16
2011
My Outrage Goes Beyond Baseball
An article by 
As most readers on MMO know, the Mets recently got a $40 million dollar bridge loan from Bank of America to help tide the team over until some of those $20 million dollar ownership stakes they’ve been peddling start to come through. For more on that, read my post “A Bridge To Nowhere” and catch yourself up.
What really irks me right now, is not so much that the Wilpons got a $40 million dollar loan, but who they got it from; Bank of America. That absolutely stinks to high heaven.
This is the same Bank of America who only two years ago got a $138 billion dollar bailout from the United States government. At the time, Bank of America Chief Executive Officer Ken Lewis told his investors that “losses were accelerating beyond expectations.”
In addition to the bailout money, nearly 13% of the first $350 billion in Troubled Asset Relief Program (TARP) funds went to Bank of America as well. This was all the result of thousands and thousands of bad loans by BOA to very low credit worthy individuals and thousands of high-risk loans to failing businesses.
Now I don’t begrudge the Wilpons applying for and receiving a loan – any loan no matter the size. They are American citizens and like all of us are entitled to the same privileges afforded to all of us under the constitution.
But what I do have a problem with is Bank of America doling out such a sizable loan to an institution that is only weeks away from becoming completely insolvent based on current and anticipated losses. This transaction is inexcusable and wreaks like the Great Kills landfill on a scorching hot, sunny day in August.
This isn’t the first time I’ve taken issue with a situation like this. It reminds me of when Citigroup took bailout money with one hand, and then agreed to pay the Wilpons $20 million a year for the naming rights to the park over the next 20 years with the other hand. That’s adds up to a grand total of $400 million dollars.
After a national outcry over this fiasco, Citigroup vowed that none of the money going toward Citi Field would come from TARP money. Still, what kind of a crock is that? It just sounded like some high tech number fudging to me – and while it appeased Congress, it certainly didn’t satisfy me.
Anyway, if any of you wonder why the Wilpons are still the owners of the Mets today, as I’ve said on many occasions before – you can thank Uncle Bud Selig primarily for that.
But leave some blame for Citi Group who funnels in $20 million annually to the Wilpons, and now Bank of America as well, for keeping this New York Mess alive.
About the Author: Joe DeCaro
I'm a lifelong Mets fan who loves writing and talking about the Amazins' 24/7. From the Miracle in 1969 to the magic of 1986, and even the near misses in '73 and '00, I've experienced it all - the highs and the lows. I started Mets Merized Online in 2005 to feed my addiction. Follow me on Twitter @metsmerized.
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This is incredible. I dont think you can do anything about it though except to grin and bear it. This is how the world works.
presumably the financial analysts at bank of america disagree with you and intend to profit from this loan. perhaps you have less access to the mets financial records than they do. thats what banks do, they loan money.
if you want to be angry, try being angry at the huge government that gives away your money.
Banks don’t profit when their loans default because the entities they loaned money to go bust. Hence the phrase “bankrupt”.
well, like i said, i commend you for having a better understanding of the ins and outs of the mets financial situation than the analysts at whatever bank.
also if the naming rights deal is profitable for citi, it would very stupid to get rid of it when they needed it most. of course you are presuming to know whether it was profitable for them, when i would assume they understand better than you do.
also if citi is able to fuction as a business by hoodwinking the government, it seems like you should be angry at the government, not citi.
I don’t think these banks are necessarily keeping the Mets alive as much as the Wilpons themselves. If they can magically get out from under all this debt (from Citifield and the creation of SNY) and somehow not end up paying back close to 400 million to Irving Picard, these banks are seeing the Wilpons as a client who’s future forecast minus the debt could be alot better. Problem is when you potentially owe close to 2 billion, it’s kinda hard to be so chipper about you’re financial future.
sorry joe S, joe D has already investigated the mets financials and determined that they are a bad risk in the long term. yunno, the biggest baseball market in the world with a new stadium and a TV network. no profit potential.
