4
2012
Blue Skies, Smiling At Me
An article by 
Who’d have thought it? Certainly not Fred Wilpon. But Frank McCourt is about to be his salvation. For if the Dodgers wind up selling for $2 billion or more, the value of the Mets, a signature franchise in their own right, in the country’s largest media market with their own network and new stadium, despite their present hard times, have to be worth close to $3 billion. “What that means,” said the insider, “is that the Wilpons can now go back to their banks, point to the value of the team, and say: ‘Lend us more money.’” Yes, thanks to Frank McCourt’s multi-million dollar divorce, which set in motion this ironic sequence of events, Wilpon is about to have more collateral than he ever dreamed of.
One person who obviously understands what the record-shattering Dodger sale will mean for the Mets — if only because he’s been one of the driving forces in it — is Steve Cohen, the Connecticut-based billionaire founder of SAC Capital Advisors investment firm. It was revealed last week that Cohen was in place to be one of the limited investors in the Mets, spending $20 million for one of 10 shares being offered for sale by the cash-strapped Wilpons in order to enable them to pay down some $65 million in loans. In doing so, you could say Cohen is hedging his bets. In either case, it’s a win-win for him. If he gets the Dodgers, it’s obviously a huge win, but if he doesn’t, his $20 million investment in the Mets figures to be worth a whole lot more with the re-evaluation of the team’s value in the wake of the final Dodger price tag. ~ Bill Madden, Daily News
Blue Skies
I was blue, just as blue as I could be.
Ev’ry day was a cloudy day for me.
Then good luck came a-knocking at my door.
Skies were gray but they’re not gray anymore.
Blue skies smiling at me.
Nothing but blue skies do I see.
Bluebirds singing a song.
Nothing but bluebirds all day long.
~ Irving Berlin
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 why I have been saying all along that the investors weren’t doing it for the Mr. Met visit, or to just hand Fred money to play with.
Smart investors looked at it as a chance to buy a valuable asset at distressed level prices.
With that type of argument, the Mets could have already gotten all the financial backing they want by simply pointing to the value of the Yankees within their own market. Bankers and other lenders want something more concrete in mind to protect their investments, not speculation based on what happened in L.A. Bank of America for sure did not give the Mets that $40 million bridge loan due to good faith.
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Ah, ‘comps’ do play a tangible role in investment valuations. One looks for ‘similar’ companies / franchises…and usually throws out the top two and bottom two ‘outliers> Hence, we’d throw the Yanks and say, the Red Sox out of the calculation. But the LA Dodgers, also a troubled big market team? Makes sense to included them in estimating a ‘market value’ for the Mets. And the Mets with NYC being their ‘Citi’ and the SNY Network–all that enhances the value of the Mets vs. the Dodgers.
Yeah, this is very credible.
Good. Retain Wright, sign Oswalt and sign Fukudome.
Look for Sandy and Saul to stretch out or cancel the sale of minority shares. With the added valuation, a solid loan at a relatively low interest rate should be available. If so, why take on additional owners when the Wilpon team can eat the whole pie with a greater retained equity position?
Blue skies smiling at me.
Nothing but blue skies do I see.
Bluebirds singing a song.
Nothing but bluebirds all day long.
Is Irving Berlin a buddy of Fred and Saul? lol.
If the sky is suddenly so blue, why not just sell the team and take the $3B and run as fast as your feet can take you? Great chance for Fred to beat it out of town with a boatload of bucks to rebuild his real estate empire. Come on Fred! Take the money and run before the winds shift and the sky turns back to gray!
just a WAG on my part, but Fred and the gang are not doing anything to make themselves wealthier (or to appear wealthier) until after they are 100% done with Picard.
Well I have to agree with some that this is not really going to be a boon to the Wilpons.
Collateral is an important thing to have when looking for loans but the debt you currently have plays a far bigger role in the decision to lend or not lend money.
You can be worth 20 Billion but if you have defaulted on loans or asked for extentions no bank is going to care how much your valued at.
Cause they still have to pay the lawyer to get it from you and there is no guarantee that he will have the competing groups to buy the team that the Dodgers had!
I mean he just had problems selling pieces of the team at 20 Mil per clip!
Now granted that had to do with the nature of what they were trying to sell more than the actual value of a NY baseball team.
But there was a lot of money in LA vying to buy and keep that team as it is just the type of thing that 20 celebrities and one rich Movie Mogul can get together on and keep raising the bid.
So I agree with Any here. Wilpon is pretty much where he is at and will remain there until the Picard suit is said and done!
