10
2012
Mets Close To Finalizing $100 Million In Shares
An article by 
According to the Daily News, the Mets are close to finalizing the sale of at least five $20 million shares in the team, a move that would help pay off $350 million in club debt, baseball officials familiar with the transactions told the Daily News.
Major League Baseball has vetted and approved the investors, and the team is expected to close those sales and raise more than $100 million within the month, the officials said.
The Mets will likely look to sell at least five additonal minority shares for another $100 million and could expand that total, according to sources. The process, described by one source as “rolling,” has no set conclusion or limit on how many shares will be sold.
Coincidentally, this morning Jessep asked me about this via email:
Mike – If they dont have investors soon I dont understand how they can possibly hang onto this team after LAD is sold.
Joe D. - They have at least five investors, the only thing is that the deals are still being negotiated and wont get done by January. That’s why it was essential that Selig approve the $40 million bridge loan from Bank of America so they could make the first quarter debt payments through end of March.
That was based on information I came across last month.
Basically, as I pointed out in previous posts, that $40 million dollar loan was a lifesaver for the Wilpons and all this talk about bankruptcy is entirely overblown right now.
CRG is in the turnaround business not the bankruptcy business.
The Rangers waited too long and it was too late for CRG to help them. Plus Bud wasn’t as eager to help the previous Rangers owner stay in control as he is with longtime friend Fred Wilpon.
Like it or not, things keep looking up for Mets ownership.
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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NL East Standings
| Team | W | L | Pct. | GB |
|---|---|---|---|---|
| Braves | 23 | 18 | .561 | - |
| Nationals | 23 | 19 | .548 | 0.5 |
| Phillies | 20 | 22 | .476 | 3.5 |
| Mets | 16 | 23 | .410 | 6.0 |
| Marlins | 11 | 31 | .262 | 12.5 |
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Yay! Only $330,000,000 of debt left! Seriously, how does this change a damn thing! The money from selling these shares of the Mets is like throwing a cup of water onto an inferno.
Correction. The individual shares were $20 mill. A total of $100 mill invested into the team. My point still stands. It’s still just a drop in the bucket of out of control spiraling debt.
Not that long ago I read that all MLB teams have debt and that the average was close to $200 million. Does anybody know if that info is tracked by anyone, it would be interesting to see where the Mets would rank. I’d be shocked if they weren’t in the top 3.
Wouldn’t surprise me at all if the majority of the teams were in debt, with a bunch of brand new stadiums that have opened up in the past 10 years. But the debt with the Mets has exponentially gone up and up, seriously affecting the teams personnel decisions, which has lead to poor numbers at the gate, which turns into more debt. All that and the Picard lawsuit isn’t close to being resolved. ugh.
I have no idea why anybody would spend $20 million on this team. I’ve been very skeptical of your posts and some of the things you keep saying about this but it seems you’re either very lucky with your predictions or you really do have an inside track on this. So are the Wilpons close to being out of the woods now?
Sweet…that $100 million will cover the 2012 financial losses.
Now Mr Met bend over and squeel like a pig for me ! ! ! (sorry couldn’t resist) Seriously…….Who would invest in this sinking ship?? Wilpon’s gotta go !!
“…at least five $20 million shares in the team, a move that would help pay off $350 million in club debt…”
Make that “…a move that would help pay off PART of the $350 million club debt.”
Drop in the bucket, indeed. I’m not sure what this latest Fonzie scheme is supposed to accomplish. Ayyyyy! I guess it’s like a loan that they don’t have to pay back. But even if they sell 5 more shares–they’re still a mere $150 million in the red going into the season.
In addition to everything else that is wrong with our Mets, it’s crazy to think about all of this squandered $. We fans needed Citifield like a gaping hole in our head!
my first question would be, why would anyone invest with this crooks?!?!
I’ve got the countdown going, IF, these deals go through, “Why aren’t we going out and spending money on big FA’s now”
What do the Mets have to do to be on the receiving end of that sweet sweet revenue sharing?
Sandy alderson saved the wilpons roughly $45 million last offseason and still didn’t sign anybody.. we all know this team is complete and no significant moves will be made.. so all the money get will go to their “save a wilpon from bankrupt foundation”… winning is not on anyone of these people’s language..
