The New Mets Finances Thread - v.2012 Offseason

[batmagadanleadoff]

Mets Owners May Pay Themselves Big Dividend While Team's Fans Suffer
Mike Ozanian, Forbes Staff

Taking advantage of low interest rates and the escalating value of regional sports networks, the owners of the New York Mets are working with bankers to move debt from their baseball team to their cable network and pay themselves a dividend in the process, according to the New York Times. The Mets have lost roughly $100 million over the past two seasons because of falling attendance and high debt payments. The team�s owners, Fred Wilpon and Saul Katz, leveraged the Mets and the cable network they own two-thords of (Comcast and Time Warner Cable own the remainder), SportsNet New York, to the hilt. For years the two men relied on fake profits from Ponzi schemer Bernie Madoff to backstop their finances. But when Madoff was exposed as a fraud, the Mets lost their ATM. Last year the team reduced their payroll by $50 million before this season and it showed on the diamond, finishing 74-88, 24 games behind the first place Washington Nationals. The Mets drew 2.24 million fans at Citi Field this season, 17th among MLB�s 30 teams and over 100,000 less than they drew in 2011, despite lowering ticket prices significantly for many seats. Wilpon and Kats are looking to refinance the $450 million of debt on SNY to pay down down some of the baseball team�s roughly $480 million of debt, and perhaps pay themselves a dividend with some of the proceeds from the refinancing. This should not come as a surprise as the team�s owners piled on debt to pay themselves a dividend in the past. The shifting of debt from the team to SNY�s is a no-brainer, given the cable channel�s value, now about $2 billion, has increased the past few years while the value of the Mets, $719 million, fell 4% over the past year. The more valuable asset that is appreciating in value can borrow more at a more favorable interest rate than the less valuable asset that is falling in value. The real hope for Mets fans is that the team�s owners will not forget their long-suffering fans and also use some of the proceeds from the refinancing to boost payroll and put a better product on the field.

http://www.forbes.com/sites/mikeozanian/2012/10/06/mets-owners-may-pay-themselves-big-dividend-while-teams-fans-suffer/

[batmagadanleadoff]

Mets Seeking Banks� Help With Heavy Debt
By RICHARD SANDOMIR
Published: October 5, 2012