It should also be pointed out that LA attendance was better than ours and an evauation of a baseball team is not like Real Estate where your neighbor’s property selling high increases the value of your property!
Most businesses are valued based on your revenue from the preceeeding year and if that was used in baseball the Wilpons would have to PAY someone 140 Mil to take the team off thier hands!
Lucky for Wilpon that doesn’t apply to baseball!
Yup Wilpon is pretty much where he’s at. Yup, he’s sitting pretty. Equities are valued on past revenues but there’s much more than that. If that was all, Eastman Kodak would be ‘gold’ today. They’ve just filed for bankruptcy. Future financial prospects count a ton too. Their cost of borrowing money will go down and amortizing their debt will be less burdensome. I’ll take the view that it’s ‘Blue skies smiling at Freddie.’
Well in Kodak’s case it WAS based on past revenues.
Last 5 years they pretty much lost their core business which was selling the paper used to create Photos and develop negatives!
Now people take the pictures on thier phone and display them on them as well!
When was the last time you took film to be developed?
Thats the last time Kodak made a profit! Which is why they are bankrupt!
Irving Picard doesn’t have the wind at his back. Judge Jed Rakoff’s ruling will have a major effect on how much money is ever recovered for victims of Madoff’s shenanigans. The Wall Street Journal says:
The decision by U.S. District Judge Jed Rakoff limited—though didn’t eliminate—possible financial ramifications from the epic Ponzi scheme for one of Major League Baseball’s most valuable franchises.
Beyond making it harder for trustee Irving Picard to recover the owners’ principal investment in the Ponzi scheme, the ruling indicated that he would only be able to take back money withdrawn in the last two years of the fraud.
Blue skies smiling at me.
Nothing but blue skies do I see.
Bluebirds singing a song.
Nothing but bluebirds all day long.
Increasingly, the Mets prospects are getting better.
Metsie,
This shows you have a much more astute understanding of the business than Bill Madden.
Great assessment.
I did however forget to point out that the Dodgers outright own all of that prime “Chavez Ravine” Real Estate that surrounds the stadium as well!
On a Real Estate value alone it is worth much more than the lot Citi Field sits on and is owned by the City!
Politely disagree in that the Mets’ market value will directly and tangibly increase IF the Dodgers are sold for $2BN. Good point on the RE owned by the Dodgers…but the Mets own a Network, the value of which would dramatically increase IF the product on the Field does.
There are many ways to frame out the value of a business, a discounted revenue based model, the PV of operating cash flows, the earnings / dividend route. And peer comps are also used. In this case, a troubled and fabled West Coast baseball franchise seems to me o be a solid basis for figuring out what our beloved Mets are worth.
i agree that Wilpon would not sell until his liabilities in the Bernie case are settled, one way or the other.
Hi Bob,
It is the role SNY plays in the overall fiscal picture that has so me suspicious that the Wilpon situation is much worse than we even we might exaggerate or Bill Madden underrates.
We know it was the new television contract that enabled the Angeles to offer such a ludicrous contract to Puljos. Same with the Yankees – the YES network is what is bringing in the real big bucks. Same with NESN and the Red Sox. The Orioles were offered a percentage of television revenue in lieu of waiving their territorial rights so Montreal could re-locate to Washington and how ownership now acknowledges it had no idea how much money was to be made in television. And we also know the Wilpons refused to include SNY in any deal regarding minority partnership – even though they are in way over a half a billion dollars in debt..
So clubs depend upon television rights or ownership to generate mega profits. And there will be a modest amount to be made in a small market area like Kansas City while there is a mint to be made in areas like Los Angeles and New York.
But the Mets are cutting back across the board – firing employees, getting rid of a minor league affiliate, dumping salaries and hiring a financial consultant to help get their house in order (to keep or file for bankruptcy we can only speculate – probably both). Ownership must be up to its ears in debt for the Mets to be taking such a hit since it seems MLB clubs depend less upon attendance and more on viewer-ship to make their fortunes.
Remember, two years ago the Pittsburgh Pirates turned a $50 million profit and even with the help of some revenue sharing considering they played to an empty ballpark in a small market that is some big accomplishment.
That’s why I think things must be much worse for Sterling Equities than let on for such cutbacks to the Mets would otherwise not be occurring – I think. You guys seems to know more on this than I do.
Smart investors get these stakes at reduced prices indeed in a way,its a win for them. But one thing that could scare investors away is this: Do the Wilpons actually have a plan for this team going forward? Lets face it,they will eventually sell if it gets worse. They lose money the longer they keep the franchise with its declining market. They have to make stakes and take advantage of other teams eventual on-coming fire-sales.