The fact that names were submitted to MLB for vetting and approval proves there are serious investors out there for a small chunk of the Mets. This undercuts the critics who for months have been claiming the Mets are having problems finding minority investors.
For the critics of the Mets like Megdal, it always seemed to me like at least 50% of their argument was simply wishful thinking. After all, so much of the Mets and Sterling Enterprises finances is simply not known publicly. So any opinion and prediction is rife with massive assumption and speculation. And so that speculation is naturally going to be heavily skewed toward an outcome they desire.
I don’t think there is any doubt the Mets owners are in a financial crunch. But reports of their imminent demise have been ginormously exaggerated.
I think I tend to agree. This has nothing to do with me wanting them to remain as owners. This is about facts.
Sandomir and Megdal must be crying this morning.
I heard Megdal on the happy recap show on Sunday and he said nobody would buy those shares and that his sources said nobody was even sniffing them.
Megdal is a huge joke. Obviously his sentiments are shared by a lot of Mets fans, but that doesn’t excuse his lack of journalistic integrity. He comes off as a totally embittered fan with a huge chip on his shoulder and a large axe to grind. His agenda-driven pieces are so repetitive, poorly sourced and full of speculation. I think he is little unbalanced.
With all that baggage, you’d think he was a mainstream reporter.
Zing!
I agree. The mainstream sports media in this town is shameful with their obvious agendas. I mentioned Sandomir above. He is one of the culprits.
He could be a mainstream reporter or he could be sympathetic to Irving Picard, another financial bloodsucker who is now getting his clock cleaned.
Megdal is a huge Met fan like me and you. It’s hard to be objective under those conditions. We all want Wilpon out. But to report on this you need to do it completely objectively. The one thing Megdal said that was true is that Sel;ig had a hand in Einhorn deal going belly up, and this is because I heard the same thing from a very reliable source long before Wilpon’s Folly came out.
As for his other claims, it’s like someone else said in another comment – wishful thinking. It doesn’t make him a bad person, he’s just a passionate Mets fan like all of us.
Joe, I’m the one who said much of what Megdal writes is wishful thinking.
And it’s obvious he’s a big fan from his writing. So much of it is more emotion than facts framed within an objective context. Maybe he isn’t a bad person at heart, but I think he does the profession of sports writing a disservice with his blatant twisted attacks.
“The one thing Megdal said that was true is that Sel;ig had a hand in Einhorn deal going belly up”
So we should give him a pass because he got one thing right? What about the other 75% of the stuff he writes?
I’m not disagreeing with you and I agree that throwing conjecture into the Mets blogosphere and passing it off as fact is not a good thing. I wasn’t giving him a pass I just wanted to tell people who don’t know him that he is a die hard Met fan and that it’s sometimes difficult to be objective when you have an agenda of wanting Wilpon out.
I guess the problem I have is that multiple mainstream (as well as alternative) media outlets seem to give him a voice. And he’s a good writer in just technical terms. So that combination lends an air of legitimacy to his rants. Thankfully he doesn’t appear to have much of a following. Even those who share his opinions can probably recognize that much of what he writes is personal rant.
I appreciate that you yourself appear to be one of the more objective Mets bloggers. Just going by what I am reading in this thread.
So he actually stated flat out that his “sources” said no one was even “sniffing” them?
If so, that is proof of Megdal’s total lack of credibility and integrity. Because even if the deals eventually fall through, the fact that parties went through the vetting and approval process by MLB is proof of way more than “sniffing.”
What dummy yes I said dummy or dummies would throw 20 mil down this rat hole. For your 20 mil you get no dividends, no prospect of appreciation, good chance of bankruptcy and you lose it all, and being partners with snakes. Oh I forgot you do get a parking spot at Citi Field-how stupid can I be. Now if you put the 20 mil in Apple stock , now you have something. These investors are jerks in the business sense of the word unless their looking for a tax writeoff.
If I remember correctly you get promised a very good percentage return in a certain amount of years as well.
They may not hold any responsibility to the debt. Since they are offering 6% return on the $20 million, this seems more like an open ended loan with some benefits than a flat out investment.
That is what I am reading as well. Basically they are going to these “investors” and getting a 20M loan with 6% interest and a chance of more in a default.
