Mets Refinance $700M In Debt, Gain $160M In Spending Money
Since the NY Post broke the story on Thursday that the Mets have refinanced $450 million dollars in SNY loans, we’ve gotten a little more clarity on what looks to be an ambitious overall re-fi plan by the Wilpons.
Including other outstanding loans that were refinanced, Mets owners have re-positioned about $700 million in total debt.
In fortifying their improving financial hold of the Mets, they have cashed out to the tune of over a $160 million dollar windfall.
It’s most likely the last thing you want to hear, but things are looking up for the once cash-strapped Mets who were wading through some choppy financial waters.
To begin, all of their outstanding debt has been refinanced at lower monthly costs and interest rates, with many of the due dates being pushed back as much 2-3 years , and more importantly, they get a huge influx of over $160 million dollars to spend as they see fit or just keep for themselves if that’s what they elect to do.
According to Forbes and the New York Times, the resulting stability and financial muscularity of SNY and similar networks make them low risks to banks. Late last month, SNY refinanced $450 million in existing bank loans at lower interest rates and borrowed at least $250 million more. With their 65 percent ownership of SNY, Wilpon and Katz should have walked away with about $162.5 million. The refinancing was first reported Friday by Bloomberg..
MLB commissioner Bud Selig must be feeling high and mighty tonight, knowing full well that it was he who hatched the scheme to help his longtime friend’ by dispatching CRG and Sandy Alderson to save Fred Wilpon’s empire.
Why were the banks so eager to help? Because baseball franchises are a great investment that keep rising in value. Because obviously they saw the Wilpons as a good risk. Because of the financial clout of a regional sports network. There were plenty of good reasons if you bothered to look beyond all the doomsday scenarios that were being painted by other prominent bloggers.
I always knew that when the timing was right those two huge loans that were due in 2014 and 2015 would be refinanced and pushed back. On December 5, I posted about the financial muscle of Sterling Equities and the billions of dollars they have in real estate holdings and other investments.
For years I’ve been trying to tell anyone who would listen that the Wilpons are not broke. The Mets are just one of over a dozen different businesses in their vast empire. The Madoff situation was a big body blow, as was the Picard lawsuit, but as I always asserted the owners did exactly what any other Fortune 500 company would do – cut costs and expenses, and ride the storm out. Now that all of that turmoil is behind them, expect a return to normalcy with regard to spending and overall team operations. You still have some doubters running around with their heads on fire screaming bankruptcy, insurmountable debt, and doomsday. Don’t believe that nonsense.
Make no mistake it was very easy for the banks to give the Mets this huge financial bailout complete with golden parachutes. They’re not in the habit of refinancing three-quarters of a billion dollars in debt unless they are certain it’s a win for them and that the debtors have the wherewithal to pay it back.
On the plus side for the Mets, the team could start spending again in the future, as they once did before the Madoff hiccup happened. Whether or not Alderson does though, is another story completely.
Richard Sandomir says the Mets are in a very good position to dive into the free agent market and one MLB adviser told him they should consider signing Michael Bourn or at the very least Scott Hairston to address the obvious needs in the outfield.
Sorry to disappoint you, but the Wilpons are here to stay as I always said they would be. There’s an old saying that applies here; better the devil you know than the one you don’t. Maybe that will give you some comfort.
Look, the bottom line is that in tough and uncertain economic times, they did exactly what we would have done if we were in jeopardy of losing our own home or business. Don’t begrudge them that. The person you should be ticked off at is Bud Selig, the propagator of all this.
Original Post 1/3
According to the New York Post, team owners Fred Wilpon and Saul Katz have refinanced $450 million in loans borrowed against cable network SNY. They have been working toward this since October.
Back in October the New York Times reported that this would no only reduce semi annual loan payments significantly and create less revolving debt, but that the owners could net $30-$40 million in dividends and cashout. Also, by completing it before the new year, they avoided higher capital gains taxes on their SNY investment.
The Post also mentions that S&P estimates that stadium revenue fell six percent last year, with seat revenue suffering the most significant decline of 13 percent. Suite sales were the saving grace, rising 11 percent — but S&P said that was due, in large part, to the Mets’ parent, Sterling, now owning “about 20 percent of the suites.”
Rival ratings firm Moody’s holds a different view and in November upgraded its outlook on the ballpark.
The Wilpons have authorized an increase in payroll over the $95 million payroll level in 2012, but the front office has yet to sign a singular MLB free agent citing their disdain for players desiring more than what the front office believes they are worth. If things stay as is and they fill out the rest of the team with $500K players, the Mets will have a payroll under $85 million for the first time since the 1990′s.
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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