Yes martin, a new stadium whose bonds were reduced by Moodys and Standard and Poors to junk bond grade six months ago.
Also, the Wilpons own just a part of SNY and according to their partnership agreement are prohibited from selling all or part of it without the approval of Time Warner or Comcast the other owners of the cable network.
No need to mention that cable networks earn revenue from advertising whose rates are based on ratings and market share. No need to tell you SNY ratings are down for second consecutive season.
A net loss of $70 million in 2011, with a net loss of $65 million in 2010 adds up to $135 million in losses AFTER all the revenues are tallied. (That’s what net losses means, Martin)
Martin, you are very smart and very attune to this situation as I can tell. I will not debate you on this because you are obviously a financial wiz and a force to be reckoned with.
yes, you are just repeating what i said you said. to be clear, id your opinion that a baseball team in the biggest baseball market in the world, with their own tv network, has no long term profit potential?
if that is true then i wonder how any baseball team anywhere in the world exists.
Martin –
There may be potential for profit yes, but the debt the Wilpons have is what may end up being too big of a hurdle to get by. On a side note, being someone who works in the cable industry, I found the Wilpon’s desire to start there own network partially a reaction to what the Steinbrenners did with the YES network. The Wilpons could have continued their partnership with FoxSports but saw dollar signs dancing in their dreams with a network of their own. Of course in their minds everything THEN was going well thanks to their wonderful profits aided by you know who.
my understanding is that sny is actually quite profitable, but joe probably has copies of their financials. anyways, all big market teams aspire to have their own networks. its how you really start making big money.
anyways, the mets will be fine, with money or without, as money is not required for wins. smart management is. if they had a ton of money and omar as GM they would be worse off.
and as for those financial institutions who choose to loan money to the mets, good luck to them, it is none of my concern. they might make a profit. i hope the government never has to bail them out with our money, but that is not really a baseball issue at all.
we all know madoff hurt the mets pretty bad. sucks. no reyes, no pujols, no beltran. but that is ok. thats the way the game works, you cant sign every free agent. build from within, make smart decisions and you can win without bringing in folks like carls pavano and crawford.
Two questions:
What do the Wilpons have on Selig?
Why isn’t the District Attorney investigating what appears to be financial malfeasance?
When the MLB owners ousted Fay Vincent in the dead of night 20 years ago, and supplanted him with Bud Selig, it was Fred Wilpon who helped convince some of the dissenting owners to switch their vote and oust Vincent to break the stalemate.
Joe — you’ve attacked part of a very big problem. The parties involved include not only the Bank of America and Citi Group, but also Merrill Lynch and lots of others. On the government side, Hank Paulson of the Treasury and Ben Bernanke of the Fed played big roles. And those members of congress who pushed Fannie and Freddie on us by by forcing banks to make loans to consumers who couldn’t pay them back were a prime mover. How in the world do we get our arms around it all?
TARP involves the deployment of $790 billion by the government into the banking system. Paulson decided not to use the Resolution Trust Corporation to absorb toxic assets. Why? The RTC would have collected them and written them off. Paulson gave the banks money and like any business they spent it to their advantage. Why not? Where were Congress’ terms and conditions to do otherwise? There was no moral demand by Congress to alter the scheme. They seemed to be in on the racket. Today we still have the lousy loans all over the place. Home values remain depressed and small businesses can’t get working capital. It’s going to take a long time to get this mess straightened out. In the bigger national picture, the Mets ownership’s dealings with Citi Group and BoA are just an asterisk on a footnote to this fiasco.
Des, I didn’t realize you were as deeply concerned about this and as attune to it as I am. We could discuss this over a few drinks for hours. Make that a few weeks, there’s much to discern.
Thanks for the offer Joe. Our locations would likely make it difficult but the camaraderie would be great and much appreciated. Yup, weeks not days would be needed. lol.
