6
2012
Budgeting, Bridge Loans and Uncle Bud
An article by Hojo's Mojo
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…
Joe D.
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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The Wilponzis lie and deny, but this news item made me smile….
me too!
Maybe 2012 is going to be a great season for the Mets after all if it means the end of the Wilpons!
Whenever they deny that usually means it’s true
This is the best news of the offseason. The writing is on the wall!
OMF, IS THERE ANYONE WHO LOOKS AT THE ABOVE PHOTO OF FRED,SAUL & JEFFEY & NOT THINK IOT’S A PUBLICITY SHOT FOR A NEW NMLB-TV REALITY SHOW ENTITLED “PALLBEARERS OF THE TEAM” ala “DANCING WITH THE STARS”?
Beginning of the end.
And I don’t care if there restructuring to shed debt in anticipation of a sale or heading towards bankruptcy.
Either works for me.
I’m rooting for the Wilpons.
One year of league average payroll and all too many fans Mets are up in arms looking to exploit and distort every situation as that of doomsday, end of world.
From CRG Website:
“During periods of transition or growth, companies turn to CRG Partners professionals to assist them in addressing the unique challenges they face. At CRG Partners, we offer unparalleled expertise and high-impact solutions to resolve complex business challenges – helping you change the results and improve the outcome.
With a wide variety of backgrounds and expertise, the common theme among CRG Partners professionals is dedication and passion for tackling complex business issues. We pride ourselves for being in relentless pursuit to maximize results and deeply committed to serving our clients.”
“CRG Partners is deeply committed to helping businesses run better, at any stage of the business cycle. We tailor our approach to the unique needs of your organization, designing and implementing solutions to improve performance. We are trusted advisers, with a proven track record of maximizing results for our clients.”
Quoting from the company’s statement about it’s services does not mean the firm can guarantee anything. It’s a case by case process.
if they are denying it, then it must be true. they are Wilpons.
they’ve denied everything up till this point. so I think this looks pretty good.
“Think of the stories we’ll tell our grandchildren: ‘Grandma and Grandpa were on the Titanic.’”
– Author Unknown from the Titanic
We’re witnesses to history.
Our pal, ‘baby al’, must be out of town. He wouldn’t want to miss this story.
All spin most likely, but many companies do use BK as a way to get out from under debt, without actually selling the team. Different here since MLB has a say in things and can in effect pull the franchise.
I assume this plays out to the logical end game that they sell out, but who knows how long they can drag things out.
D’nile is not just a river in Egypt…………..
This is the best report regarding the Mets I’ve read in quite some time. You don’t hire CRG unless you’re filing bankrupt or maximizing your return from a sale.
No doubt the Wilpons are lying are. Soon we may able to start singing “Happy Days Are Here Again.” They have no one to thank but themselves for the mess they created.
AS a Met fan since ’62 I have bought the Brooklyn Bridge more times than I can remember. They just did it to me again-Ka Ching!
I do feel bad for the Wilpons…a lot of people have said some very good things about Fred as a person and as a honest and positive business man. He is a very trusting, honest and loyal person…which has gotten him in trouble by trusting the wrong people at times, but I’d still rather those traits in an owner than not. Despite the lack of winning, Fred has invested a greater percentage of profits into the team than the majority of owners and he does care about winning…at least until this year now that money is not there and MLB has secretly taken over the team.
Fred has also done a lot for charities and is a big supporter of programs like the Walter Reed Center.
I think that Fred has been too involved with the operations of the team and has never stepped back and let the GM do his job. Unfortunately this has undermined and hurt the team in the past.