The Mets, whose financial woes have included steep losses, burdensome debt and an expensive showdown with the trustee for the victims of Bernard L. Madoff, are talking to banks to find a way to raise cash, according to two people with knowledge of their plans. Under one option, SNY, the team�s lucrative cable network, would refinance its existing $450 million loan and borrow still more toward paying off some of the team�s heavy bank debt and toward other possible purposes, like day-to-day operating expenses or the twice-a-year payments on Citi Field�s bonds. The team�s owners, and their SNY partners, could also get cash dividends from the proceeds. The owners, Fred Wilpon and Saul Katz, declined to comment publicly on their plans or how much they hope to borrow. The cable network, which carries Mets games, is a growing media asset potentially worth at least $1 billion, with revenue generated largely through cable, satellite and telephone company subscribers. Its cash flow is backed by multiyear contracts that typically lock in annual fee increases for a fixed length of time, making it largely immune from the team�s longstanding revenue challenges, which are tied to attendance drops and ticket discounts at Citi Field. Sterling Equities � Wilpon and Katz�s sports, real estate and investment company � owns about 65 percent of SNY. Its partners, Time Warner and Comcast, must still agree to the borrowing plan. They would also receive dividends if the plan goes through. �SNY is a better credit risk than the team,� Marc Ganis, a sports industry consultant, said. �It�s not subject to Major League Baseball�s debt restrictions, and unlike a team�s expenses that go up and down, SNY�s are easily quantifiable.� Rob Tilliss, chief executive of Inner Circle Sports, a sports investment bank, said, �They�re moving the debt from one side of the ledger to the other.� When SNY borrowed $450 million two years ago, $200 million was used to repay SNY�s partners for the network�s start-up costs, and nearly all the rest went to SNY�s partners as cash dividends, The SportsBusiness Journal reported. Depending on the size of the refinancing and the interest rates, SNY�s debt payments could rise, which could mean that fewer profits are shuttled to the Mets� bottom line, Ganis said. One of the advantages of team-owned regional sports networks is the ability to move profits from the channels to the team. �Any time you refinance, there�s some hesitation and concern,� said Wayne McDonnell, a professor of sports management at New York University. �But this is a nice opportunity. It says to me that the Wilpon family is ready and willing to reassess some of the things that have hung over their heads for so long.� Kenneth Shropshire, a sports business expert who is a professor of legal studies at the Wharton School at the University of Pennsylvania, said refinancing was like �transferring a load of debt from a 19 percent credit card to a 10 percent credit card.� �You still have the debt,� he said, �but at a lower rate.� The Mets have an uphill climb before they can spend as freely as they did before Madoff�s collapse in 2008 devastated Sterling�s finances. In 2011, the team lost $70 million, and might have lost tens of millions of dollars more this season despite lopping off $50 million in salary obligations. Wilpon and Katz were able to raise $200 million earlier this year by selling 40 percent of the team to a group of investors that includes the hedge-fund billionaire Steven A. Cohen and the comedian Bill Maher. The money went to pay off more than $100 million in bank debt and a $25 million loan from Major League Baseball. The other proceeds went for working capital. The team finished in fourth place in the National League East for the fourth consecutive season, with a 74-88 record. General Manager Sandy Alderson said on Wednesday that as he tried to extend the contracts of the team�s two stars, pitcher R. A. Dickey and third baseman David Wright, he would make clear that �we will not in the near future have unlimited funds.� In the immediate aftermath of Madoff�s December 2008 arrest on fraud and other charges, Wilpon and Katz portrayed themselves as innocent victims of the Ponzi scheme Madoff later pleaded guilty to orchestrating. Wilpon, Katz and their families and businesses had scores of accounts tied up in the Ponzi scheme, and they hoped to recoup many of their lost millions. Instead, the court-appointed trustee charged with determining the legitimate victims of the scheme and the illegitimate beneficiaries of it accused Wilpon and Katz of having greedily invested with Madoff for decades despite ample warnings that his investment operation was suspect. After months of litigation, Wilpon and Katz, as part of a settlement with the trustee, agreed to abandon their hopes of recovering much of what they insisted they were entitled to � a sum in excess of $150 million. Certainly, the Mets could have used the tens of millions of dollars that would have been returned to Wilpon and Katz had they been regarded as legitimate victims.

http://www.nytimes.com/2012/10/06/sports/baseball/mets-and-sny-seek-banks-help-with-debt.html

[Guest John Cougar Lunchbucket]

Did Forbes really misspell Katz?

[batmagadanleadoff]

[u:35z6jou5]Top 10 Funny Football Quotes[/u:35z6jou5]

10. Thomas "Hollywood" Henderson, Former Dallas Cowboys Linebacker

Commenting on Pittsburgh Steelers quarterback Terry Bradshaw�s intelligence...

�He couldn�t spell cat if you spotted him the C and the T.�

http://football.about.com/od/footballhistory/tp/funnyquotes.htm

[Guest John Cougar Lunchbucket]

Also, why link to the lazy blogger and not to the blogger's source material? Sandomir did all the work here, Mike Ozanian is getting a vulture win and can't even spell. Eff Mike Ozanian!

Let's be the forum that credits the right sources.

