6
2012
Source Says Mets Cut Losses To $23MM And Are On Firmer Financial Footing
An article by Hojo's Mojo
According to a report by Josh Kosman of the NY Post, the Mets are expected to cut their 2012 season loss by two-thirds from last year, to roughly $23 million. That figure is in line with expectations, but not enough to support anything but a modest uptick in payroll in 2013.
But even with the losses at that level, cash-strapped owners Fred Wilpon and Saul Katz appear to have just over $21 million in free cash — from their profitable SportsNet New York cable operation — to sink into the club, the source said.
To be sure, the days of the Mets’ financial emergency are over. The team has repaid some of its loans and is on firmer financial footing, the source said.
In large part, that’s due to the profitable SNY operation, which had profits of nearly $100 million in 2011.
Wilpon and his partners own 65 percent of SNY — meaning their share is about $65 million.
The source told the Post that even with the losses at that level the Mets could have “roughly $21 million in free cash to spend” on the team this off season. That should cover raises for many of the players that are due them, but with regard to keeping third baseman David Wright, plus adding some stars, that “the money might not be there”.
“There will be room to make gradual increases in payroll, but nothing dramatic,” the source said.
About the Author: Rob Johnson
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NL East Standings
| Team | W | L | Pct. | GB |
|---|---|---|---|---|
| Braves | 24 | 18 | .571 | - |
| Nationals | 23 | 20 | .535 | 1.5 |
| Phillies | 20 | 23 | .465 | 4.5 |
| Mets | 16 | 24 | .400 | 7.0 |
| Marlins | 11 | 32 | .256 | 13.5 |
Last updated: 05/18/2013
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SO, they lost $70 million in 2011 and then they slashed $50+ million of payroll, and now report says they lost $23 million? so does that mean they lost more than $70 million combined? plus how sh**** att will be now that they’re completely out of it? Sounds like they will keep losing money for as long as they’re owners.
Please MLB, force this people to sell and to take the Sh**** FO they brought in with them!!!!
Saw this tweet from Jon Heyman earlier:
NY post: mets loss decreases $47M ($70M loss to $23M). We knew payroll cut from $140M to $93M. 1 word for that: Arithmetic
Not a doubt in my mind this FO was brought in not only to turn this franchise around for the future but in the immediate to save the team for the Wilpons. They accomplished that in large part by the historical slashing of payroll from 2011 to what it is for 2012.
I really wish they would have been just forced to sell.
Hi Srt,
Hey, you must have been listening to former President Clinton last night!
Joey D: You didn’t have to insult SRT with that last comment. Try to be nice you’re amongst friends here.
Hi Metfan Lou,
LOL – I think you knew I was suggesting SRT picked up on Clinton’s often use of the word “arithmatic” last night.
Srt, you did realize that was all I meant, right?
BTW – if you somehow recall watching the post game show after the 2011 home opener that was live from Citi Field, then you might have seen me among the group yelling “Sell The Team” exiting from behind the stage.
No worries here, Joey. I didn’t take any offense to that.
Hi Srt,
I knew you didn’t, just like Metfan Lou knows I didn’t with him too!
Fred and Jeff Wilpon and Sandy Alderson…. that’s another story. But I bet Saul Katz is glad that he’s really the silent partner in all this.
Ha!
Yep and I knew it was going to happen months ago!
When you cut 55 Million and only save 47 Million you did not accomplish what you wanted to do! You actually cost yourself 8+ Million cause you have to cut again! And probably lose more attendance when you do especially if it is a guy like Wright!
Cutting the PRODUCT that brings in the fans will not solve the financial shortfalls!
Cutting the stuff that does nothing for attendance is the only way to save money and not lose customers!
If they are lucky and somehow find a way to re-sign Wright they MIGHT actually break even once Bay and Santana go off the books.
But there still won’t be enough attendance to add like the Slurpers told us would be the case with all this FINANCIAL FLEXABILITY!
We cut 55 Mil in Payroll and we STILL don’t have any of this FLEXABILITY we were promised!
Stop making excuses, lol.