People will blast him for the Madoff situation…but Fred trusted a friend, who was a highly respected inverter and a person who was investigated by the SEC and they found nothing…Madoff wasn’t giving outrageous returns, he was giving decent returns that were steady. A lot of very smart people invested with Madoff, so I can’t be a Caption Hindsight and judge Wilpon too much on his decision to invest. Besides, a lot of what goes on at Wall Street isn’t much better…people should be as angry at all of our politicians who let this crap goon and not just the people doing the “crimes”. Our government is supposed to help protect us against this garbage, not help them get away with it…(I’ll stop with the political BS)
As far as Fred always saying that things are OK, what do you want him to say? We’re broke and we’re screwed, we have no money and our entire Business is collapsing? Those comments will absolutely doom Sterling and the Mets. You’ll never hear any CEO admit the truth about these things until it’s already too late.
People always say that “if we only had new ownership, we’d be winning every year”…I don’t know if that’s true…The sad thing about MLB is, you can spend and try to win to make money, or (as teams like Florida and Pittsburgh did) not spend and make money. Who knows what a new owner will do. Look at the Owner of the Twins…he has a loyal Fan Base and a huge region with out competition, he’s one of the richest owners in baseball, he has much more money that the Wilpons or the Steinbrenners…but he never spends any money on the team…imagine what the Twins could have done if he invested an extra $20 into payroll back when the team was winning the division every year? This A-Hole was even willing to contract the team (so Buds Brewers would have a larger market) and he’d take the money and run.
In the end, I’m not cheering for or against Wilpon, I’m cheering for a quick resolution of the mess they’re in…either they sell or not, I just want the team to get back to trying to win.
People said Bernie Madoff was a nice guy too Fred only invested heavily in the Mets when his free money making crooked maxchine, the ponzi scheme was working. If he were half as honest as you claim him to be, he’d have tried to work out a deal with the vicitms. But Fred wants the whole pie. He is a crook who had a free ride for decades and the fall is well deserved. As for the Twins, I guess we all missed them dumping Joe Mauer instead of sigining him for 160 mil or so. The only thing you are correct about is what new owners might so. But that is meaningless because nothing in the future is known, so your argument is irrelevant.
I can only go by what I’ve heard from people who have dealt with Fred…I really don’t know for sure…I know that he’s already settled a lawsuit against him by Sterling Employees who had their pensions wrapped up in Madoff. Who knows if it was a fair settlement or why Fred did it…I know they’ve tried to settle with Picard, but Picard want’s everything and won’t settle, he wants more money fro Fred than what the law allows. Even though Picard is getting sued by Madoff Victims because he let some major inverters off the hook with a small slap on the wrist while he’s using the Media to destroy Wilpon. Wilpon can’t do anything for the victims if he wanted to until the Picard case is settled. Although I doubt that anybody is going to give up more money than they have to…especially knowing that Fred is going to lose at least a total of $1 billion once this is all done.
As far as the Twins owner, Jim Pohlad…the reason he gave Joe Mauer that contract was for two reasons; #1 Mauer is a homegrown star from Minneapolis and the fans would revolt if Mauer left…it would have been Reyes times 100. #2 Pohlad was trying to get state funding to build Target Field. He needed to show that there was a reason for the state to give him that money.
But you’re right, if Fred is a good guy or not doesn’t change the facts of the current situation. The team is broke and owes a ton of money that’s due in the next couple of years. Fred is doing anything possible to try to hang on. I don’t think he’ll be able to…he’ll have to sell the team…it’s only a matter of time…I hope that the new ownership is willing and able to build a winning franchise and i hope it happens quickly.
Yup, Fred is a wonderful man.Excuse me while i throw up in my mouth.I feel much better now.I am looking forward to yiur next post about how great Jeff W. is.
I don’t know if Fred is a wonderful man or not…the fact is, I don’t think anyone here has worked with or for Wilpon…I’d be surprised if anyone here has even meet Fred. I can only base my opinions off of what I read…He started with nothing and built the Sterling Empire and a lot of people say good things about Fred in how he did business…his path to full ownership of the Mets seems a little shady and it appears that Fred and Bud forced Doubleday out and gave him much less than what his stake in the team was worth.
But I love when people think that Doubleday was good while Fred was bad…Doubleday owned and controlled the team for a long time and only had a few years of success from it.
