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

[Edgy MD]

Well, they aren't necessary killing each other for the opportunity, but a guaranteed return on your investment in a volatile market is something. Plus there're the same appeals there always is for buying into an asset with a long established history that is nonetheless troubled. You're buying low and, if the assett rebounds, you can score big. If it doesn't, you (and perhaps some of your confederates) have a foot in the door when controlling interest is put up.

Major league baseball teams have a legally protected monopoly. If you've got the skitch, they're always good investments. I wouldn't be shockets if half the $20 million investors turn out to be fronts for Einhorn.

[Vic Sage]

"shockets" ... really? Are you making up words again?
And Einhorn is too smart to invest in this team without a clear path to ownership; that's what queered the deal in the first place.

[seawolf17]

Vic Sage wrote: "shockets" ... really? Are you making up words again? And Einhorn is too smart to invest in this team without a clear path to ownership; that's what queered the deal in the first place.

That was my impression, yes. He wanted a shot at the whole shebang, and the Wilpons wouldn't give him one.

[Edgy MD]

Vic Sage wrote: "shockets" ... really? Are you making up words again?

Oh and you bought "skitch"? I was trying to sound like I knew what I was talking about by fabricating jargon. I got halfway home, I guess.

Vic Sage wrote: And Einhorn is too smart to invest in this team without a clear path to ownership; that's what queered the deal in the first place.

Yes, well, what I'm trying to sugest is that he's so crackwaddle smart, that he might find a way to outmaneuver them by finding a backdoor clear path. You should listen to me. I know words.

[batmagadanleadoff]

A Bridge Loan Too Far

I don't believe the news that the Mets have sought--and received--another loan from MLB should be all that shocking. But this, combined with the recent loss of Jose Reyes to the free spending Marlins (another team with dubious finances), set off many fans' You Gotta Be Effin' Kidding Me Alarms. This morning, I even heard a WFAN caller say he would root for the Nationals over the Mets this coming season. While I suspect this caller is either hyperbolizing or not much of a fan (while also sounding like the kind of guy who proposes a Mike Nickeas for Justin Verlander trade), his words were indicative of the kind of anger and fear inspired by this news. It's one thing for the Mets to take a pass on a high priced free agent, home grown or not. It's another entirely to need a $40 million get-me-over from Bud Selig's Money Store. The line thus far has been that this piddling eight-figure loan is just to tide the Mets over until their wonderful minority shares scheme takes off. That plan is going swimmingly thus far, because the Wilpons have told us it is, and anything else is none of our business, apparently. That's why it's never been explained exactly why anyone would buy shares in an institution with steadily mounting debt, whose owners will probably be forced to sell majority stake before long. Or why the Mets' best hope for a viable, well financed minority owner, David Einhorn, mysteriously dropped out this summer, never to be heard from again. I've defended the Wilpons on this site before. Around this time last year, I still believed they weren't so much dishonest as gobsmacked, so stunned by the Madoff mess they were slow to realize the true depths of their financial situation. But at this point, I feel there is more evidence that they're simply not telling the truth about the status of their coffers. Or even worse, are possessed of a god-like level of self delusion or crippling amount of stupidity to not realize they don't have enough money to own a baseball team anymore. So the Wilpons are either liars or morons with blinders. In either case, I'd rather they not have anything to do with my favorite team. And yet, I can't blame them entirely for this mess. In the face of financial ruin, they're simply trying to hang on to their biggest, most valued asset. Wouldn't you? It takes two to tango in this situation: One to hold out his hand, and the other to fork over the cash. For the latter, we have to blame Bud Selig, MLB commissioner and Wilpon BFF. Fred Wilpon, after all, was instrumental in ousting Faye Vincent and installing Selig as Commissioner For Life, and for that Selig is eternally grateful. It's the main reason why Wilpon, and not his former co-owner Nelson Doubleday, is now the sole owner of the Mets. If Wilpon was anybody else, would he be toast by now? It's impossible to say, but if the Frank McCourt affair proved anything, it's that if Selig wants someone gone, he can make them disappear with Mafia speed. Granted, McCourt did Selig a huge favor by doing colossally idiotic and unethical things like putting his family on the payroll with no-show jobs and spending lavish amounts of money on ridiculous expenses. But it was clear from day one that the main reason Selig tossed McCourt to the curb when times got tight is that he was not part of Selig's "inner circle." More than anything else, Selig simply did not want that man to own a baseball team anymore. If the Wilpons' situation isn't exactly analogous to McCourt's--they haven't, as far as I know, attempted to hire a faith healer on the Mets' dime--it is disturbingly familiar to that of another embattled former owner, Tom Hicks. As owner of the Texas Rangers, Hicks was a comparatively good citizen, but he stretched himself too thin and took out far too many loans to cover expenses. He too sought to sell minority shares in his team, until the enormity of his cash problems became painfully obvious. A planned sale of the team was squashed when Hicks' creditors realized the proceeds wouldn't cover his enormous debts. Selig threatened an MLB takeover of the Rangers, much in the way he'd done with the Expos. Hicks was forced to declare bankruptcy and the team was finally sold at auction to the current Peter Greenberg-Nolan Ryan ownership. In other words, when Selig even threatens severe action, things get done. The differences between Hicks' situation and that of the Wilpons' is becoming increasingly academic. And yet, Selig has not so much as had a harsh word for the Wilpons. He continues to play along with their Potemkin village version of reality, and it does no one a bit of good, least of all the Wilpons themselves. If Bud Selig and Fred Wilpon really are good friends, the best thing Selig can do is to gently guide his friend out MLB's backdoor.

