People wonder how the Wilpons could be losing money when MLB is awash in media profits. How the biggest baseball market in the world could feature a team with dwindling gate proceeds. How a team that owns its own network, boasting a brand spanking new stadium with bells and whistles galore and an excellent selection of tasty treats and luxury boxes could drop 93 million over two seasons. As crazy as it sounds it should be difficult for a major league baseball team to do poorly in N.Y., and yet the Wilpons have managed it with astonishing aplomb. It’s not easy, just as it isn’t easy to wake up one morning and find out you’re 500 million dollars poorer. I get really upset if I lose a quarter in the seat cushions. The Wilpons are not just bad owners, they are bad gardeners. Failures at just having to stand around and watch stuff grow, even though they have the finest fertilizer (from all the stiffs who’ve crapped the field), a just right amount of sunlight (from all the greenhouse gasses), perfect temperature (all the hot air), and a state of the art irrigation system (won’t even go there) … They’ve failed to build a decent product in spite of having the benefit of every imaginable resource they might need (and the greatest fans in the world). Fred Wilpon’s lawyers once argued that their client was blinded by friendship in his dealings with Madoff, well, for those of us who wondered whether it was possible for anyone to be that clueless, the answer is a resounding yes.
For fans there is hope only in so far as this ownership group may be distanced from its own baseball operations, either by losing the team outright or by other means. To this end, Sandy Alderson, as de facto appointee of MLB and owing to a forehead large enough to accommodate images from an overhead projector, may just possess enough clout to resist Fred’s inane queries and Jeff’s vapid buffoonery, running the team the way he wants to. Whether the Wilpons will in fact ever be parted from the Mets remains to be seen. Standard and Poor has again reduced bonds issued to finance Citi Field to “BB,” two levels below investment grade (bonds at BB or lower are considered junk) – Moody’s still has them rated below investment grade also. The Post and Times later reported that the Wilpons refinanced 450 million in existing debt on their 65% share of SNY and borrowed 240 million more, with a 160 million cash out. The re-financing involved some 700 million dollars in total. This infusion may not only mitigate the 23 million in 2012 losses and 70 million 2011 losses, but may allow them to pay down bank debt and possibly a portion of the looming 320 million payment on the stadium due on June 2nd of 2014.
The problem for the Wilpons, if you see the glass as half empty, is that they are using the profitable side of their business (leveraging their 65% stake in SNY to the hilt) not only to pay down debt on SNY, but on the Stadium side of operations which has bled losses of 143 million over the past three seasons. The team owes a crippling annual $43.5 million for Ebbe, er Citi Field which was predicted in that same Standard and Poor report to see another 8 percent drop in attendance this year. An 8% drop in attendance comes out to around 180,000 fewer paying fans. That’s roughly an additional 22 million dollar loss on top the standing 23 million dollar deficit from last year. So the Wilpons could be looking at losses of over 40 million in 2013. With this latest stratagem the Wilpons have increased money owed on SNY from 450 million to 700 million. There is still the matter of the debt on Citi Field which has not been paid down. That debt represents the same 43.5 million in yearly payments (and 22 million in annual interest) in addition to the 320 million lump-sum due in 2014. The argument that the ship is still sinking can certainly be made. It’s hard to know for sure how broke the Wilpons are. Irving Picard, the trustee for the Madoff victims, believed the Wilpons simply didn’t have the money he was looking for after thoroughly combing through their records. In the end, this refinancing is the equivalent of a second mortgage to help pay off a major debt, and it has the feel of a borrower tapping his last bit of collateral. My guess is they’ll use the 240 million to pay down the team debt and bank debt while they apply some of the 160 million to the stadium’s debt and some to operating expenses and cash flow for the next couple of seasons. They’re not getting any more bridge loans or emergency MLB loans, and if the bleeding doesn’t stop they’ll be in the same spot in a season or two without the option of borrowing more against SNY. All the while the fans continue to lament a diminishing Met budget and Alderson’s pathetic soirees into the free agent pool, but what they aren’t doing is buying tickets.
You’d think Alderson would be trying a little harder to bring the fans back. Maybe sign Valverde and Kyle Lohse and a couple of other notables, but throwing money at problems hasn’t really clicked for us in the past, so my thinking is what the heck, lets try something else. Lets be like the Twins! Only the Twins spent 20 million dollars more last year than we’re slated (so far) to spend in 2013, no, wait, that can’t be right, the Twins? Minneapolis is like smaller than Staten Island … by like a 100,000 people (!)… how is that even possible? Well, okay regardless, we’ll be more like Duluth then. We’ll be prudent and thrifty, even though it will take years to restock the farm system to a level where it will significantly alter the quality of the major league roster. Currently the “talent bump” in the Met system’s “baseball snake” is in Saint Lucie where their rotation sported a league best ERA. The capybara (not to be confused with Yogi Berra) has only just started working its way through this particular python. Eventually the bump will find its way through the upper levels and get pooped out (with great fanfare!) on the major league stage. For now we have the occasional dropping, Wheeler and d’Arnaud and … er, that’s about it. Yeah, years away, so why haven’t we signed a single free agent again?