A bankruptcy wipes out stock, dividends and all contract provisions. A bankruptcy allows creditors to get in line with other debtors. Under federal law in a bankruptcy the first in line are employees. After that the judge takes over. Knowingf the financial condition of the Mets where in the world are they going to get 6% in dividends for each investor? A default is even worse because all they do is add additional fees and interest to what is already in default. Try to take your default and deposit it in the bank.You want to see financial misery just look at the people who were snookered when GM went bankrupt and our corrupt gov’t took over. They lost everything.
Metfan Lou — Well done. Our Washington politicians redefined bankruptcy and the mom and pop bondholders got snookered and were called selfish. Let’s try to keep the politicians and Selig, who is really a corrupt politician, out of as much of this as possible.
If real estate comes back in the short term — which I doubt — maybe we’ll see the Wilpon’s suddenly get more healthy.
Even if this is true and even if they sell to another 5 investors – that’s 200 MIL in the coffers. Considering what they owe – which if I’m reading correctly is:
- 25 MIL to MLB
- 40 MIL bridge load
- 26 MIL + 26 MIL for a total of 52 MIL due shortly on Citi Field financing
That’s 117 MIL. That’s just to pay off just that debt. I’m sure there’s more debt across the board but this is just what I know of right now.
Couple that with the 70 MIL loss in revenues last year alone and you have to imagine they’ll be lucky to enter 2012 at the break even point. In fact, I’m willing to bet they don’t and are crossing their fingers on increased revenues (hence the ridiculous statement of them projecting a 10% increase this year)……..I believe that $52 MIL is due to city/state yearly for X number of years on Citi.
Unless some miracle occurs and the Mets have some dream team that fans come out to see, then I just don’t see how the Wilpons will be in any better shape at the end of this season. Not unless they reduce payroll to some ridiculous number like $60 MIL as Joe D. has predicted.
Dark days ahead indeed if the Wilpons are allowed to hang on…..
Keep in mind though that the average MLB team is 100′s of millions in debt.
Huh…I learn something new everyday.
I always thought those smaller market teams operated at less than 70-80 MIL b/c that’s all the owners could afford in that type of market.
Some may, I just think I read the average was in the hundreds.
All this is, is renegotiating debt. The debt is not getting paid down in anyway, they are just avoiding default with what is currently due. This is standard practice with many business’s. We don’t know the true state of the Wilpon’s finances, we only know how much they owe to Bond holders (for Stadium Financing) and the MLB, and to BOA, and to the Payroll and eventually we will know how much to Admiral Picard.
At some point they will need to start paying this down and I imagine that is why they brought those consultants in, to see if it will be possible. I imagine by the end of the season it will be clear whether they can hold on or if they have to walk.
No. If they actually use the proceeds of the sales to pay back the BOA and MLB loans, it IS paying down debt. That’s a fact.
Paying debt down with money they basically borrowed. Remember these “investments” have to be paid back.
Not necessarily. The money does not necessarily have to be paid back. It is up to the investor in 2017 (or whatever the year is in the contract) whether or not they want to sit on their potentially appreciated investment or cash out.
These sales are not a loan in the traditional sense. I believe they don’t even go on the book as loans in a traditional accounting sense.
No matter what you call it, it is still a liability and fans should not be made to believe that these transactions will have any bearing on how the team conducts business personnel. All this does is put a nice plug in the dyke.
You are right, they technically don’t have to cash out but the Mets have to anticipate they will.
Barring a big Picard victory in 2012, which seems unlikely at this point, I don’t see where the Mets finances won’t improve n the next 2-3 years. This will have the impact of raising the valuation of the current team. If the Dodgers are worth 1.5 billion in 2012 (even with all THEIR debt) than how much do you think the Mets will be worth in 2017?
So in 2017 with the team at an even higher valuation than it is at now, the owners would likely be able to sell off more shares at an even greater return to pay off any investor who wants to cash out. And their loans will likely be paid down significantly by then so if they had to they could likely borrow more money to pay back any investor who wanted to cash out.
Why do I think the finances will likely improve over the next 2-3 years?
1) Current belt-tightening AKA fiscal responsibility
2) Faith that Alderson is competent and has the team on the right track.
