17
2011
Madoff Decision Is Significant Setback For Owners Of Mets
An article by Former Writers
In a column in the New York Times this morning by Richard Sandomir and Ken Belson, all the current news about the Wilpon, Katz suit is brought up to date. For those who are really interested in the business part of the Mets Operation, this article is very informative. The New York Times doesn’t waste space and they’ve taken up a big chunk of the Sports Section for this.
On Tuesday…a federal appeals court in Manhattan appeared to settle a sizable chunk of the suit. Under its ruling, the team’s owners, Fred Wilpon and Saul Katz, could have to turn over at least $300 million to the trustee. It is a major financial setback for the owners who, faced with an unprofitable baseball operation, have already been forced to sell a portion of the team just to stop the bleeding of money.
The United States Court of Appeals for the Second Circuit, in a unanimous ruling by the three-judge panel, said the trustee’s central formula for deciding how to recoup and redistribute the money that had moved through Madoff’s vast Ponzi scheme was appropriate. The trustee, Irving H. Picard, had decided that investors who had taken more money out of their accounts with Madoff than they had put in had to return their “net winnings.”
If and when we come to the end of all of this posturing and pouting, there will be plenty of accolades to go around – maybe even one for Mario. The Wilpons and Katz families are hanging on to their last penny over this knowing full well that after all this time the cat is out of the bag, but still running around the room.
So read the rest of this if you want to be really informed – we all know Richard Sandomir and Ken Benson – so you see that the Times has hauled out the Big Guys for this never-ending situation. I for one can’t wait for the trial to be over and Richard and Ken turned loose again.
I’m sure Sandy Alderson and Terry Collins can’t wait for the final days of the trial either.- they’ve sure had to be careful with everything they say and do. In the meantime, Terry has managed to keep a team together and speak with each player every day. No wonder the guys love him – he’s really shown that he cares about them. And Sandy, poor Sandy who is meant for a much better introduction to his Mets position is walking a tightrope as well.
About the Author: Former Writers
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wow.. the beat goes on… why can’t they just sell the team and dissapear for life??
Agreed. Or at the least sell their majority to Einhorn (or whomever else) and consider themselves lucky they would walk away still baseball owners in some way.
Hi Alex – here’s the URL for you and anyone else who wants to read the article in the Times –
http://www.nytimes.com/2011/08/17/sports/baseball/madoff-decision-is-significant-setback-for-owners-of-mets.html?ref=sports
hi annie, great article, thanks for the link.. it seems the 300 million will be the base amount they will pay, if not it’ll be close to that.. which might force them to sell the team… yikes..
Alex – From what I know of the new Einhorn kid, he’d love to own the Mets and has said so publicly. He’s apparently got the money, too –
annie, from your mouth to god’s ears.. the thing is, i was also reading that the deal hadn’t been finalized yet, which led me to believe that with all the money the mets will save in payroll, that would’ve been use for debt to einhorn instead of using it on the team.. making them solely owners once again
I don’t understand the “faced with an unprofitable baseball operation” reference. They’re saying that the baseball operation is not profitable? Since when?
JP the Mets have been bleeding money since 2009. Yes they are un profitable. I read that this season they will lose $7 million.
A key line at the end of the story says, “In the meantime, the Mets are in flux. They expect to lose as much as $70 million this season and have not received the $200 million they need from Einhorn.” And earlier in the piece it says, “Wilpon and Katz have already agreed to sell a third of the Mets to David Einhorn, a hedge-fund manager, for $200 million. But six weeks after the Mets had optimistically hoped to close the deal, they had not done so.”
Even as someone who doesn’t trust the Wilpons as far as I could throw them and can’t wait for them to sell the team, I am blown away by this. How are they able to LOSE $70 million with one of the biggest sports franchises in the world? How, after all the hoopla over the Einhorn deal, have they managed to not see a dime? Would it be possible for anybody to do a worse job?
JPM – You are going to have to find someone else to answer this – I have no idea of the business of baseball, nor just how much or how little the Wilpon crew spends on the team. They’ve got a lot of other projects to manage and maybe there’s just not enough Wilpon cash to go around. All I know is that it seems as though all those big new stadiums that were built recently are never as full as Fenway.
They took on a ton of debt to build the stadium, ran up a high payroll, and saw attendance drp at least 1mill from what cash flow projections were based on.
so hell yeah, it is easy to “lose” (in quotes, keeping in mind all the funky accounting that goes on, especially when you also own the broadcast network) 70 mill on a BB team, even in NY (maybe especially, since it costs more to do anything in the city!)
Anyone who believes the Wilpons are “bleeding money” to the tune of 70 million per year also believes in the Tooth Fairy. The Wilpons are losing money like I’m Barack Obama.
Not a fan of your healthcare solution.
Funny…thats the exact amount I have always said they were fairly obligated to return.
In cases like these UNLESS you can prove they were part of the scheme itself at worst you give back profits taken and everyone goes home!
This is a FAIR judgement and not the stunning masacre of the Wilpon Welath everyone said was a foregone conclusion!
They gave back the money that did not TRULY belong to them and not ONE PENNY MORE!
Sometimes the justice system DOES work!
Very interesting Times article. If settled it will be 300 mil plus lawyer fees and I bet they are in the millions and millions. If I were the Wilpons I would appeal to the Supreme court because whether the high court accepts or rejects the case it won’t happen tomorrow and they can hang on to their money longer and you never know, they may win. Of course the lawyer fees will continue to mount. If Einhorn comesw in with 200 million, where do the Wilpons get the rest. Surely they can’t borrow anymore. The result is a ten ton brick around the Mets’ neck and will affect this team for many, many years. We’ll be a mediocre team for the forseeable future. This is my take.
the 300 million really does not seem like new news. That goes way back to early in this situation, and if anything, what they seemed prepared to pay 9and expecting, so must have been budgeted for). It was always the penalty phase (700mill or so) that they were really fighting.
