I read an interesting article at Baseball Prospectus by Biz of Baseball’s Maury Brown, who sheds new light on some of complexities regarding the financial turmoil that has engulfed Mets ownership in the aftermath of the Madoff scandal.
Interestingly enough, Brown corroborates some of the things I’ve either speculated here on MMO as well as a few things I reported based on what an MLB source told me.
Lets jump to Brown’s conclusion which echoes what I’ve been saying for months here:
Brown characterizes Mets ownership’s money moves as a ‘shell game,’ which ultimately could help keep them keep control of the team.
This is coming from a journalist who is widely regarded as one of the finest and most knowledgeable reporters in the industry when it comes to business as it relates to baseball.
Brown also indicated that that too much is being made of the $25 million loan to MLB, as well as the SNY loan, which he says is essentially a no-interest loan that can easily be restructured.
When I first reported that the SNY loan was adjustable and that it could be renewed for a further five years, I received several emails asking where I heard that, and I responded that someone I knew and trusted had knowledge of the situation and told me about it.
As for the MLB loan being problematic, I’ve been saying for a long time that it’s not. Not as long as Bud Selig is sitting on the throne.
While some tried to convey that the Mets would never sell those twenty shares, I scoffed at that notion as well.
Why wouldn’t you want to invest $20 million for a 4% share of a $1 billion dollar enterprises? If you had that kind of money to invest, you’d be a lunatic to pass it up. Especially with a 3% interest buyout clause. And by the way, none of them will cash out.
Brown asks and answers the magic question:
“Is the debt so unmanageable as to crush Sterling The answer is no.”
Regarding all this new hubub over the key witness for Picard who will testify that she warned the Wilpons about Madoff when she headed the fund known as Sterling-Stamos, first of all this is not news. We knew this was coming way back in July of last year. The so-called whistle blower, Noreen Harrington, can say anything she wants, but the Mets will deny anything she says and there is no evidence that proves anything she alleges. You still need evidence that the Wilpons willfully participated in the scam. There is no evidence of that.
There is however much evidence that Harrington has a history of turning on her employers and making a pretty penny doing so over the years. Strengthening the Mets side of the issue will be that one of the chairs of the SEC also invested with Madoff at the time Sterling-Stamos invested with them. You want due diligence? I give you the SEC.
Let me repeat what I wrote in another post a couple of months ago:
To win his case, Picard will have to establish at trial that Wilpon and Katz had “willfully blinded” themselves to evidence that Madoff might have been engaged in fraud, a higher legal standard to meet than the one he wanted to pursue in order to prevail against the Mets owners.
It ain’t happening… There is no smoking gun…
In that same post I included a tweet by CBS Sports’ Rich Couthino who asked ten lawyers which side they would rather defend in this lawsuit. Their response?
As for the constant churning that the Mets are losing money… Correction… They “WERE” losing money. I pointed out in another post that they have stopped the $70 million dollar a year bleeding when they slashed $55 million in payroll, cut 10% of the Mets workforce and eliminated an entire minor league affiliate. Anyone following this case from the very beginning knows this, but for some reason nobody is choosing to report this all important fact. It’s an apparent agenda that is invisible to some, but clear as day to me.
I find it amazing, and I even kept a notes, on how often the negative stories against Wilpon were heavily circulated in the Mets blogosphere. But anything remotely positive was rarely passed along to readers. I will give a ton of credit to Matt Cerrone who is the only one that has posted fairly and equitably on both sides as we have done here on MMO. In this day and age, fairness like that is rare to find.
After the CRG story broke I tried to drown out all that bankruptcy talk. I even spoke to a major Turnaround Consulting firm and posted what they had told me – that CRG is not in the business of overseeing bankruptcies, they are in the business of preventing them. Everyone who was reporting on CRG, left that fact out. When the Texas Rangers called CRG, it was already too late. When the Wilpons contacted CRG, the timing was perfect (and expected).
Here is what I wrote on January 7:
Here are a few things you can expect to see from this CRG partnership, some of which has already happened and many others that will be familiar to MMO readers.
1. Consolidate The Operation – We’ve already seen this consolidation when the Mets eliminated their Gulf Coast League team based in Port St. Lucie for 2012. The will lead to a $1 million dollar savings each year in operational costs.
2. Sublease Some Assets – The Mets are already in the process of subleasing parts of their Baseball Academy in the Dominican Republic to other MLB teams according to one report on ESPN last month. This will create a revenue stream that should be enough to pay for the Mets remaining portion of their academy.
3. Downsize The Workforce – The Mets made big news in November when it was announced that they cut 10% of their non-player workforce. The baseball-operations jobs that were cut were a combination of scouting and administrative positions. Additionally, I would expect to see a dozen or so middle management jobs eliminated by the middle of this season and expect to see a few departments merged.
