Budgeting, Bridge Loans and Uncle Bud
12/6 – Thoughts by Joe D.
I wanted to add my own thoughts to the news that came out last night regarding the Mets retaining the services of CRG Partners which was first reported by Eno Sarris. Regular readers here shouldn’t have been surprised as for months I’ve been saying what the Wilpons say about their financial situation and what the reality is do not match up.
Now while it’s easy to make the assumption that the Wilpons are reorganizing for the purpose of either a sale or bankruptcy given that CRG headed the bankruptcy proceedings for the Texas Rangers last year, that may not be the case at all.
If this news had broke back in September, the probability that the Wilpons were at the end of the line would have been very real and close to the mark, but as I forewarned in a few of my earlier posts, there’s the matter of that bridge loan from Bank of America that I railed against for most of December on MMO.
In my post entitled “A Bridge To Nowhere“, I expressed deep concern over Bud Selig’s decision to approve the $40 million loan for the Wilpons. In fact I even went so far as saying that I bet they guaranteed the loan considering how deep in debt the Wilpons were in already. It turns out that was indeed the case. As I wrote last month:
This $40 million dollar bridge loan that Selig approved for the Wilpons’ only delays their eventual exodus, and invites even more heartache for a fan base that has suffered for far too long and deserves so much better. We have been a patient fanbase, but our only reward has been to see a once proud franchise fall into the depths of a new philosophy that is intended for the likes of baseball’s poorest and smallest markets.
Prior to that bridge loan, the Mets were running on fumes and were in jeopardy of not being able to pay upcoming debt payments that became due in 2012. Now they have some time to sell those ten ownership stakes they keep talking about so they can make two more huge debt payments that become due in 2013. That bridge loan became their life-support system.
As for those stakes, Sandy Alderson declined to comment on the status of those sales yesterday on a conference call. When last we heard, those sales were expected to start closing in January, but you may remember me saying don’t hold your breaths. These stakes have been on the market for more than six months now. It’s a cut and dry deal – $20 million in exchange for 4% of the team, yet not one sale to report after all this time. I can think of a million better things to do with $20 million dollars than to invest it in this mountain of debt called the Mets. Still, I foresee some buyers, and only because they may sweeten the deal with a bigger slice of the team if they don’t start closing on some of these sales soon.
At this point, enlisting the services of CRG is a smart play. For a team that needs to put their financial ducks in order, you can’t do any better than going with them according to the word on the street. This is what CRG does and most of their clients dont file for bankruptcy, they instead come away renewed and of the red and into the black.
That is the Wilpon’s hope and with Uncle Bud around to provide aid and support along the way, they might just be able to squeeze out of this mess altogether.
This is why I was so angry last month. I knew the writing was on the wall for the fate of the Wilpons after the holidays. There was no way they would be able to make those debt payments that were coming in January. But that bridge loan came out of nowhere and was the gasp of air they needed to but another year at the helm while the somehow find away to sell those stakes in the team.
This is why I was so ticked off. Now you know.
You know what? I bet the Wilpons seeked out CRG at the urging of Uncle Bud, “Give’em a shot Fred, they got a couple of smart guys over there who could help you navigate through this tempest.”
Let me also throw that out there…
Original Post 1/5
The Mets have issued a statement in response to a report by Amazin Avenue that the team hired a consulting firm that specializes in bankruptcy and “ that a team sale with or without bankruptcy is on the table.”
The Mets said that retaining CRG Partners‘ services should not imply that they are headed toward bankruptcy.
“Mets Limited Partnership engaged CRG Partners to provide services in connection with financial reporting and budgeting processes,” the organization said in a statement.
CRG Partners is a company that helps distressed companies and were retained by the Texas Rangers when they filed for bankruptcy.
Nevertheless, readers here can catch up on many of the posts by Joe D. who has been closely covering this storyline for the past 18 months. On December 24 he wrote:
Wilpon may still be able to last another couple of years after receiving a $40 million dollar bridge loan to cover upcoming debt payments. Additionally, if the $200 million dollars he expects to raise from selling individual $20 million dollar stakes come through, he may even be able to ride this storm out entirely.
Still the situation is very tenuous and difficult to predict, so in the meantime expect things to get much worse before they get better – if they get better at all.
About the Author: Rob Johnson
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