Really? Sell the team already and stop holding loyal fans hostage !
According to Forbes, last year the Phillies lost almost $12million.
The issue for the Mets is debt and lack of production from the payroll. That’s not going to get fixed overnight.
If the figure that they lost $70mil last year (which Forbes said it was $40m of operating income) then this would suggest things are headed in the right direction despite what some others may think.
You’re not going to go from a huge loss financially to a gain in 1 year. The reasons they are losing $ are not gone yet.
I don’t really understand why people are mad at Alderson or the Wilpon’s over this statement. Jason Bay’s $16million represents 70% of their loss for the year.
Right direction? Cut 55 Mil and we are already under 100M of Payroll and have YET to get all this Financial flexability those cuts were supposed to get us!
If they resign Wright as you claim in another thread is a slam dunk they SHOULD lose another 23 Mil next year if attendance stays the same…..
Minus Bay’s money and maybe it gets reduced to 5-7 Mil in losses….
Take away Santana’s salary and you know what you have at the end of it all?
10-20 Mil in Payroll Flexability!
You had to cut Major fan draws amounting to close to 70 Mil in payroll to get 10-20 Mil in flexability!
This was the most efficient way you guys could think of!
Where if they did what we said and got or kept one of thier star draws they might already be turning a profit even before Bay and Santana got cut!
Cause for every 2K per game attendance increase you make about 20 Mil on the year!
Increase attendance by 8K and you made 80Mil which turns a proifit of 7Mil!
You could have signed someone for 20 Mil last offseason and still be where you are right now only ready to turn a profit the second bay came off the books!
No. I said picking up his 2013 Option was a 100% guarantee.
If the Mets flat out turn down David Wright’s option year, you can board up Citi Field and call it a day. There is a 0% chance David Wright will hit the open market this winter. 0.
Again answering the question you WANT me to ask not the one I asked…
DO THEY HAVE A CHOICE? YES OR NO?
If they have a choice they are not committed!
You say it’s a slam dunk and probably is!
But they have a choice in the matter it isn’t committed money yet!
Not until they make that choice!
And don;’t you know, the slurpers are telling others not to get mad at alderson.. Well, he is supposed to be some sort of genius at finding undervalue players no? isn’t that the reason why articles about Brad eamus and having a good day were written?? But of course, since those moves didn’t work out, we can always go back to blame the wilpons… SMH
LOL Whats worse is even if they manage to not pay Bay they still stand to lose money!
Yeah it’s all about Payroll flexability!
When Santana leaves we will have 10-20 Mil of Payroll felxability!
WOW all that to spend?
ROFLMAO!
Meh, its the Post. Huge grains of salt.
Ohhh Yeah?? had they say SA is a genius i’m sure you’d be saying how great they are???
Hi Metsie,
As you know, we have a very friendly (certain others please take note that) disagreement regarding the importance of the sports network offsetting losses due to attendance. What’s your take on the Post’s comment regarding SNY as quoted by Rob?
“In large part, that’s due to the profitable SNY operation, which had profits of nearly $100 million in 2011.
“Wilpon and his partners own 65 percent of SNY — meaning their share is about $65 million”
Joey
Well they make the same mistake everyone else makes regarding SNY…
Wilpons have Partners that have to agree to spend thier SNY money on the team first.
If they do agree it will most likely be the same as was this year where SNY buys another 20 Mil piece of the team!
While the Network made 100 Mil in profit not all of that gets split between the partners.
It actually makes sense for the partners to agree to spend it because a better product means better ratings in the end and even more profits!
So it’s in thier interest to allow the transfer of thier profits to Met accounts.
But the Post is making the same bad assumption that everyone else makes.That because the Wilpons have some other source of funds that they can spend money from one company to pay for another. Could the Mets profit be used to go buy some real estate property Sterling wanted to buy? Hardly, and they Own a majority of the Mets as well!
More likely SNY will wind up owning a piece of the mets if any transfer of money is made.
This article does paint a bit rosier picture for the following season, however, whether or not the extra money that as offset by SNY profits can be used on the roster we do not know. Costs could go up in other areas of operations not related to the team on the field. But even though the losses are being reduced, it is still losing money, only adding to the total losses over the years.