http://www.amazinavenue.com/2011/12/13/2632724/a-bridge-loan-too-far

_____________

Or even worse, are possessed of a god-like level of self delusion or crippling amount of stupidity to not realize they don't have enough money to own a baseball team anymore.

Anymore? It's possible that for all of their past wealth, whatever it was, the Wilpons never amassed the scratch needed to own and operate New York's NL MLB franchise. It's no secret that in 1980, Wilpon/Katz couldn't afford much more than a 5% stake in the Mets. And according to one of Picard's current legal theories, the Wilpons/Katz could not have purchased Doubleday's share of the team some 10 years ago, were it not for the unrealistically high and fabricated profits they were receiving from Madoff. We might learn, one day, that without Madoff's steady stream of cash, Sterling's stake in the Mets, as highly leveraged as it is, was never anything more than a tenuous house of cards.

[Edgy MD]

I don't believe the news that the Mets have sought--and received--another loan from MLB should be all that shocking. But this, combined with the recent loss of Jose Reyes to the free spending Marlins (another team with dubious finances), set off many fans' You Gotta Be Effin' Kidding Me Alarms.

Am I missing something, or wasn't there only a new loan from a major bank?

This morning, I even heard a WFAN caller say he would root for the Nationals over the Mets this coming season.

An FAN listener writing a story about the Wilpons based on the opinions of FAN callers? Pass.

[Guest John Cougar Lunchbucket]

I tend agree with BatMag's comment: I don't think the Mets/Wilpon had much of a financial strategy beyond these killer returns from Madoff and they are at sea without them.

I know they were somewhat unlucky in addition to being dumb with the timing of the economic downturn, but least you'd expect of the Mets is the ability to sell the Mets to Mets fans and they are failing at that pretty spectacularly.

Johnny Amazin Opinions there has the source of the loan wrong in the first sentence, it's hard to take him much more seriously from there.

[batmagadanleadoff]

AA did get the source of the loan wrong. Unless AA meant to write that the Mets received MLB's approval to take on that second loan. Still, the main point of the AA piece, methinks, is that the extra $200M that the Mets are negotiating to obtain is nothing more than a band-aid in the Mets financial catastrophe.