http://www.nytimes.com/2012/10/06/sports/baseball/mets-and-sny-seek-banks-help-with-debt.html?_r=0&adxnnl=1&adxnnlx=1349532296-vqYGGJ6s96BJJgU7BrVxYg October 5, 2012 Mets Seeking Banks� Help With Heavy Debt By RICHARD SANDOMIR The Mets, whose financial woes have included steep losses, burdensome debt and an expensive showdown with the trustee for the victims of Bernard L. Madoff, are talking to banks to find a way to raise cash, according to two people with knowledge of their plans. Under one option, SNY, the team�s lucrative cable network, would refinance its existing $450 million loan and borrow still more toward paying off some of the team�s heavy bank debt and toward other possible purposes, like day-to-day operating expenses or the twice-a-year payments on Citi Field�s bonds. The team�s owners, and their SNY partners, could also get cash dividends from the proceeds. The owners, Fred Wilpon and Saul Katz, declined to comment publicly on their plans or how much they hope to borrow. The cable network, which carries Mets games, is a growing media asset potentially worth at least $1 billion, with revenue generated largely through cable, satellite and telephone company subscribers. Its cash flow is backed by multiyear contracts that typically lock in annual fee increases for a fixed length of time, making it largely immune from the team�s longstanding revenue challenges, which are tied to attendance drops and ticket discounts at Citi Field. Sterling Equities � Wilpon and Katz�s sports, real estate and investment company � owns about 65 percent of SNY. Its partners, Time Warner and Comcast, must still agree to the borrowing plan. They would also receive dividends if the plan goes through. �SNY is a better credit risk than the team,� Marc Ganis, a sports industry consultant, said. �It�s not subject to Major League Baseball�s debt restrictions, and unlike a team�s expenses that go up and down, SNY�s are easily quantifiable.� Rob Tilliss, chief executive of Inner Circle Sports, a sports investment bank, said, �They�re moving the debt from one side of the ledger to the other.� When SNY borrowed $450 million two years ago, $200 million was used to repay SNY�s partners for the network�s start-up costs, and nearly all the rest went to SNY�s partners as cash dividends, The SportsBusiness Journal reported. Depending on the size of the refinancing and the interest rates, SNY�s debt payments could rise, which could mean that fewer profits are shuttled to the Mets� bottom line, Ganis said. One of the advantages of team-owned regional sports networks is the ability to move profits from the channels to the team. �Any time you refinance, there�s some hesitation and concern,� said Wayne McDonnell, a professor of sports management at New York University. �But this is a nice opportunity. It says to me that the Wilpon family is ready and willing to reassess some of the things that have hung over their heads for so long.� Kenneth Shropshire, a sports business expert who is a professor of legal studies at the Wharton School at the University of Pennsylvania, said refinancing was like �transferring a load of debt from a 19 percent credit card to a 10 percent credit card.� �You still have the debt,� he said, �but at a lower rate.� The Mets have an uphill climb before they can spend as freely as they did before Madoff�s collapse in 2008 devastated Sterling�s finances. In 2011, the team lost $70 million, and might have lost tens of millions of dollars more this season despite lopping off $50 million in salary obligations. Wilpon and Katz were able to raise $200 million earlier this year by selling 40 percent of the team to a group of investors that includes the hedge-fund billionaire Steven A. Cohen and the comedian Bill Maher. The money went to pay off more than $100 million in bank debt and a $25 million loan from Major League Baseball. The other proceeds went for working capital. The team finished in fourth place in the National League East for the fourth consecutive season, with a 74-88 record. General Manager Sandy Alderson said on Wednesday that as he tried to extend the contracts of the team�s two stars, pitcher R. A. Dickey and third baseman David Wright, he would make clear that �we will not in the near future have unlimited funds.� In the immediate aftermath of Madoff�s December 2008 arrest on fraud and other charges, Wilpon and Katz portrayed themselves as innocent victims of the Ponzi scheme Madoff later pleaded guilty to orchestrating. Wilpon, Katz and their families and businesses had scores of accounts tied up in the Ponzi scheme, and they hoped to recoup many of their lost millions. Instead, the court-appointed trustee charged with determining the legitimate victims of the scheme and the illegitimate beneficiaries of it accused Wilpon and Katz of having greedily invested with Madoff for decades despite ample warnings that his investment operation was suspect. After months of litigation, Wilpon and Katz, as part of a settlement with the trustee, agreed to abandon their hopes of recovering much of what they insisted they were entitled to � a sum in excess of $150 million. Certainly, the Mets could have used the tens of millions of dollars that would have been returned to Wilpon and Katz had they been regarded as legitimate victims.

[batmagadanleadoff]

John Cougar Lunchbucket wrote: Also, why link to the lazy blogger and not to the blogger's source material? Sandomir did all the work here, Mike Ozanian is getting a vulture win and can't even spell. Eff Mike Ozanian! Let's be the forum that credits the right sources.

Ummmmm ..... I did that. Check out post #2.

[Guest John Cougar Lunchbucket]

Welll.... good. I appear to have opened the thread between posts 1 and 2.

[batmagadanleadoff]

I know.

[Guest John Cougar Lunchbucket]

Who are you, Mike Ozanian?