Still, good signs and in many ways indicates my point behind the hiring of Sandy Alderson – to downsize and bring that financial house in order. Obviously, even with some of the debts already paid, the Mets are still losing money despite a ten percent cut-back of operating expenses independent of the major league roster. But, as the Democrats say, if those measures weren’t taken, it could have been a whole lot worse.
So for those like me who believe Sandy was hired due to his financial and legal expertise to get the economic house back in order for the ownership one must say he has indeed done his job well.
It’s not about the costs Joey…It’s about the revenue!
Why did they lose as much as they did this year after cutting 55 Mil from a 70 Mil loss last year?
Because while they cut cost they also cut revenue!
You have to attack these things from both sides.
Cutting cost does not work unless you can maintain revenue! because at some point you can not cut anymore without killing your ability to draw!
Increasing revenue is much more effective because of the fact that one ticket creates much more revenue than just the ticket!
For every 162K of Attendance increase per year you net about 20 Mil in revenue that year!
Add 646K of Attendance and your back in the black!
And all it would take to get that is some star RH Power bat fans might want to see!
That seems like a very balanced and rational approach. Austerity measures only tackle the problem from one angle and don’t provide a solution to the issue.
I have used the store analogy many times here…
Your losing money because there aren’t enough people coming in. Keeping stock for people to buy is the biggest cost of any business.
Cutting the stock is not going to bring in more people your just going to lose the few that came in to buy the item you cut!
If you cut the items that do NOT sell you won’t lose customer but save money by not keeping that item in stock.
In our case thats a Bay, Perex. Castillo. Get them off the books and the money you saved is all savings because no one was coming to the store to see them anyway!
We cut the salaries of the guys who were probably the best draws on the team. And revenue decreased as a result.
We need a new product people are curious to try and see if they like it!
Then when Bay comes off the books the price you paid has been offset by Bay’s contract removal and any increase in attendance is pure profit!
We say it isn’t what you spend it’s HOW you spend or Smart Spending…
But that also is true for cutting.
It’s not about cutting payroll but what your cutting!
And you need to make SMART cuts in the same way as you need to have SMART spending!
I don’t think they ever released their loses from the previous years either. So a one year reduction is pretty good seeing the massive knot they had to unravel. When the team is making multiple bridge loans to get through the next couple months, it shows how dire the situation is.
Here is the problem, when they start making a profit, it doesn’t mean it’s all going into the team. If you lost 100m in two years, wouldn’t you pocket some of those profits and pay down debt? I imagine it would be the responsible thing to do. Then if they don’t start re-investing more aggressively, how will they every get that attendance back up. They are in a pickle.
What Sandy has failed at doing (thanks in part to this situation) is most don’t feel the team is in a better position and he is not making the type of moves to change that perception. If the Wilpons and the front office don’t make a more dramatic change this off-season (and I don’t think they really will) they are only going to lose more money next season and beyond.
Well they didrelease numbers for the last two years and honestly I don’t think they lost any money in 2009. They had (despite the injury and losses) Nearly 40K in attendance!
Your right and it is what I have been saying for close to two years now.
Yes you can cut but if you do that you need to cut the waste not the product that draws the revenue.
Cutting Bay will not cost you any revenue! Who knows seeing Bay cut could actually increase it for all we know!
It wasn’t an option is the problem so they went and cut players that WERE part of the revenue draw.
Beltran may have cost them 12-15 Mil to keep but his drawing power would have brought in more revenue to offset the cost.
Cutting costs only works if the cost savings is way more than the revenue losses it creates.
Probably not the case with Beltran and most certainly won’t be the case with Wright or Dickey!
They need to make a splash this offseason to get some more revenue. A power RH Bat might be enough to do that. If he makes in the 15-18Mil range (roughly what Bay is making) the cutting of Bay the next year will offset that cost but you will have also increased revenue with the new hope!
So the costs would be the same while the revenues increased!
Thats what they need to do but it is highly doubtful they will!