At least that's what Megdal's new piece implies. Sterling borrowed over $400M against the Mets and another $400M+ against SNY -- and those loans come due soon. They owe NYC about $50M/year on their Citi Field loan. All this before factoring in any Madoff damages.

Work out the numbers for yourself:

Banks and Major League Baseball prop up the Wilpon group, but for how long? By Howard Megdal 11:48 am Dec. 13, 2011 Has the New York Mets ownership group become too big too fail? That is the question at the moment, since the New York Times reported Monday evening that Bank of America provided Wilpon and his partners with a $40 million bridge loan, even though between debt against the team, against their television network, and against Citi Field, the ownership group has around $1.5 billion in debt at the moment. That doesn't include a penny of what they might need to pay in the lawsuit brought against them by a trustee for the victims of Bernie Madoff's Ponzi scheme, in which the Wilpon group was adjudged to have been a net "winner." In reality, even if everything in the current plan goes right, the Wilpon group doesn't have any obvious pathway to solvency. And the latest news simply reinforces the notion that the Mets owners have run out of money, and are also running out of time. This latest bridge loan is supposed to get the team's owners through to March, by which point, they claim, they'll be able to raise $200 million by selling off ten separate minority ownership stakes in the Mets. According to the bank's financing statement, the loan is due back five years from the date of the agreement�November 28, 2016. But that is likely a date created to reassure the other lenders that Bank of America won't jump the line in the event of a bankruptcy. And the Mets confirmed late Monday night that they will pay the approximately $25 million to the city of New York, which is the latest of the twice-annual debt installments due on Citi Field. It represents just the latest in the obstacle course of debt the Wilpon group is picking its way through in an attempt to keep the team and avoid bankruptcy. This latest loan of $40 million, to be paid back in March, is largely needed to pay that Citi Field debt. So let's look at the team's finances, acting under the assumptions that the Mets pay off that debt, and that the $40 million in Bank of America money gets them through the winter. Come March, if the team has completed deals with ten minority investors for approximately $200 million�an extraordinarily tall order�$40 million gets paid back for the bridge loan. Another $25 million, owed to Major League Baseball and currently past due, also gets repaid. That leaves $135 million to get them through the season with a team that lost $70 million last year. While salaries have been slashed�approximately $50 million has come off of the payroll, and most of the Mets' top players have been jettisoned�it is reasonable to expect that they won't draw more fans than they did last year, even at a discount. And with ticket prices cut as well, what tickets do sell won't bring in as much revenue as they did in 2011. But let's be extremely optimistic, and estimate the team loses just $35 million next year. That leaves $100 million. That's just about enough to cover the two more debt payments against Citi Field, the $30 million in interest on the debt against the team, and the $20 million in interest on the debt against SNY. And it doesn't address some other massive issues for this ownership group: the $430 million in debt against the team (due in 2014), the $450 million in debt against SNY (due in 2015), or even a penny of the massive legal fees they'll be paying to fight the Madoff lawsuit, with a trial date set for March 19 of next year. Oh, and they'll owe $200 million, plus 3 percent per year, to their ten minority investors in 2017. So the best-case scenario places them right back in this position a year from now�on the brink. So then why did Bank of America lend these people the money at all? And why did the other lenders go along with it? For Bank of America, which holds a substantial portion of the team's SNY debt, keeping the Wilpon group around in the hope of getting back back some money makes more sense than bailing on them and entering a bankruptcy proceeding with the other lenders. What would follow�and what is an eventuality if the lenders can't nurse the Wilpon ownership back to health�is a free-for-all with massive claims to be paid to a multitude of creditors. And what will exist to pay them? The sale of a team whose value isn't greater than the debt owed against it and its stadium and a TV network, SNY, that isn't worth much without a deal to show Mets games. And rest assured, a new team owner, who may or may not own SNY as well, is going to pay attention to the $150 million per year the Angels recently received for their television rights, and contrast it to the $63 million per year SNY pays the Mets. One way or another, that model will change, and not to SNY's benefit. Once again, none of this includes any potential judgment against Wilpon and his partners in the Madoff suit. That potential burden currently stands at $386 million, with the potential to rise on appeal, and not including substantial legal fees to fight the battle along the way. Two endings are likely here. One is that the Wilpon ownership group misses a payment. This week's debt payment to the City of New York could have done it, for example, but the loan allowed them to keep going. It's hard to see how they'll manage to avoid missing a payment if they fail to find minority investors by March. If they do, it will likely be the point at which the lenders give up on them and race to the front of the line for bankruptcy. Another possible ending is that Major League Baseball enforces its own rules regarding debt�the Wilpon ownership group has been in violation of them for at least three years now�and forces a sale of the team. As a statement from the team made clear last night, M.L.B. signed off on the new loan, just as M.L.B. has allowed the Mets to owe them $25 million long beyond the agreed deadline for repayment. It is hard to believe that the banks and M.L.B., which is watching one of its marquee clubs shrivel and turn to dust before its very eyes, will keep pretending everything is OK for much longer.