[batmagadanleadoff]

The New Financial Story, In Brief
Posted by: Howard Megdal - Posted in Today's Mets headlines on Oct 09, 2012

In case you missed it, Rich Sandomir had a great scoop on how the Mets plan to cobble enough money together to get through the offseason. 2010�s plan, an MLB loan, is apparently no longer available. 2011�s plan, a bridge loan ahead of a minority ownership sale, isn�t available for the simple reason that there aren�t more shares to sell. So 2012�s plan, according to Sandomir, is to borrow more against SNY. This is theoretically possible, since the Wilpon group has borrowed only $450 million against a 65 percent stake in SNY, and the company is believed to be worth over a billion dollars. What this will mean, though, is any additional borrowing, and/or time extension on repayment, almost certainly carries with it a higher interest rate. And that will cut into the margin of error the team has for losing money. But all of this requires a number of entities to sign off on the new debt: the debtholders on the SNY loan, the debtholders on the loan against the team ($320 million, roughly, due in June 2014), Major League Baseball (probably the easiest sell, given Bud Selig�s see-no-debt precedent with this ownership group), and Comcast/Time Warner, the Wilpon partners in SNY. And to sign off, they�ll all want a piece of the money coming in, making the ultimate payoff of the last profit spigot for Sterling that much smaller. Financially speaking, it�s epic drama. For the Mets to get back on firm financial footing, it�s probably just going to delay things a bit. The higher the ultimate amount of new money the owners squeeze out of this scenario, and that is if they do, the more likely it is to decimate annual profits from SNY to Mets ownership. But if they pull it off, ownership will manage, with few other options, to have grabbed tomorrow�s SNY profits today. In a sport where salaries appear set to rise exponentially because the other teams around MLB can take profits from local TV deals and put them into new player acquisitions, not financial survival, that�s a bad omen for the Mets, ompetitively. But then, that�s tomorrow�s problem, isn�t it?

http://mets.lohudblogs.com/2012/10/09/the-new-financial-story-in-brief/


Sandomir's NYT piece implies, though, that if the Mets do refinance, it will be at an interest rate lower than the current one. Megdal is almost certain that the refinance rate will be higher.

[Edgy MD]

I'd be surprised to see Howard assume any but the worst with regards to the Mets financial picture.

I'm not sure what's the heavier hyperbole: "great scoop" or "epic drama."

[metirish]

Seriously, is Megdal implying that the minority shares money sold last year, 20 in all is gone?

Gone, based on what?, by my math they should have at least two thords of that left.

[Edgy MD]

Well, they used a chunk of that to pay off loans from MLB and Bank of America.

[Ceetar]

Edgy DC wrote: Well, they used a chunk of that to pay off loans from MLB and Bank of America.

it's murky without seeing the books of course, meaning no one actually knows.

The BoA loan was for operating expenses. was that as it applied to 2012 payroll? 2011? some sort of bridge period inbetween? If they lost 70 million last year for instance, and dropped payroll this year and maybe don't make quite as much, they're looking at what, 40million to cover? If that's not what the loan was for, they owe more. If it was they're in a different situation. We don't really know if they're still playing catchup, although the idea as the minority sales would do that.

they might be refinancing to get some cash to bridge the the payroll/expense gap, or they simply might be looking at a wise investment to minimize long term payments the same way you'd refinance a mortgage or switch to a lower interest credit card.

What we do know is that Sterling could afford to put $60 (I think it was 3 shares right?) million into the Mets last season. They raised money from themselves. They knew 2013 was coming. They're not Mayan. If they needed that money they could've held on to it, sold the other three shares to someone else, and had it for this year.

[Edgy MD]

Ceetar wrote: Edgy DC wrote: Well, they used a chunk of that to pay off loans from MLB and Bank of America. it's murky without seeing the books of course, meaning no one actually knows.

No, nothing is truly knowable. But it was widely reported that they used a chunk of that to pay off loans from MLB and Bank of America. Neither entity has ever denied this, so I'm not sure what you're calling into question.

[Ceetar]

Edgy DC wrote: Edgy DC wrote: Well, they used a chunk of that to pay off loans from MLB and Bank of America. it's murky without seeing the books of course, meaning no one actually knows. No, nothing is truly knowable. But it was widely reported that they used a chunk of that to pay off loans from MLB and Bank of America. Neither entity has ever denied this, so I'm not sure what you're calling into question.