Cause they seem to be more interested in having low payroll than they are in having high revenue!
Couldn’t agree more, Salty.
I agree as well that the Mets will eventually have to spend more money to get out of the hole they are in. However, I do think that waiting to spend that money until more of the players developed and more cash becomes available due to poor contracts coming off the books was the right move. Which I still think is the current plan. I still think that when the time comes the Mets will spend money. Will that be this off-season? I hope so but I would not bet on it. I still think the plan was after 2013 but we shall see.
Do the Math….
23 Mil in Losses Minus Bay…
How much do you have to spend of your payroll flexability and are the finances fixed?
Now take away Santana’s 25 Mil and tell me he isn’t a draw to the stadium?
What the net savings on him cause it sure isn’t 25 Mil.
How much is left once all the cuts are made to spend on the guy who is going to bring the fans back?
He isn’t much of a draw because he can’t be there to draw.
That’s beside the point. What I am saying is I believe they will invest when they think the timing is right. Right now that timing looks to be after next year. It’s not just about Bay and Johan coming off the books, it’s about the development of prospects.
When is that time right and how much will they have when it comes?
That was the question I posed to you!
My opinion is after the 2013 season will be the right time and how much they will have? Enough. Again, that’s my opinion but things may change based on circumstances. I thought it could be even earlier if guys like Ike and Duda had came out and taken the next step…
Agree with this as well, TRS.
Rubin had this to say about it in his chat today when asked the question:
Scot (Washington, DC )
Possibly dumb but honest question: How can a team in a major market, that owns its own network, with a sub-$100 million payroll and an average attendance per game of roughly 70% capacity still lose $23 million?
Adam Rubin (12:04 PM)
It’s all complicated, and obviously the books aren’t open, so we’re just speculating — educated speculation, but speculation nonetheless. Here are some possible reasons: (1) Large debt payments on the stadium approaching $50 million annually. I thought I read in the Post piece that’s actually charged to SNY, but I’m not sure. (2) SNY has Mets TV rights. I’ve been told in the past that they pay an actual competitive rate, but clearly it’s not the rate that would be paid if there were open bidding. So essentially the Mets/SNY based on the rate they charge as a free to broadcast games how they want to allocate profits between the network and team.
The Rights fees for broadcast are nothing more than what we call Blue Money transfers.
They don’t actually get transferred and really only get seperated as far as reporting purposes go.
And I can’t think of any reason why SNY would be making Stadium loan payments.
Unless SNY is the actual owner of the Stadium (possible but unlikely)
More from Rubin:
Danny A. (Brooklyn)
Hey Adam,The Mets lost 60M last year, 23M this year, and are projected to lose 15M next year. It boggles the mind that some fans see losing 37M LESS than last year as a continuation of the path the team was heading towards. Thoughts?
Adam Rubin (12:26 PM)
It’s not about actual losses. It’s about tight cash flow. And tight cash flow remains. They cannot spend at the level they would like because they don’t have the financial means to do so. The lower loss is merely a function of slashing payroll about $50 million. Clearly, revenue is down. Otherwise, their loss would have been no more than $10 million.
*************************************************************
Those that think the Mets money woes are over just b/c there was no Wilpon/Picard trial are clearly wrong. The Mets still have a cash flow problem. One easy way to fix that is get revenues up. How they expect to do that with a non contending team is beyond me. Not unless they slash payroll even more, which according to Rubin is a near impossibility:
Adam Rubin (12:17 PM)
It’s virtually impossible to cut payroll more. There’s only a limited amount of money coming off the books. Your biggest salaries coming off are Mike Pelfrey (likely non-tender, $5.7 million), Jon Rauch ($3.5M), Ramon Ramirez (about $2.2M), Andres Torres (probable non-tender, about $2.7M), Scott Hairston ($1.1 million), Tim Byrdak ($1 million). Much of that money, before replacing those pieces, is swallowed by raises to Niese, Dickey, Wright and arbitration-eligible players. And if you count the Jason Bay and Johan Santana 2014 buyouts as 2013 money, then the money is gone before anything is done and it’ll automatically be the same payroll.