I think is current position was caused by bad decisions that are easily 2nd guessed, I don’t think it’s because Fred is evil or bad…nor because he’s good or wonderful. I don’t deal with Black and White…everything is gray.
And Fred hasn’t been skating off of Madoff for decades, he only got involved with Madoff in the late 90′s and any returns he got from Madoff went into Sterling and/or the Mets or was reinvested. Fred made himself a success long before Madoff ever came around. Fred only knew Bernie because Jeff went to collage with Madoff’s kids.
But I’m not a Jeffie boy supporter…While Fred built himself up, Jeff is living off of Freds’ success. I pray that Jeff never gets control of the Mets…I don’t trust him or think he’s qualified.
Fred and Jeff screwed the average working fan by making the price to go to a game nearly unaffordable and treating them like second class citizens with blocked views, limited access to the park, only one escalator going to the top, only two sets up restrooms, etc. They played up to those with the money to spend and told the rest of the fan base too bad… see us when you have the money to spend.
They figured 37,000 people would be stupid enough to pay through the nose each home game.
You’ve got proof of those acqusations? Picard couldn’t even find proof of that.
Nobody hates this situation more than I do. I want to see this team sold to new owners with deep pockets and a love of the game. But calling the Wilpons crooks and saying they willfully and knowingly perpetrated or were part of the Ponzi scheme is way out of bounds. There is no evidence of that, none. The Wilpons are guilty of being bad owners and poor business men.
I agree, like I said about Castillo a few days ago, there is no reason to bury someone as a person like this.
Being a bad baseball owner/player/etc does not automatically make someone a bad person.
Exactly, Fred being a good or bad guy has little to do with the situation they’re in. Not too many people would say that Steinbrenner was a good guy…but he did help build the Yankee Empire, so he’s not hated.
biased on what I’ve read about Fred, I doubt that he would knowingly participate to rip people off, but that facts are he did…and not only will it cost him the $100billion (can’t remember the exact number) he had currently invested, but it also cost him $17mil to Sterling employees, and it will cost him #300mil to Picard if not another $100bil. A not so bad decision turned into a terrible situation. Lets call this bad decision #1.
Fred hired Omar and spent big and gambled on Free Agents focusing on short term success instead of long term stability. A lot of things went wrong, mostly injuries and the way they got handled…but it led to Two seasons with bad finishes and two seasons of complete disappointment and now two seasons of “punting”. Some of it was bad decisions, the other part was bad luck. The Fan base is disheartened and fighting among themselves…nobody is watching or going to the park. This group of decisions I’ll group into bad decision #2.
Fred took out loans and bonds to build SNY and Citi Field.Both smart moves..I do question some of CitiFields planning, I hate the trend in Sports to today that caters to the rich and the corporations over the average die hard fan, but that’s the world today. But because of bad decisions #1 and #2, Fred can’t pay back the loans he owes. This is now bad decision #3.
Could Fred survive if he only made two of the three main bad decisions? I think so…bad seasons happen, but Fred doesn’t have the extra money to work through it…If Fred lost all the Money to Madoff, but the team was winning and the stands were full, I’d think he’d be OK. If the team lost and Fred lost money to Madoff, but he didn’t have these huge loans and bonds to payoff, he might still be OK…
The combination of these moves not working out DID happen and DID destroy Fred and WILL force him out of Mets ownership. Fred’s character has little to do with the situation other than I think it lead him to be trustworthy of people he shouldn’t have been.
Sorry, that should read $1billion, not $100 billion..
I don’t doubt that Fred W is a good man, and I’ve read about a lot of his charity work, especially his “Welcome home Hero’s” and working with Walter Reed etc….
However, as an owner of a baseball team, he has let down far too many people with bad business practices. He let down far too many, his employees the hundreds of workers plus the athletes themselves, fans etc….and for that this needs to be resolved and I am upset with the Wilpons, etc…..