4. Don’t Re-Sign Jose Reyes – Last year we saw the Mets move a couple of high-priced players in Carlos Beltran and Francisco Rodriguez. That was just Alderson doing what he does and had nothing to do with CRG. However, as I maintained all offseason – re-signing Jose Reyes was never a top priority – getting rid of Reyes was. You can take the naive approach and believe the Mets had good faith conceptual negotiations that were very substantial if it makes you feel good, but that never happened. It couldn’t happen – because Reyes was never in the plan. Hell…It wasn’t even Alderson’s call. Never.
Now we get to some of the things yet to occur:
5. Trade David Wright – He’s as good as gone. As I’ve said time and time again, there’s no chance he’s in a Mets uniform come August 1st, but I wouldn’t be shocked if he’s traded months before then. Any turnaround consultant will look at Wright’s $15 million dollar salary and view it as an unnecessary expense and a primary target. The longer they hang onto him, the more the team is on the hook for those millions. A spring training or April injury would prove disastrous. This is not about building up his trade value, this is only about stopping the bleeding and believe me, $15 million dollars buys a lot of bandages. If Johan Santana and Jason Bay have any type of return to form, they’ll be gone too.
6. New 5-Year Payroll Budget – No more looking at payroll budgets on a year to year basis. That’s not how most good businesses do it anyway. The Mets will have a 5-year payroll budget that will settle in at about $60 million dollars when all is said and done. I’ve done this before so let me just show you what you can expect:
2012 – $85 Million, 2013 – $70 Million, 2014 – $65 Million, 2015 – $60 Million, 2016 – $60 Million
7. Re-Branding – Remember those corny slogans the Mets were so enamored with back in the 70′s and early-80′s… The Magic Is Back – Take Your Kids Out To See Our Kids… While they learn to live life under very tight payroll constraints, expect the Mets to start emphasizing a renewed dedication to scouting and player development. Expect more news on minor leaguers who are having great seasons, expect lots of up-selling on draft picks, and expect prospects to be hyped like you will never believe. I’ve seen this before and it ain’t pretty. In fact it’s very Royals/Pirates-esque. The Mets will contract an ad agency who will buff up the Mets image and somehow they will make it all work.
8. Family Friendly/Group Events – Ah remember the picnic area at Shea? (I loved it!) Remember Family Night? Remember Banner Day? Remember Businessman Specials? As part of the re-branding I mentioned, expect a shift in ticket selling philosophy. Take your family to the game and have a Nathan’s hot dog and enjoy the day. Life is good. Group Ticket Sales Dept. is going to be very busy for the next five years. This might actually be a good thing and more fun for us fans.
So there you have it… These are some of the things I fully expect to see moving forward. Implementing these moves could save the Mets $100 million or more in expenses and add new revenue streams they never had before.
On January 10 I wrote this
Get used to it my friends, because nothing is changing anytime soon with regard to ownership of the team. For the billionth time, the Mets needed to stop the bleeding and they have done that. They needed to trim the fat and they have done that. They needed smarter people to call the financial shots and they have done that. The loans that are due in 2014 and 2015 are adjustable and can be refinanced for a new 5-year term.
In conclusion, when you go to Citi Field and look up to the owners box in 2015, the man you’ll see sipping his chardonnay around the fifth inning will be none other than Fred Wilpon.
On January 12, I also wrote the following in a post entitled “Wilpon Doesn’t Look Like Someone Who Is Near Bankruptcy To Me”.
Fred Wilpon doesn’t sound like an owner filing for bankruptcy, and Bud Selig doesn’t sound like he’s ready to have MLB take over the team. I try to keep it real here when I discus the team with regard to the financial turmoil and the news and non-news surrounding it. That puts me in a tiny minority because nobody really wants to hear the hard, cold facts, when sweet nothings are much more soothing to the soul.
Better days lie ahead for Mr. Wilpon and he still intends to leave this team for his children and grandchildren as he has always said. He also lives and learns. By that I mean he learns from his mistakes.
I can write my own book on all of this, and maybe someday I will. But I refuse to write a final chapter to a book whose ending has yet to be determined. I also refuse to speculate under the guise of facts, or try this matter in the court of public opinion where justice is never blind and always twisted.
I get that many of you blame Wilpons for the problems that this team has had on the field over the years, but that’s not a reason to turn a blind eye to the facts or to wish for a miscarriage of justice because you think it’s one way to get rid of the Wilpons. Why don’t you throw yourself on the tracks in the path of an oncoming 7 train to see what it’s like to be railroaded.
The reporting of late on Wilpon/Picard reads like something out of the Neo-McCarthyism era – an agenda driven crusade that seeks their own fitting end – facts and truth be damned.