At some point the Wilpons will have to spend their own money to reinvest in the team and take a risk in doing so. However, they are making sure that if that risk backfires they are stable enough to not lose the team. Before this situation if they lost 50M investing in the team it would suck but life would go on. Right now they just don’t have the money to invest and are not certain at all that investment could even bring a return.
‘At some point the Wilpons will have to spend their own money to reinvest in the team and take a risk in doing so’
Agree but I can’t see them doing so. Which is why I wanted them forced out.
Other franchises do this. Angels and Dodgers right now come to mind. But it sounds to me like the Wilpons would rather hold onto the team at all costs, even if it’s just a mediocre team year to year.
Question is, if MLB forces the wilpons out are they gonna take the gooners out of the FO position as well? cuz if they forced the wilpons out and these losers stay then things will be the same… Now, if you tell me, get the wilpons out along with these losers, i’m up for it, but i’d doubt you’d say that, since you’re SA biggest cheerleader….
MLB isn’t forcing them out. As long as the finances are stable and they are paying their bills, they have no right (or justification) to do so. And would be sued up the wingwang if they tried.
They are spending about 100mill on payroll. More than about 1/2 the other teams. Should those teams be taken away too because they don’t spend as much as some fans want them to?
I would love to see new owners with money to burn as much as everyone else, but don’t bother to live in a fantasy land where MLB is taking the team away and selling it off. Not a chance it happens.
No worries for you Alex. Most new owners usually bring their own guys. -)
As we all are reading though – and Rubin agrees – doesn’t look like the WIlpons are going anywhere soon.
Right, failure to invest your OWN money into the team is not a punishable offense. See the Nats and the Marlins for the last decade.
As for new GM? Yeah Sandy will not be here past his contract anyway. Will some of his juniors take over? Possibly. Have no idea. But regardless of change of ownership or not, Sandy was only going to be here to ride out the restructuring.
Agree, Stick. Wilpons did a fine job of bringing in the right guys all around to ensure they retain the team. Dang it…..
Whoever buys the team will….
But be careful with you wish for because before they fire Sandy they might move the team someplace else first!
I do believe it was more outside losses of capital and revenue due to Madoff and the loans taht were needed to be paid off that forced the Wilpons to downsize the Mets because the money – through legal loopholes and business practices of the parent corporation – that was usually used to make up for losses in attendance had to be used to pay off their debts. That’s why I felt last season’s $70 million “loss” was on paper only and not reflective of the true amount of money that was actually made. The Wilpons can do what they want with their share of the profits from SNY
Instead of re-investing it in the Mets, it went to pay off those loans. Downsizing the Mets own operation meant less money needed to go into the operating budget – which suggests some sort of legal loophole which allowed them to skim off the Mets to pay off… well, a lot of people.
But I agree totally with Metsie that the best solution would have been to invest further into the Mets to build up the attendance – the revenue from the increased attendance figures would have offset the additional investment. Why they didn’t? Perhaps they needed the cash immediately and could not wait till the investment paid off.
In any event, things have become so bad that they are giving away seats for free to all children 12 and under (accompanied by an adult) for the rest of the season – not one or two games – but all the remaining contests. Though that will mean bringing in some revenue from the sale of one ticket and the concessions then purchased by all, it’s still pathetic. And I doubt the tickets are just being given out for free – there are all those processing fees one has to pay regardless.
Question with a hypothetical situation, if I want to invest money into the stock market and yet I have no money to invest how might I invest that money? I could borrow that money but unfortunately I have already maxed out my credit and had to even get a loan from my parents. My best bet is to pay down some of my already existing loans, cut my budget tight and then be in a better position to both borrow and invest later.
Again you set the wrong hypothetical (why would I expect otherwise!)
Your once again forgetting that all those cuts you are making also cut revenue!
Your chasing your tail and will NEVER pay down the debt just keep the losses rolling along until there is nothing left to cut and have no revenue left to fix it!
If your favorite brand of coffee kept giving you worse and worse coffee eventually you will find another brand!
And at some point there is no cheaper coffe to save money on!