3) They ARE paying down current debt, despite what some are saying
I think BOTH survival and bankruptcy scenarios are possible. I tend to think the balance is at least slightly in favor of the survival scenario.
Most fans are rational enough to understand that the team is being handled correctly in light of the financial mess.But the course of the team will need to change once the Madoff ruling comes to light in order to keep that perception.
Currently all player moves are designed to reduce payroll and not have any obligations starting in 2014 (only Bay’s and Santana’s options remain at that point). Once the unknowns are known, the the Wilpons will need to re-invest in the team again and build pieces that will complement guys like H/F/W and push forward with a product that fans will embrace and pay money for. If they feel they need to continue and turtle (which I just don’t think is possible in this market), the Wilpon’s would probably be in a mode where they have to sell.
Don’t you think current ownership (and Alderson) already know what they have to do if they get past this current financial crunch? I believe they are already building toward the future with their hiring of CRG and belt-tightening. I also think the Wilpons know they are in a precarious situation and that the Picard outcome will influence their fate.
However they still want to compete. Right now. If belt-tightening was their only goal currently and in the near future, they would have traded Wright and Dickey this winter. Both are very tradeable and would save the Mets roughly $20 million in 2012 if they were sent to other teams.
I feel they have an idea of what to do, but they wouldn’t of hired that firm unless they needed more guidance and creativity. I feel there is also a balance with the belt tightening that they are trying to achieve. They don’t want to turn the team into the Brooklyn Cyclones but in a bigger stadium. The goal is to still have a team where fans want to come an see. As a fan no matter what the situation is, it’s great to see Wright play and fans are interested to see how Ike and Duda perform. If they completely gutted it, the losses could potentially be more than what they are spending on Wrights current contract.
Are you trying to give me hope they don’t dump Wright?
But isn’t the fact that they hired the firm proof that they know they have to change and do things differently? CRG is probably there as much for their objectivity as they are for their financial expertise. Wilpon/Katz are too close to things and likely realize they can’t manage things objectively.
Whether or not majority ownership remains in the Wilpon family, I think new management thinking has to come forward long-term. Maybe it is someone else in the Wilpon family. Or maybe it is someone from amongst this group of new minority investors.
I think that is a unknown whether they are going to let a completely different financial management structure take hold or if they are using the company simply to audit and provide recommendations. As much as we all feel they are a bunch of dummies, you don’t just build a highly successful and profitable real estate and capital investment firm without being highly knowledgeable about finance. With that knowledge comes a ego that his hard to tamper down and let others tell you how to do things going forward. It really depends how willing they are to change and accept the recommendations that are provided.
I am actually hopeful they are not going to dump Wright. I personal feel it’s more about Wrights wishes. Wright is so entrenched with the team, that if he wants to stay long term, the players will know this and right now he is very affordable in the grand scheme of things.
For me personally they need to put him back in the role of table setter as opposed to the clean-up crew. If they can’t bring in those kind of pieces within the next few years, they might as well put him to better use and flip him.
To give you a better idea, these sales will likely NOT count against MLB’s debt-asset guidelines.
Right, which allows them to borrow more money from banks later if needed but in any other way it is a loan.
For all practical purposes, it’s only a loan IF an investor decides to cash out years from now.
But to protect yourself don’t you have to anticipate they will?
They believe they are. I would think the historical rise in valuations of MLB teams even in times of recession (Dodgers in 2012) is enough to give them faith they will be able to handle a cashout in 2017 should that occur.
You wrote: But isn’t the fact that they hired the firm proof that they know they have to change and do things differently? CRG is probably there as much for their objectivity as they are for their financial expertise. Wilpon/Katz are too close to things and likely realize they can’t manage things objectively.
Yes, that’s absolutely true. CRG was engaged for the purpose of getting them on track and mostly because they finally realized they were incapable of doing that on there own. Plus I wouldn’t be surprised if it turns out Selig encouraged them to use CRG.
Last month after the $40 million dollar loan was approved I said, the Wilpons are better off today than they were a month ago. Today I can say the same thing. That’s two months in a row of forward progress. The ship is heading in the right direction where the Wilpons are concerned.