http://www.capitalnewyork.com/article/null/2011/12/4589453/banks-and-major-league-baseball-prop-wilpon-group-how-long

[batmagadanleadoff]

Excerpt:

On the day after word was leaked of the Mets taking out yet another loan, here is what you heard Tuesday from Major League Baseball officials: The walls are closing in on the Wilpons. Nobody was saying that Bud Selig is ready to give the Mets owners the Frank McCourt treatment, and start chasing them toward the door. But neither was there any mistaking the growing concern from inside the MLB offices about the state of the franchise. �They have a lot of things coming due,� was the way one MLB official put it. �They need some things to happen fairly soon.� The official went on to explain that the banks, more so than MLB, are likely to start squeezing the Wilpons. �They�re sort of at the end here with the banks and everything else,� the official said. Suffice to say there is now a level of pessimism among MLB people about whether the Wilpons are going to survive their financial problems, which have become more of a topic of conversation than ever since Sandy Alderson told the world last week the Mets recently lost $70 million unrelated to the ongoing Bernie Madoff matter. Now word has been leaked of a $40 million loan the Mets received from Bank of America six weeks ago, on top of last year�s $25 million loan from MLB on which they were recently granted a deadline extension for repayment until March.

Read more: http://www.nydailynews.com/sports/baseball/mets/mlb-banking-mets-woes-jump-control-wilpons-feel-financial-squeeze-article-1.991269#ixzz1gUDZa7gt

Also, GM Alderson sez Mets might complete sale of minority stakes by next month.

[metirish]

I can't help but think of this when wondering what's going on in Fred's mind.



I think that'his attitude and this may well take a few years to play out but hopefully he'll be forced to sell, hoping not more than two years.

[Benjamin Grimm]

Maybe he'll sell the team if he gets elected President of Russia.

[Vic Sage]

lets start a write-in candidacy.

Oh and you bought "skitch"?

Absatively. It's onomatopoetic.

[metirish]

Alderson wasn't even aware of the loan until Monday, is that odd?, probably not.

GM: Mets close to having investors in place
Originally published: December 13, 2011 2:11 PM
Updated: December 13, 2011 9:40 PM
By DAVID LENNON david.lennon@newsday.com