Yet again you don’t understand that if you have no money to invest you can’t invest.
Why not? Spending money you don’t have seems to be the gov.’s answer to everything.
Yeah wel what about all that money they are investing in the property around CitiField!
Your problem is you ASSUME they have no money to invest.
Again, you are also assuming they do. Investing in property does not mean that they could invest in the MLB team. They can go to others and borrow money for a property investment that they might not be able to go to for a player investment.
Oh please….It’s a 200 Mil gentrification project that enough for a 20 Mil player for 10 years!
The Wilpons probably have plenty of money to invest. They make their money off real estate.
The Mets having money to invest is another story all together.
It’s two separate entities. My mindset is the Wilpons own the Mets for a hobby. They don’t want to lose money on this hobby. They apparently also don’t want to invest much of their own money in their hobby either. They want the team to be more or less self sufficient.
They also want thier hobby to pay it’s own way and under this Front Office it is not going to anytime soon!
Short term goal seemed to be saving the team for the Wilpons. From everything I’ve read, that appears to have went in the right direction for them.
Now…it should be about improving the organization going forward so the Wilpons don’t ever find themselves in this position again. When and how long that takes is anyone’s guess. I still think we won’t see any money spent over this off season. Rubin seems to indicate that as well.
Hi Srt,
Agree with you about that but the Wilpons better do things to ammend the alienation of their fan base – and that doesn’t begin or end with Sandy Alderson (if he is to be made the scapegoat or just retire) – but with keeping the ticket prices low where they are and not raise them and then to stop with the general boulder dash (I’m actually getting sick hearing Gary Cohen and Kevin Bukhardt pitching the company line about building from within, vision, better off not making moves, Jose “leaving” the Mets, etc., that few believe anymore – and they are not coming across convincing, either).
Or they just maintain the status quo which in my mind means = mediocre type team ……
Nothing will change until 2014 at the earliest. Sandy already said that their most likely option in adding a productive outfielder next year is through trade. That means they don’t have cash to spend. Which also means whoever they trade for must also be cheap…while also productive(or else why make the trade). That’s not a type of player most teams typically trade…productive and cheap. He’s working with pitching depth in the minors. He needs to find a team with a surplus of young, cheap outfielders or possibly a young, ready, hopefully offensive catcher. Good luck. Like I said, 2014.
It also means there is not all that much on the FA market worth chasing. Outside of Hamilton (not seeing that for a multitude of reasons!) who are the “big name” FAs that can play CF? Vicky, B.J. Upton, and Bourne? any one could likely help, but are these guys you want to get in a bidding war for?
2012 hasn’t even ended and people are already punting 2013 and lookign forward to 2014.. SMH.
Thank you SA.
When Wright doesn’t get re-signed it will quickly turn to 2016!
They know the old projections are wrong and just refuse to admit everything they said was going to come to pass has not come and the years just keep on passing!
I expect them all to immediatly go silent the day Sandy gets fired!
TRS went from a plan for 2014 to a 16 Year plan in 2028!
That Fence he claims to sit on is going to leave a mark that will never go away by then and Sandy will be long gone before that plan ever gets to the day it might work!
LOL, don’t hold your breath waiting for SA to be fired.
He won’t be here past the end of his contract but before that, he’s not going anywhere.
Just not sure why some have a hard time understanding the financial situation the Mets were in last couple of years – and where they stand now.
While I agree with your sentiment that in this business more often than not you have to spend money to make money – doesn’t appear to me as if the Wilpons are either willing or able to put themselves on the hook going into 2013 for what they don’t have. Doesn’t appear to be bothering the new Dodger’s management group any.
Just say, ‘Thanks, Fred’.
Hi Srt,
I’ll thank Fred once he sells the team.
If I’m not mistaken his contract ends 2014!
Which is right about the time TRS expects to get off the fence!
Close, his contract runs through 2014 and I am off the fence during the off-season of 2013. Remember I supported Omar until his last year as well.
Bay should just retire already!!! He’s holding the franchise and fan base hostage, just to add more millions. Id be embarrassed to cash those checks