These do not get paid back, they are buying a 4% share of the Mets. Lots of incredibly bad info out there. Incredibly bad. These are ownership stakes with built in 6% floors if team makes more they get more just like all owners do.
As for what the Mets owe and bringing up the $70 million they lost, it’s done. It’s gone. It’s a net loss.
In that regard $50 million less payroll means $20 mil loss if things stay the same. Removing the minor league affiliate, cutting 10% of workforce, leasing assets in St. Lucie and DR, saves even more. Once bleeding stops creditors will work with Wilpons to consolidate debt via CRG.
The amount of bad info being circulated is appalling.
The Wilpons are not going bankrupt, no way, no how.
The bridge loan approved and guaranteed by Selig saved their asses. They are no longer bleeding cash, will make their debt payments when due, and even turn a profit in 2012.
“The investor also has the option after six years to cash out for their original investment plus 3% annual compounded interest. That would be a profit of almost $4M over the six year term. On top of that, the new investors get liquidation preference over existing equity holders (the Wilpons), meaning if the Wilpons can’t sustain the team and they have to sell, the new investors are paid in full, plus interest, before Wilpons receive any proceeds from the sale. So the worst case scenario for an investor is an almost zero risk, 3% return on their investments over 6 years, which is nothing to thumb your nose at in this economy.”
I dont know who your source is or who that source’s source is, but most of that is inaccurate.
LOL, take that up with the NY Times:
“In the document, the Mets told potential investors that they could get their money back after six years with 3 percent compound annual interest included. In essence, the investment would be a loan. For the same six years, the investors would not have to invest another cent. Those details were first reported by Sports Business Journal. ”
http://www.nytimes.com/2011/12/21/sports/baseball/to-attract-potential-investors-mets-add-perks-to-the-deal.html?_r=1
That was an early draft that has gone through a dozen variations since then. If this deal was actually ever on the table, every investment banker on Wall Street would have lined up with $20 million in their hands.
When Einhorn first entered the picture, the Times also publicized terms of the agreement which both sides disputed and as it turned out was nothing like what it ended up being when the truth finally came out.
Early draft? Show me an updated draft? Got any sources that this is not the case?
Yup, all they are doing is taking a couple of high balance credit cards and transferring their balances to multiple credit cards with a lower interest rate. Except on these that new credit card comes with no payment until 2017.
Next stop: Irving Picard Station. Fare might be a little too steep for the Wilpons though…
Gary, I am not talking about a completely different financial structure necessarily, and I am not talking about operations outside of the Mets. So, sure Wilpon/Katz have a lot of pride and ego regarding their overall business accomplishments, but in regards to just the Mets, they must have been personally humbled in recent years by Madoff, the failure of the tenure of Omar, and the missteps with Citi Field such as the questionable capacity, dimensions, and early Dodger-centric theme. It’s the finances and baseball operations of the Mets that are front and center in question.
Moreover, Fred and Saul are getting real old real fast. It just stands to reason that they will have to turn over the reigns relatively soon. What better way to do it than to broaden ownership at this point and then mine that new group to select and/or groom a successor — whether it is from within the family or not.
I don’t think Jeff Wilpon is qualified to run the team. Not that he is responsible for the Mets current troubles, despite what complaining fans say. In fact, he is probably the least responsible as Omar, Madoff, and a Dodger-centric Citi Field with small dimensions were all the ideas of Fred and/or Saul. It’s just that Jeff seems like he doesn’t have a forceful enough personality to head a team. I could be wrong.
So I am not suggesting that CRG is going to come in and force an entirely new business/financial structure. They will simply provide advice, guidance and models to follow. Fred and Saul have probably already come to the realization — before CRG came aboard — that they need to change their business strategy as it pertains to the Mets. Hiring CRG is proof of their change in thinking. They are admitting they need help and don’t have all the answers.
Should Read: In fact, he is probably the least responsible as Omar, Madoff, and a Dodger-centric Citi Field with LARGE dimensions AND A SMALL CAPACITY were all the ideas of Fred and/or Saul.
Gary, I just tried to reply to you here but the reply went to the bottom of the section.
To the webmasters of this site: When I hit the “Reply” button on some of the comments above, the comment is just placed here at the bottom. It’s not working right.