Mets general manager Sandy Alderson said Tuesday that the Mets expect to have a group of investors in place shortly after the start of 2012, and perhaps as early as January, which would mean a cash influx that could be worth eventually $200 million for the financially hurting franchise. Alderson's comments during the team's annual kids holiday party at Citi Field come on the heels of Monday's acknowledgment by the Mets of a recent bridge loan, which a source said was for $40 million. The loan comes on top of the $25 million the club already borrowed from Major League Baseball more than a year ago. A source said the funds for the bridge loan were secured by Bank of America. "I wasn't even aware of the [bridge] loan until [Monday]," Alderson said, "so it couldn't have had any impact on what I've done. On the other hand, I'm not surprised that with the losses that we sustained last year, they have to be funded somehow, and that's either with cash or debt, and I think a bridge loan makes perfect sense given the investments that are expected to close in January." Alderson was referring to the Mets' strategy of rounding up a group of about 10 investors, at roughly $20 million each, to sell a minority stake in the franchise. Principal owner Fred Wilpon, along with team president Saul Katz and COO Jeff Wilpon, have not provided any details of that process, other than to say it has been "going very well." Alderson was asked later in the day during an interview on Fox Business Network whether the Mets were financially sound. "Yes, I think with this infusion of cash together with the possibility, I think the strong likelihood in the next two or three months that there will be additional investors in Mets ownership, that we should be good to go over the next couple years," he said. The Mets have said they have seven potential investors who are being vetted by Major League Baseball. A source said the team has another six or seven prospects under consideration. The source also said the Mets need only three to meet the goal of 10 investors. The source, however, expects the transactions to close in February. The source said the $200 million from unit sales is earmarked to pay for 2011 and estimated 2012 losses. Jeff Wilpon made a brief appearance at the holiday party, but he did not comment on the recent loan or the pending sale of minority shares. In addition to the two loans, the Mets' ownership group also is facing a lawsuit from Irving Picard, the trustee for the victims of Bernard Madoff. Picard is trying to recover as much as $386 million. There is a jury hearing set for March 19. Alderson already has said that the Mets' 2012 payroll will not exceed $100 million, and could even be below that number, as the team keeps some cash in reserve for amateur signing bonuses later in the year. The Mets didn't make an offer to homegrown shortstop Jose Reyes, who earlier this month signed a six-year, $106-million contract with the Marlins. When asked if the sale of minority shares in the team would help him increase the payroll at some point, Alderson hedged. "I think eventually," he said, "but I wouldn't expect that an influx of capital in January or February would have a major impact on our payroll for 2012, at least going into the season." As for subsequent years, Alderson hinted in the past that the Mets' money problems will plague the team beyond this season, and he did not shy away from that Tuesday, despite a somewhat more optimistic spin. "Anytime there is debt, there's interest to be paid, which presumably is a cash requirement, so I guess theoretically there could be some impact on payroll," Alderson said. "But I really don't believe it will have any. Most teams have debt." With Steven Marcus

[Edgy MD]

Mets general manager Sandy Alderson said Tuesday that the Mets expect to have a group of investors in place shortly after the start of 2012, and perhaps as early as January...

These two time frames are different how?

[Edgy MD]

The amount of meaningless regurgitations every time the needle seems to move is ridiculous. Covering the Wilpons has become akin to covering the pope --- it's one long 10-million-word deathwatch of a beat, saying next to nothing to people hanging on your every word

[batmagadanleadoff]

... and we expect to finalize our $200M deal with new minority investors by next month. Really.



Stay in your seat, son. I sent Sandy up there for your own protection. If you said what Sandy's saying, they'd pelt you with rotten tomatoes.

[metirish]

Can't help but laugh

[Fman99]

"Now, this is my deal here Wade, just give me the money, MLB specifically told me they want to deal with me here Wade. This is MY DEAL."



"Listen, Jeffy, no offense, but I don't want you fucking this whole thing up like you do everything. Gave all that money to Jason Bay, for Chrissakes."

[metirish]

Brilliant

[Guest John Cougar Lunchbucket]

Mets whacking Kingsport Rookie League team in cost-cutting move.

Somehow this hurts more than losing Reyes.

[metirish]

John Cougar Lunchbucket wrote: Mets whacking Kingsport Rookie League team in cost-cutting move. Somehow this hurts more than losing Reyes.

this thread is depressing, hoping one day to open it with news that they are selling it all.

[Edgy MD]

John Cougar Lunchbucket wrote: Mets whacking Kingsport Rookie League team in cost-cutting move. Somehow this hurts more than losing Reyes.

