is $200 million, is brought in.� Boland and Ganis added that concern about the management of the team, which has presided over an estimated $120 million in losses the past two seasons, might be causing some potential investors to balk at committing their own millions. Still looming for Wilpon and Saul Katz, the Mets� co-owner, is a lawsuit filed by the trustee for the victims of Bernard L. Madoff�s Ponzi scheme. The trustee is seeking $83 million to $386 million from the Mets� owners � well below the $1 billion the trustee originally sued for. Meanwhile, the Mets are offering incentives to make potential investors comfortable. For one thing, the investors will not be asked to kick in any extra money for six years in the form of capital calls, the Sports Business Journal first reported. Second, investors have an option to get their money back in five years, with 3 percent interest compounded annually.

[Ceetar]

Joel Sherman wrote: Joelsherman1 Person with strong Wall St ties tells me #Mets new strategy to sell $20M stakes at 3 pct interest already has several commitments

[Vic Sage]

no need to resort to quote Joel Douchebag, when you've got the NYTimes article stating:

They added that there were strong buyer commitments for as many as seven of the shares.

Wilpons simply can't sell them until they have commitments for all ten units.
If true, they're actually further along than i thought.

[metirish]

Mets, Struggling for Cash, Receive $40 Million Bank Loan

By MICHAEL S. SCHMIDT and RICHARD SANDOMIR Published: December 12, 2011 The owners of the Mets, needing cash and unable to turn to Major League Baseball for more financial help, received a $40 million loan from a major bank in the past six weeks. The team described the arrangement as a �bridge loan,� meant to aid them as they try to raise money through the sale of minority stakes in the club. The loan marks the second time in a year that the Mets have received an infusion of cash. A year ago, the team�s owners, Fred Wilpon and Saul Katz, received a $25 million loan from Major League Baseball, but they have not been able to repay it. Meanwhile, Sandy Alderson, the club�s general manager, said last week that the organization had lost $70 million in 2011 alone. Earlier this year, the team�s owners appeared to have a plan to address their financial problems: selling a roughly $200 million stake in the team to the hedge fund tycoon David Einhorn. But after months of negotiations, the owners called off the deal in September, in part because they did not want to give Einhorn a path to becoming the team�s majority owner. At the time, Wilpon and Katz said that �ownership has provided additional capital to cover all 2011 losses and is moving forward with the necessary resources to continue to operate the franchise.� And the owners said they were confident they could easily raise the $200 million they needed by selling 10 minority shares in the team for $20 million each. The $200 million was going to be used, they said, to pay off debts to their banks and to Major League Baseball, and to finance team operations. The recent $40 million loan suggests that the effort to sell minority shares in the team was not generating the cash that the owners needed in the near term. The owners, through a spokesman, said the loan had been approved by Major League Baseball and the other banks to which they are already indebted. Bank of America was the source of the $40 million loan, according to a person with knowledge of the deal. The club earlier this month lost shortstop Jose Reyes, widely considered its best player, to the Miami Marlins, and its extremely modest player acquisitions in recent weeks suggest the team is not operating like a big-market, marquee team. The implications of the team�s latest outside financing are not easy to forecast. But two people with knowledge of the team�s finances said that if a full lineup of minority stake investors was not in place by next spring, and cash not in hand, Wilpon and Katz might have to confront the prospect of selling the team entirely. The men first had to face that possibility last December when they learned they were the target of $1 billion lawsuit brought by the trustee representing the victims of Bernard L. Madoff�s fraud. The trustee has accused the men of having turned a blind eye to the possibility that Madoff was a fraud while they enriched themselves with his steady, outsize investment returns. Wilpon and Katz are facing a jury trial this spring at which they could be forced to explain themselves, and their years of investing with Madoff. Their potential liability could be hundreds of millions of dollars. People familiar with the team�s situation have said the owners had firm commitments from at least seven investors interested in buying a small share of the team for $20 million apiece. Still, until all are sold, none of the investors have had to turn over cash. Vince Gennaro, a consultant to several major league teams, said that the $40 million loan �says to me that their finances continue to be tight, that there is a cash pinch.� He added: �The team underperformed, and this tides them over until they get their money. They need cash flow.� Now, Gennaro said, between the bridge loan and the $25 million owed to baseball, �the first $65 million has to go out the door� should the team sell an adequate number of shares in the team. Joseph Ravitch, a veteran sports banker who is a partner in the Raine Group, said the ability of the team�s owners to secure another $40 million in loans established that the team was still considered a valuable holding. But, Ravitch added, a bridge loan usually carries a high interest rate, and he said that they �don�t lack for clarity about their ability to recover the loan against an asset.�

[Guest John Cougar Lunchbucket]

who would lend these guys money anymore?