Hey Joe, you remember when I wrote about Madoff before he became so synonomous to the Mets? Even some of the writers on here, who by the way I’m still quite friendly with, pretty much said I was making a mountain out of a molehill and if I remember correctly Martin, if it’s the same Martin I’m thinking of, said none of this interested him. The debt the Wilpons have and if it’s added to by Picard, could force the sale of the team.
I think it’s the same Martin, the guy who represented himself as an 11 year old, originally and used to comment about his hot date on a Saturday night. I had a lot of fun with him. He’s quite bright and very acerbic at times. But he’s also funny and occasionally drives people nuts. He should be at least 13 years old now. lol.
I absolutely remember that. In fact I remember it so distinctly because it was the only time you ever asked me for permission to post something.
You said the Wilpons profited on Madoff Ponzi scheme which had never been reported prior to that. The only reports at the time was that the Wilpons were victims, but only lost a little money or possibly broke even.
Your Mets source also told you that the feds were going to go after the Wilpons for that money.
Your Mets source also told you that Jason Bay would be the last significant free agent the team will ever sign for the immediate future and that spending was over.
Your Mets source gave you some hot info that ended up exploding a month later all over ESPN, SI.Com, etc.
You talked about a coming firestorm based on your Mets source and were very reluctant to post it, but I thought that you should if you really trusted and believed your source.
You were very concerned about how our readers would receive it some scoffed at it and some accepted it.
Coop said: However, “not willing” and “not able” to spend are two entirely different things, and I’m a little disappointed that MMO is going the schlock route with this whole thing.
Lifelongmetsfan wrote: un-named source, “.. very close to a member of the Met organization.” FYI when your standing in line at the grocery store and begin chit-chating with the woman in line ahead of you…That’s not exactly news. What is this the Washington Post? Who is the real Met deep-throat I wonder….. Hmmmmmm? Who the F! cares?!!
I then defended you and wrote this:
As all of you know, this site does not and has never quoted a source and posted it. There are plenty of other Mets sites that do that, and I would rather debate Mets news than make Mets news.
Joe Spector is a standup guy, and I can vouch for his integrity. I also know he has a connection to this Mets source who is a well known name that all of you would know. When someone tells you something in confidence like this person did, it’s only right to respect his anonymity. If you choose not to believe us that’s your choice. But I never would have allowed this post if I personally wasn’t aware that this discussion took place. It happened.
All reputable media people have unnamed sources from which they report most of their trade rumors, news, etc.. If they started revealing their identities than 99% of what you love to read wouldn’t exist because a valuable trust had been broken.
But the best comment on that post was from Alex!
ppl, let’s see, we blame the owners right, and want them to sell the team, if there’s something i’ll blame them is for hiring a.group of inept to run the franchize, starting with the gm and his buddies, 2 managers who seemed to not know the game, the wilpons have given minaya 150 for 3 straight years,.all we got is 1 playoff app
As for martin, he somehow managed not to comment on that post, but he terrorized Annie for it every time she posted on the the financial mess.
Uhh, what? Blame the government for giving the bailouts. Blame the Federal Reserve for years of easy money policies which led to risky lending by the banks. They are the true culprits.
Oh I absolutely blame the gov too.
Actually JoeD Bank of America was one of the few institutions that didn’t hand out bad loans like all the other banks.That’s why they were able to withstand the financial implosion in 2008.They were persuaded bt Bernanke and Poulson to take TARP money.They didn’t even want it.They promptly paid it back.
In fact I am pretty sure they bought CitiGroup’s loan and paid that back too. Not that I am a BoA fan, I actually had a terrible experience with them but just stating facts as I know them
Joe, you are right. BOA did pay back the TARP money in that same year as a matter of fact, but only because they wanted a favorable resolution from feds to the illegalities behind their Merrill Lynch takeover. A few months later Judge Rakoff begrudgingly approved the $100+ million dollar fine and accepted their no contest plea and called it “half-assed” justice saying they got off easy. That’s the same Judge Rakoff by the way who’s ruling on the motion filed by Picard against Wilpon and already ruled in Wilpon’s favor by minimizing their liability in the claw-back suit.