That's a wash really is my point. What was the bank of america loan money used for is what I'm asking? It was taken out earlier this year, so it's not like this was some long standing debt like some seem to make it out to be. They used the money to pay for..something. the 70 million they lost last year? the money they expected to lose this year? something else? it was a bridge loan. Besides the fees associated with taking out a long for a month or two, they're in the same financial state they'd have been in if they sold the shares 2 months earlier. The money to Bank of America was spent on the team/debt/payments/etc. It all falls within the 2012 financial picture. It seems like people are erasing the BoA debit with the partial sale credit and forgetting about the BoA credit associated with it.

[Edgy MD]

What was the bank of america loan money used for is what I'm asking?

A very different point from questioning whether or not anyone really knows if they paid off the loan.

Contemporary accounts reported that the BoA loan was to cover operating expenses until the minority sale went through.

[Ceetar]

Edgy DC wrote: What was the bank of america loan money used for is what I'm asking? A very different point from questioning whether or not anyone really knows if they paid off the loan. Contemporary accounts reported that the BoA loan was to cover operating expenses until the minority sale went through.

I wasn't questioning if they paid the loan, just questioning in general how much we know about the money flow.

'operating expenses' is fairly vague no? Salaries? Does David Wright get a check every two weeks, or only during the season? If so, that's payroll anyway. Or is this stuff like Citi Field's electric bill and Big Bertha game in Jeff Wilpon's office?

[Edgy MD]

Ceetar wrote: I wasn't questioning if they paid the loan, just questioning in general how much we know about the money flow.

Well, that's certainly what seems to be suggested is suggested by this exchange.

Ceetar wrote: Edgy DC wrote: Well, they used a chunk of that to pay off loans from MLB and Bank of America. it's murky without seeing the books of course, meaning no one actually knows.

[Edgy MD]

MLB players are paid during the season.

[Ceetar]

I should've quoted metirish's bit as well to be clear I guess, or nothing at all. He was pondering where all the money went, and you responded with that. So I was just continuing the conversation, not questioning it.

they spent some of the money on the MLB loan and the BoA loan. Where did the rest go? well part of that answer means asking where the BoA loan went too. All I'm saying is not to forget that credit in terms of the Mets income last year.

[ashie62]

I understand restructuring the debt of the more credit worthy entity SNY to free up cash to pay down the debt of the team.

I understand the Wilpons wanting to get a dividend out of this, a salary during losing money times so to speak, but how do you take for yourself and ask MLB, Comcast and Time Warner to take a haircut??

Maybe borrow from future SNY revenue in the form of a new bond and satisy all.

I don't see it as a move of financial desperation, more one of recovery.

[Frayed Knot]

Edgy DC wrote: MLB players are paid during the season.

This can actually vary with individual contracts.
Some call for only in-season payments, others get paid across the entire calendar year.

[Gwreck]

Being paid across the calendar year is the exception. I seem to recall that CC Sabathia negotiated that particular provision into his first contract with New York's Junior Circuit team.

[Frayed Knot]

Yes, I believe you're correct, it's just not completely universal subject to individual negotiations.

That was part of the problem in the NFL lockout. With most (if not all) of their players being on in-season only pay plans and with most of them also not exactly living, let's put it kindly here, save-it-for-rainy-day life-styles, the owners were able to (correctly) bet on the fact that the players were much more likely to cave the minute those anticipated paychecks (the first ones in six months) began to be missed or even delayed.

[batmagadanleadoff]

If You�re Keeping Score At Home�
Posted by: Howard Megdal - Posted in Today's Mets headlines on Oct 10, 2012

Just some basic facts and figures to keep in mind, courtesy of the amazing people at MLBTradeRumors.com. The Mets, if we assume they are letting Mike Pelfrey, Andres Torres, Rob Johnson, Manny Acosta and Fred Lewis go without qualifying offers, will be on the hook for an estimated $8.5 million to four players: Ike Davis, Daniel Murphy, Bobby Parnell and Josh Thole. Add that to the $80.5 million due to Johan Santana, Jason Bay, Jon Niese, Frank Francisco, R.A. Dickey and David Wright, and you get $89 million for 10 players. Payroll was $91.6 million in 2012, and is to remain static in 2013. If the other 15 players are all minimum salary players, at $490,000, that�s another $7,350,000, or a total of $96.35 million. Somethig doesn�t add up here. And the ludicrously underwhelming offers to Wright and Dickey make it fair to wonder if the Mets plan to cut salary by eliminating two of their salary obligations for 2013 that are movable via trade. It also explains the Ike Davis/Jon Niese trade talk.