If the result is they just pay back net gains, nothing more, then most likely they agree and move on. And they could have done it a year ago, saving everyone time, aggravation and money. Well, the lawyers would have lost money on that (including Picard), so I guess that explains why it did take so long!
The Wilpons it seems expect to pay the $300 million in the Madoff case all along. The billion dollar plus claims are what spooked them. Now that the courts seem to be in the Wilpons favor and the bogus damages are off the table, the Wilpons can easily pay the $300 million and move on. Own the mets, sell a piece to Einhorn, another piece to someone else and all is good.
Return of false profits was always the obvious outcome. However, it’s not finalized and a settlement continues in the works. Picard now has no incentive to settle for anything less than $300 million. So the $300 M is now set in stone as the base number. Any settlement will be higher than that and will depend upon how convincing Picard can be with Cuomo regarding complicity on the part of the Wilpons. I think it will end up modestly north of $300 M in the range of $350 to $400 M. Oh by the way, the Wilpons are in trouble with their Einhorn solution. The latest story is that Einhorn’s magic touch on Wall Street may have run dry and all his latest investments are now headed into the tank. He may no longer be able to buy the Mets. Freddie may have to find a new partner and that is not good when your team is floundering and the fans are headed for the exits. None of that comes out very good for the prospect of resigning Reyes for the future. I see the total scenario as becoming bleaker as we go. Econmomy in decline, team in decline, attendance in decline, owners up to their necks in litigation and financial trouble, boy wonder partner now declining also. What’s to like about the future for the Mets?
That’s about the most depressing thing I’ve read all week. You know, the team wasn’t really “in decline” this season… I mean, they at least seemed to be doing better than last season, playing with some spirit and intensity, and hanging around the .500 mark. But, that’s the fan in me talking. I suppose they could go completely into the tank for the last month of the season — just like Einhorn’s investments.
Still, you impress me as someone with an axe to grind. Or perhaps your real name is Debbie Downer?
JPM, I agree with you that, given all the circumstances, the Mets have performed reasonably well this season. Beltran and Reyes gave them spark early on, but Beltran is now history and Jose’ is injured again. Fortunately, David has come back and is performing as he should. We have gotten some life from Turner, Tejada, Duda, and Murphy (who is all hit and no field) and now gone for the remainder of the season. As fans we continue to wait for the return of Santana and are thankful for the performances of Niese and Gee. Fortunately Izzy filled in well enough after KRod was shipped out. So the year has been OK, mostly mediocre, with a few highlights. Nevertheless, going into next year, we have to look for continuing development of a handful of younger players as we wait for the likes of Harvey and Wheeler to develop some years out. So it is a lengthy wait at best. Hopefully we get Ike back for next year and that will help.
My negative assessment is based on where we are now with near term expectations that don’t have a lot to base any excitement upon. The best thing that could happen IMO is for the Wilpons to sell this team and use the proceeds to get out of their litigation. Then we at least get a new owner with some money to spend and a fresh outlook. Keep going with the Wilpons in charge and I don’t see much light at the end of this tunnel. You can keep hopeing, but it’s just not going anywhere with them controlling the purse strings. I have been a fan since 1962 and my only axe to grind is that of a disappointed long term fan. This is NY and we deserve a team capable of respresenting this fan base. The quickest way we can get there is with new ownership. My glum assessment in the original post is based on the Wilpon’s continuing indefinitely. They need to sell out and the sooner the better for all of us fans. Any fans who don’t understand that are living on another planet far far way. With a new owner, we can get a fresh lease on life. Otherwise it’s same-o same-o forever with no hope for the future.
You’re absolutely right. I’ve been saying the Wilpons have to go for some time. The positives from this season and anticipated for next are based on what Sandy and Terry have been able to do…but that’s with their hands tied because of the Wilpon situation. I can only imagine where the team could be if they weren’t constricted by this ownership.
That said, I still feel like this has been a mostly enjoyable team to watch — especially when contrasted to the last couple of years — so I find it hard to feel things are quite as bleak as you portray them. But yes, in a New York market where the expectation is for big things now, that amounts to failure. And really, with the exception of the pinstripes from the Bronx and the blue team in New Jersey, every pro team in the New York market has been a failure for years.
I agree with you. I have enjoyed watching some of the younger players like Turner, Tejada and especially Gee. They did bring some excitement to an otherwise dreary season. Murphy surprised me with his bat, although he is disappointing at not being a complete player. I was glad to see the resurgence of Jose’ and Carlos. I have always liked Carlos and was glad to see his comeback and his knees in pretty good shape. I was actually glad for him that he could find a new slot with a successful team. I was also glad to see KROD sent packing, as I never really liked him. I believe he was overrated and always in trouble on the field and off. I think the guy is basically a dirt bag. So yes, it was not totally disappointing. I see Alderson as handcuffed by the Wilpons and so it is not a fair test to look at his performance. His biggest accomplishments were sending KROD packing and trading Beltran for a top notch prospect. I think Collins has done a great job and he is a vast improvement of Manuel. That is probably the biggest achievemnt of this year and I will be disappointed if he does not get resigned. But for all that, it is difficult to get excited about the future. Especially since Harvey and Wheeler are years away and Santana might just never return. So it is a long haul and we have 2 or 3 years of substandard performance on the horizon. It just is not up to NY standards and I believe that all goes back to the Wilpons. I just hope they get buried financially so they finally pack it in and cash in what they can get for the team. If they get off easy on this Madofff thing, they will just keep the team and it will always be mediocre as long as they are around. An ownership change is the key to future.