The two can be separated, he can be a good man, but he needs to get out of this mess and let new Owners come in and bring back the love for National League baseball in NY.
Money spent for self survival. nothing spent to improve the product. a successful recipe for guaranteed failure.
Please explain how allowing Minaya to steadily increase the ML payroll to $140 MIL was a matter of self survival????
Hindsight tells us the money was not well spent but it wasn’t done so in any kind of survival mode.
na na na na……
It’s becoming more and more apparent that Alderson was appointed by MLB to “manage the Met organization “CrAsh!” landing while fielding the most competitive team possible.
They (the Wilpons) have denied and lied before about their financial mess. So if they’re denying that they’re headed toward bankruptcy, that can mean only one thing: they are headed for bankruptcy. I learned some time ago not to believe most of what comes from the Wilpons, rather to believe the opposite of what they say. Of course, there is a chance that this move does not mean bankruptcy is imminent, but it’s a very small chance when they’re almost $1 billion in debt not to mention the bridge loan, loan from MLB, and possible damages from the Madoff lawsuit.
Regarding Joe D’s comments on this breaking story:
There were many Met fans that saw the handwriting on the wall. AA did an extensive analysis on the Mets financial situation. After reading that it wasn’t hard to connect the dots.
This corporations job is to find every penny they can to pay down debt and get the operating expenses out of the red whether they sell or not. Either way they’ll be some lean years ahead.
The Wilpons like any baseball team owner will do anything they can to hang onto their team. I agree with what you’ve been saying that in the Wilpons case they have benefited a great deal because of their friendship with Bud Selig. I do hope you are wrong about them having enough funds to keep them from eventually selling, but no matter what it doesn’t look like that it could happen this year.
I don’t think anyone really knows what’s going on at this point. It’s difficult to predict an outcome with any degree of certainty. I expect we will learn more in the next few weeks, but we are still a long way from knowing all the facts surrounding the team’s true financial status. I do appreciate all of your updates on this situation.
If the Wilpons had any compassion for the fans they would sell the team and spare us the sordid details of what will be a messy divorce like drama!
If they haven’t already completed the sale of those $20 million shares, this will probably kill that idea.
Or perhaps someone with a better working knowledge of high finance can give me a reason why buying small shares in a company nearing bankruptcy is a good idea.
well, if it comes out of BK, you still own 4% of it. But, possibly without all the debt!
old style is back at TRDMB. woot.
Most all statements issued by the Mets from finances down to hamstrings have been for public consumption resembling little of what was actually going on. This latest announcment makes it seem like they hired Bob from Accounts Temps.
Suspect, like others, that the real goal of CRG is to help them get the best deal they can to sell the team. It does seem kind of late for budget restructuring, especially with being unable to raise that $200 million in minority ownership for almost a year now if one includes losing Einhorn’s support.
Something just occurred to me that probably won’t be well received. I haven’t thought it all the way through, so bear with me.
Maybe we don’t want the Wilpons to sell right now. Maybe it would be best to wait after the season, when Selig is gone.
It’s not like a new ownership group would be able to make any major changes now, anyway. The roster for 2012 is almost set, with just 1 or 2 more pieces coming and those are role players.
Any new owner that comes in now will need Selig’s backing. That means they will most likely be willing participants in the country club that is MLB. The next commissioner (whomever it may be) will hopefully be less inclined to play gatekeeper and more willing to expand the league’s horizons. I don’t want ownership that will keep doing things a certain way because that is the way they were always done.
Also, seeing what guys the guys we have now can be expected to do in the future will affect the value of the franchise. If Bay and Wright rebound and Santana is at least a decent starter or if any or all can be moved, then they are that much more valuable.
And a new group will most likely bring in their own front office. 3 front offices in 4 years can’t be good for rebuilding the franchise. Let the current group finish restructuring and then look to move on.
” Let the current group finish restructuring and then look to move on.” There is no restructuring going on at present. It is dismantling that is going on. Restructuring is further down the road after the administration changes over to new ownership.