http://mets.lohudblogs.com/2012/10/10/if-youre-keeping-score-at-home/

[batmagadanleadoff]

If You�re Keeping Score At Home� Posted by: Howard Megdal - Posted in Today's Mets headlines on Oct 10, 2012 Payroll was $91.6 million in 2012, and is to remain static in 2013. If the other 15 players are all minimum salary players, at $490,000, that�s another $7,350,000, or a total of $96.35 million. Somethig doesn�t add up here. And the ludicrously underwhelming offers to Wright and Dickey make it fair to wonder if the Mets plan to cut salary by eliminating two of their salary obligations for 2013 that are movable via trade. It also explains the Ike Davis/Jon Niese trade talk. http://mets.lohudblogs.com/2012/10/10/if-youre-keeping-score-at-home/

Or the Mets might go with a $96M payroll. If the Mets refinance, $96M is do-able, given the team's comments about 2013 payroll possibilities.

[Edgy MD]

And the ludicrously underwhelming offers to Wright and Dickey make it fair to wonder if the Mets plan to cut salary by eliminating two of their salary obligations for 2013 that are movable via trade.

How does he sleep at night, what with his brain racing to unwind the intricate and far-reaching plots the Mets are hatching at that very hour to deprive the public of joy?

[batmagadanleadoff]

The New Financial Story, In Brief Posted by: Howard Megdal - Posted in Today's Mets headlines on Oct 09, 2012 In case you missed it, Rich Sandomir had a great scoop on how the Mets plan to cobble enough money together to get through the offseason. 2010�s plan, an MLB loan, is apparently no longer available. 2011�s plan, a bridge loan ahead of a minority ownership sale, isn�t available for the simple reason that there aren�t more shares to sell. So 2012�s plan, according to Sandomir, is to borrow more against SNY. This is theoretically possible, since the Wilpon group has borrowed only $450 million against a 65 percent stake in SNY, and the company is believed to be worth over a billion dollars. What this will mean, though, is any additional borrowing, and/or time extension on repayment, almost certainly carries with it a higher interest rate. And that will cut into the margin of error the team has for losing money. But all of this requires a number of entities to sign off on the new debt: the debtholders on the SNY loan, the debtholders on the loan against the team ($320 million, roughly, due in June 2014), Major League Baseball (probably the easiest sell, given Bud Selig�s see-no-debt precedent with this ownership group), and Comcast/Time Warner, the Wilpon partners in SNY. And to sign off, they�ll all want a piece of the money coming in, making the ultimate payoff of the last profit spigot for Sterling that much smaller. Financially speaking, it�s epic drama. For the Mets to get back on firm financial footing, it�s probably just going to delay things a bit. The higher the ultimate amount of new money the owners squeeze out of this scenario, and that is if they do, the more likely it is to decimate annual profits from SNY to Mets ownership. But if they pull it off, ownership will manage, with few other options, to have grabbed tomorrow�s SNY profits today. In a sport where salaries appear set to rise exponentially because the other teams around MLB can take profits from local TV deals and put them into new player acquisitions, not financial survival, that�s a bad omen for the Mets, ompetitively. But then, that�s tomorrow�s problem, isn�t it? http://mets.lohudblogs.com/2012/10/09/the-new-financial-story-in-brief/ Sandomir's NYT piece implies, though, that if the Mets do refinance, it will be at an interest rate lower than the current one. Megdal is almost certain that the refinance rate will be higher.

Megdal's follow-up:

The Mets are building an October tradition, too
By Howard Megdal
10:45 am Oct. 9, 2012
Who says the Mets don't have meaningful Octobers?