Yeah, in a sense, I felt the same way about them gutting administrative staff. Ugh.

One of my favorite minor league trips was to Kingsport to see a game called after two and a half innings. Good folks in smalltown America losing their ball team. Booooo, Mets!

I think I'll go open an indy league team there.

[Edgy MD]

Rubin says (1) he hasn't confirmed this yet, and (2) Mets would still have the same number of prospects, but more of them would be kicking around St. Lucie playing intrasquad games.

I'm expecting he'll get a yes on (1), and I'll respond with a maybe on (2).

[batmagadanleadoff]

metirish wrote: John Cougar Lunchbucket wrote: Mets whacking Kingsport Rookie League team in cost-cutting move. Somehow this hurts more than losing Reyes. this thread is depressing, hoping one day to open it with news that they are selling it all.

They'll sell alright. But not before letting David Wright go away for nothing in return. And then they'll sell the team to Jim Dolan. Because Fred Wilpon is a ********** who deep down, holds Mets fans in contempt.

[Frayed Knot]

Edgy DC wrote: Rubin says (1) he hasn't confirmed this yet, and (2) Mets would still have the same number of prospects, but more of them would be kicking around St. Lucie playing intrasquad games. I'm expecting he'll get a yes on (1), and I'll respond with a maybe on (2).

In fairness the Mets have been running with one "extra" farm team at the lowest level for the last number of years having one in both the Appy League (Kingsport) and in the Gulf Coast. Dumping Kingsport in favor of what is in effect the St Lucie Juniors would bring them back down to six domestic teams like most others although it would also probably have the cost saving move of centralizing things in PSL and I think the Appy is considered a small step better than the GCL.

[Guest John Cougar Lunchbucket]

NYPost_Mets Mike Puma May not be the Kingsport team the Mets dump; spoke to Gulf Coast League official who indicated Mets Rookie team in St. Lucie in jeopardy. 1 minute ago

[metirish]

But the Mets are synonymous with St. Lucie, can't see that going down well, unless of course Fred plans on canceling ST to save money.

[Frayed Knot]

metirish wrote: But the Mets are synonymous with St. Lucie, can't see that going down well, unless of course Fred plans on canceling ST to save money.

They'd still be in PSL.
What they have there now is the 'High-A' Florida State League entry AND a Gulf Coast League affiliate; the GCL being an entry level league where they play a half-season comprised with rosters of new and largely teenage signees from both the recent draft plus the Caribbean. The Mets currently have two entry-level teams: the GCL Mets plus the Appalachian League one in Kingsport and because these low-level leagues rarely draw more than a handful of spectators - other than scouts from other team or the occasional player relative - the big league club frequently owns these clubs as opposed local ownership for the higher minor leagues. I know the Mets own the GCL team (and Brooklyn), not sure about Kingsport.

Current pecking order:
NYC - MLB
Buffalo - AAA International League
Binghamton - AA Eastern League
Port St Lucie - High A Florida State League
Savannah - Low A South Atlantic (Sally) League
Brooklyn - Split Season New York-Penn League
Kingsport - Rookie Appalachian League
Port St Lucie - Rookie Gulf Coast League

So if one does disappear, sure, it'll almost certainly be for a cost-cutting move, but it also just puts them back to one entry-level club which is where most teams are and where they were before expanding to the GCL club 5 or 6 years back. The surviving entry level team, plus instructional league stuff, plus the teams they have in the Caribbean would take up the slack.

[bmfc1]

With the elimination of the Gulf Coast Mets, the Mets have 8 minor league teams. They quickly remind us that most teams have 7 but that doesn't eliminate the fact that there are now 25 or so fewer minor leaguers in the organization which makes it that much tougher to find the next Wright or Reyes. Sell the team Fred.
http://espn.go.com/blog/new-york/mets/post/_/id/37292/mets-slash-gcl-team

[G-Fafif]

Darryl's first professional team.