The funny thing is Joe D., and by the way I hope your well, if the Mets are losing so much scratch, explain this to me; The local Tv contract with SNY nets the team 78 million; the local radio rights approx. 4 mil. This is 82 mil each season. The 20 mil. In stadium rights,With ad money, National radio and TV rights, revenue generated by stadium
advertising; and revenue from luxury boxes, all seating, food and concessions, MLB Properties, all these revenues, even with all the minor leagues payroll all of major league, the revenue generated has to be near or above 250 million how can this team be losing 70 mil., unless the Wilpon s are pulling money out of this franchise…yes or no? Selig should be impeached by the other owners and removed for helping these thieving buffoons get away with trying to ‘cook’ the books to show a 70 mil. loss. It s reprehensible and sad…therein lies a story unto itself. Until they sell, or are removed I see no hope of this improving. None.
Sorry for jumping in, but this is an interesting debate you have going on here. The 78mil figure you quote, is that the Wilpons’ third-share or the total SNY revenue?
My understandimg is that is what SNY pays for the rights to the nymets as a seperate entity. Obviously, it is all profit for the Wilpons, their SNY Financiers and themselves, but that 78 mil. is what has been reported as the yearly paymemt for Met tv rights…
Thank you Mike, that answers my question. That’s a lot of money in addition to all the other revenue you mentioned. If they are losing $70 million after all that revenue, then basically the principle and interest payments on Citi Field must be out of this stratosphere. Anybody know what percent of the nearly one billion was financed?
Hey Joe which MLB team do you own? And which bank do you manage?
I didn’t know that Joe is a comedian.
Joe, BofA is in the business of lending money. If they stopped doing that, wouldn’t that in effect cause them to have a negative cash flow, in effect stopping what the bailout was supposed to do? Yes, I know this becomes a very tangeled web, but I see no reason for being appalled at a bank lending money. There’s no way a NY franchise goes insolvent. Probably a very safe investment, actually. The creditors will get theirs when the club is sold, hopefully sooner than later.
agreed. banks lend money like this when they are going to get it back, or have collateral safe enough that they don’t care.
The end game does seem that the owners will have to sell, but none of us know enough about the true financial picture to know if they are going to walk away with anything but debts.
You’re right, banks are in the business of lending money. But they also must ensure the loans are made to those that do not pose a risk for non-payment as well. When this news first came out, I read that this bridge loan had to be approved by Bud Selig. Why? Did Selig offer the bank assurances or guarantee the loan in case of default? Considering the team’s bad creditworthiness, there must be more to this than what’s being reported.
If the Wilpons truly love there Mets and are not just self center owners would just for the good of the Mets Sell majority share of the Mets. Then they can still save face by doing so. But at this time it appears that its the Good old boy system going on with the Wilpons and Bud Selig. He is greasing the wheel to help the Wilpons or turning a blind eye to there Money problems.
Lets get an owner who will help the Mets become the Mets of Old and not the Laughing Stock of New York and third class team behind them Dam Yankees
. Lets do the best thing for the Mets 50th year. Go Mets.
The Wilpons love the “Wilpon Mets”. The idea that the Mets are above the Wilpons is false. They’ll drive this team into the ground before they sell on some moral level about the good of the institution.
what he said.
Let someone like Trump buy the Mets. The Wilpons don’t give a F> about the Mets any more the just like the Ideal of being able to say I’m a MLB team owner along with Bernie and company. Why don’t they just Move the Team to Vegas for a Crap Shoot with the mob influence.Oh thats what Bug is for to twist arms Oh no that only goes on in Congress and Washington.
CitiBank must of said “no.”