While playoff teams struggle simply to raise a flag that will represent success for, at most, one season, the Mets are set to fight a pitched battle for ownership's financial survival, while at the same time, trying to keep the team's most valuable pitcher and everyday player for years to come. Now those are some high stakes. The October rush for survival money is becoming a tradition for the Mets, as much a part of the team's fabric these days as the postseason is to the Yankees. In 2010, the Mets addressed it with a loan from Major League Baseball. In 2011, they did so with a Bank of America bridge loan. How they hope to do so in 2012 was laid out by Richard Sandomir in the New York Times on Saturday. He wrote: "Under one option, SNY, the team�s lucrative cable network, would refinance its existing $450 million loan and borrow still more toward paying off some of the team�s heavy bank debt and toward other possible purposes, like day-to-day operating expenses or the twice-a-year payments on Citi Field�s bonds. The team�s owners, and their SNY partners, could also get cash dividends from the proceeds." Let's break down exactly what that option would entail. As it stood in 2012, the New York Mets lost $23 million. Much of that was due to roughly $20 million in interest payment from the approximately $320 million debt against the Mets due back in 2014, and $20 million in interest on a $450 million debt against SNY due back in 2015. But there were two reasons Fred Wilpon and his partners weren't forced into bankruptcy by the loss. One: A March infusion of minority owner cash, largely from SNY itself, helped pay down a portion of the team debt, outstanding loans to Major League Baseball and Bank of America, and interest on their large outstanding debts. Two: SNY earned a profit of $100 million, with Wilpon and his partners owning about 65 percent of SNY. Thus, $65 million in profit. Then, the $43.5 million in stadium debt came out of that chunk of profit, leaving around $21.5 million to go toward the losses of the Mets. But borrowing more against SNY, if that is ultimately even possible, changes the math. Exactly how much it changes things depends on how much a lender will value the 65 percent interest the Wilpon group have in SNY. If the company is valued at a billion dollars, for instance, that share would presumably be worth $650 million. But not only have the Mets owners already borrowed $450 million against that stake, they also have partners who would stand to be paid off from any dividend raised by additional borrowing, according to Sandomir. Finding money to pay day-to-day expenses in 2013, and enough money to convince their team debtholder to go along with the deal, and enough money to convince their SNY co-owners to go along with the deal; well, Wilpon and his partners need to make this money go a long way. The other thing to factor in, if the Mets owners borrow against SNY, is the likely effect it has on the annual payoff from SNY going forward. Banks don't generally give something for nothing; if the Mets borrow even more against SNY, and manage to get that 2015 date pushed back, the lender is almost certainly going to demand a much higher interest rate. More money borrowed, at a higher interest rate, means getting less in profits from SNY in 2013 and the years beyond. Considering the extent to which SNY's profits helped the owners survive until now, turning off that last Sterling spigot simply to cover day-to-day expenses doesn't seem to add up as a long-term play, unless the Mets can start to make money again. And about that: 2013 looks pretty grim, given static payroll and the current talent on hand, which just finished 74-88. But the Mets have been making loud noises about retaining David Wright and R.A. Dickey, the two brightest spots in 2012, for the long-term. Both players have options for 2013, and have expressed a desire not to negotiate in-season next year. So the Mets need to either sign them long-term this winter, or risk losing them next winter for nothing, Jose Reyes-style. Accordingly, a piece appeared in the New York Post the same day the Sandomir piece appeared stating this: "A baseball source with knowledge of the team�s thinking was more specific yesterday, saying it�s conceivable Wright and Dickey will have new deals in place, at least in principle, by the time the World Series begins later this month." Sandy Alderson has reportedly yet to reach out to Dickey's agent, and has had preliminary conversations with Wright's agent. But neither Wright nor Dickey would have much to fear, in terms of getting a bounced paycheck; M.L.B. would step in a guarantee payroll should current ownership falter. Both players have described a winning team as just as important to them as a big payday, however, and the Sandomir story simply reiterates the specifics of what Alderson meant when he said last week that the Mets "will not in the near-future have unlimited funds". Thus, the knock-on effect: it is up to Alderson to sell the future of the Mets to Wright and Dickey, and signing them would provide some measure of independent validation that someone other than the Wilpons themselves actually believes in the long-term prospects of the Wilpons. Securing them would make the Mets better on the field in 2013, and validate them in a significant way off the field as well. So they may not be contending for a championship in Flushing next season. But they'll be playing for a lot.

http://www.capitalnewyork.com/article/sports/2012/10/6538003/mets-are-building-october-tradition-too

[ashie62]

the Mets are set to fight a pitched battle for ownership's financial survival, while at the same time, trying to keep the team's most valuable pitcher and everyday player for years to come


pitched battles, survival...Hyperbole Howard needs help.