[Ceetar]

John Cougar Lunchbucket wrote: who would lend these guys money anymore?

the Mets? a lot of people. Despite 'losing money' the team still generates a ton of revenue.

And they're not going to be contracted. Even if the Wilpons eventually go under.. wouldn't the Mets still owe the money? and Bank of America may be one of the first paid..ahead of say David Wright..

[TransMonk]

It's time for the Wilpons to just admit defeat.

[G-Fafif]

John Cougar Lunchbucket wrote: who would lend these guys money anymore?

Somehow reminded of the modestly amusing 1997 film Kiss Me Guido wherein the title character answers an apartment-sharing ad placed by a "GWM," which the "Guido" in question assumed meant Guy With Money.

And if banks assume you're a guy with money, apparently they'll lend you more of it.

[Ceetar]

TransMonk wrote: It's time for the Wilpons to just admit defeat.

well, they're clearly not doing that. They're not even going all-in, saying 'fuck it', keeping Reyes, and trying to turn it around fast and be profitable. It's almost like they're trying not to lose, which doesn't seem to bode well for the short term. They've cut payroll enough that they'll probably only lose like 50 mill this year if they have a similar record, and they can probably sustain that another 3-4 seasons at least.

[metirish]

Ceetar wrote: TransMonk wrote: It's time for the Wilpons to just admit defeat. well, they're clearly not doing that. They're not even going all-in, saying 'fuck it', keeping Reyes, and trying to turn it around fast and be profitable. It's almost like they're trying not to lose, which doesn't seem to bode well for the short term. They've cut payroll enough that they'll probably only lose like 50 mill this year if they have a similar record, and they can probably sustain that another 3-4 seasons at least.

yeah and that's what fucking blows, these wankers would field a team capable of losing 90 games as long as they continued to own it.They will do what's in their interest rather than the franchise.

[Ceetar]

and it really seems like the quickest path to success is hoping the Wilpons get it together.

[Edgy MD]

The people who would lend them money are people that (a) like the size of that interest, and ( who see there's still some collateral left in the team, even as they don't have the resources left to run it.

[Guest John Cougar Lunchbucket]

Ceetar wrote: and it really seems like the quickest path to success is hoping the Wilpons get it together.

Perhaps they can find another crook to give them 12% interest on their investments too.

[Valadius]

TransMonk wrote: It's time for the Wilpons to just admit defeat.

They will never admit defeat. Jeffy won't get to play with his model planes anymore.

[batmagadanleadoff]

The New York Times wrote: The implications of the team�s latest outside financing are not easy to forecast. But two people with knowledge of the team�s finances said that if a full lineup of minority stake investors was not in place by next spring, and cash not in hand, Wilpon and Katz might have to confront the prospect of selling the team entirely.

We can only hope. But several anonymous insiders regarded as credible by the media have already stated that the Mets are on course to obtain another $200M in financing by selling between 10-20 small shares in the team. According to inside sources, the Mets are offering 3% interest on those minority stake investments. But with no path to ownership, it's tough to see the lure. The 3% gain is taxable. I'm too lazy to look this up, but I'm sure that our resident bonds expert Ashie --when he's feeling better -- could easily find some safe bond investments that pay 3% and are tax-free. And the potential new Mets investors will probably end up at the back of the line, way behind other better secured investors, should the Mets go belly up or declare bankruptcy, either by choice or involuntarily.

[Lefty Specialist]

You lend money to the Mets knowing that if they're forced to sell the team, it'll sell for enough to make you whole. There's no real downside risk. That's why Bud's not sweating his $25 million.

The '$20 million investors' are what I can't figure.

I'm imagining the conversation:

"So if I give you twenty million dollars, what do I get in return?"

"The thanks of a grateful Fred Wilpon."

"That's it?"

"Yup, that's it."

"Gee, where do I sign?"