In a report for the New York Times, Richard Sandomir says the Mets are talking to banks in an effort to raise more cash so to be able to reorganize their debt.
According to Sandomir, the Mets could refinance SNY’s $450 million loan and then borrow more to repay some of the team’s debt and pick up some extra money that will be used to pay for day-to-day operations of the team.
You may remember last year I made an issue about that $450 million dollar SNY loan and I said they could easily refinance it to give the team more flexibility if they needed it and more time to pay the loan back and perhaps at an even lower interest rate because of how far rates had fallen in the last two years. It was a big point of contention between me and few others who have been following this story. Well, it now looks like the Wilpons will indeed re-finance the terms and as Sandomir’s source says, “You still have the debt,” he said, “but at a lower rate.”
This is a great move by the Wilpons at a time when things are pointing in the right direction and expected sponsorship revenue about to pour in for the All Star Game. Also their point-man Sandy Alderson has guided and aided the process by continuing to slash payroll which has already reduced the teams losses by $70 million dollars since he took over, including $50 million in fiscal 2012 alone.
After losses of $75 million in 2010 and $70 million in 2011, the Mets losses for this year are expected to range between $15-$20 million, but together with the profits from their cash-generating network, 2012 will be a banner year for the Mets owners. The first one in five years.
On top of the extra cash that will be raised, the owners and SNY’s partners will most certainly receive cash dividends from the proceeds of this redistribution of debt.
“SNY is a better credit risk than the team,” Marc Ganis, a sports industry consultant, told Sandomir. “It’s not subject to Major League Baseball’s debt restrictions, and unlike a team’s expenses that go up and down, SNY’s are easily quantifiable.”
That’s important to note because if it was a team loan that was being refinanced, you can bet the interest rate would be significantly higher and possibly even double what the rate would be for the SNY Network which they own 65% of.
Of course partners Time Warner and Comcast would have to approve such a deal, but it’s in their best interest to see the Mets financially stable and the expected cash dividends plus a lower rate would be attractive to them and fatten their own bottom lines. Everybody wins.
And the beat goes on…