There are two big indicators that point to a better future if you really must believe things will frigging improve and that this effing glass is half full dammit. Alderson does appear to be running things autonomously, and player acquisition trends appear to be reserved and controlled with a notable improvement in the health of our pitching. This is a far cry from the plucky pizzicato symphony of snapping ligaments we’ve become accustomed to since 2006. Furthermore, owing to the gruesome nature of developments since Beltran’s called third strike, any marked deviation almost has to be good.
Alderson is a smart man, or at least he looks like a smart man. He knows that if he spends an additional 20 million on free agents, if, for instance, he signs Shaun Marcum and Michael Bourn and a couple of relievers, he might coax enough wins from this squad to boost gate proceeds, stop the bleeding, and forestall ownership’s decline long enough to tide them over until a true Met contender (the digested capybara) can rescue them outright. Alderson, however, has, strangely, eerily, held the line. Spending even an additional 10 million could pay for itself if attendance jumps by 4%, but it probably won’t bring us a pennant in 2013, and it isn’t going to help the team in the long run (we’d lose our first round pick for Bourn). The only people it would really help are the Wilpons. Alderson seems content to sit back and work on the future while his owners orchestrate their maladroit schemes (paying debt with more debt) that are ultimately contingent on that elusive profitability margin. You almost wonder if Sandy wants the Mets to be bad. If the Mets are hopeless in 2013 it not only allows Alderson to again go back to the future, it may just hasten the departure of an ownership group that is living in the past — especially if the Wilpons do their part and continue to screw up in every imaginable way.
It could be that Selig and Alderson concocted a sink or swim contingency framework for the Wilpons to determine whether they are capable of getting their financial house in order. Maybe Sandy is really The Sandman, maybe he’s invaded Jeff Wilpon’s dreams like Freddie Krueger, showing up in a weird turtleneck to rip up Jeff’s binky and slash the budget with those finger-knife things. Maybe he really wants the Mets to suck for the next few seasons because he can’t stand that little yammering nincompoop in the Oakley shades. Retaining Dickey for instance was well within the budget, but Sandy chose again to push the competitiveness timetable down the road. With Dickey on board maybe they sign an outfielder and have an outside shot at the wild-card. Dickey had also mastered the art of making Major League hitters twist themselves into Stella D’oro cookies swinging at a sinister floating illusion. Talk about entertaining, watching Dickey use the force was priceless. Without him we can pretty much kiss 2013 goodbye.
Last winter when it became apparent that Jose Reyes was headed to the Marlins, Alderson told reporters, “When a team loses $70 million, irrespective of Bernie Madoff or anyone else, that’s probably a bigger factor in our approach to this season and the next couple than anything else.” As it stands, a year later, our Cy Young award winner is gone and the Wilpons may have mortgaged their most profitable asset only to continue to lose money … awesome! What I think most fans fail to appreciate is that Alderson is both Selig’s henchman and MLB’s axeman. His work speaks for itself — especially in San Diego. If by some miracle the Mets are competitive with their current budget Sandy ends up looking like a genius while the Wilpons live to fight another day. If on the other hand the Mets go belly-up and Citi continues to be a wasteland, the Wilpons lose another 40 – 50 million as they drift back towards bankruptcy. Under this second premise, Sandy proceeds with fortifying the future so that he’ll look like a genius 3 to 6 years from now (when the python finally relieves itself) by which time Alderson will be sitting in Selig’s chair and a more competent ownership group will reside in Flushing. It’s a win / win scenario for the Sandy-Man.
Do I really think Alderson wants the Mets to do poorly? Naah. Do I think he’s conspired with Selig to either force the Wilpon’s into solvency or expedite their departure? Probably not. Do I think MLB has injected a layer of influence (through Alderson) to facilitate a sustainable remunerative organizational structure in New York’s National League franchise? Absolutely, and I think that actions on the part of Alderson to achieve this end are independent of Wilpon’s financial rearrangements, and may in fact run contrary to Wilpon’s short-term needs. Why else would a GM not spend money he clearly has at his disposal? It’s all about sustainability.
Go ahead, cue the Metallica.
About the Author: Matthew Balasis
I’ve been a Met fan since August 1969 when a fire resulted in the Red Cross placing my family on the 6th floor of a building in Willets Point. I could see Shea from our balcony and I knew something big was going on. I followed them through the dark years and the resurgence of the 80’s only (sadly) to miss the fall of 86 because I was in Boot Camp. I've been serving penance ever since in Minnesota where I'm an SLP. I've written a lot about the Mets in an effort to share with my kids (and anyone else who might listen), a sporting tradition that made much of my childhood worthwhile. Follow me on twitter: https://twitter.com/MatthewBalasis
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