1. It’s All In The Rearview Mirror
“It’s all in the rearview mirror,” Wilpon said about past financial woes last year as the 2013 spring training started, “The family is in great shape. The family really is in great shape. There’s no one in my family — there’s the Katz family, the Wilpon family, kids has any personal bank debt. Zero. Everything has been paid. We don’t owe a dollar to anybody. We have mortgages on buildings and stuff like that, but we don’t owe a dollar.”
The vast majority of people who Madoff scammed were financially devastated by his crimes, and didn’t get off as well. They lost retirement accounts, houses, everything. Some who lost the most were very close personal friends of the Wilpons, who they introduced to Madoff. Sandy Koufax, for one.
Here’s the rub. Wilpon will cry Madoff when convenient but leaves out the part that they have virtually shielded themselves from any Madoff effect by passing through the debt away from them personally when it also suits them. Wilpon also conveniently leaves out the part about taking $700 million in allegedly fraudulent transfers of principal from his Madoff accounts to help secure this personal burden.
Then there’s the $300 million in allegedly fictitious profits that kept the Mets afloat. Say what you will about clawbacks and what not, and dance around the fact that the Wilpons agreed to pay a small portion of that back, but the court records apparently showed the entirety of these withdrawals and payments were in fact made. Where did it all go? I don’t know about you, but I am relieved his family is totally debt free. Helps me sleep better at night. That is, when I’m not worrying about paying my own bills. The Mets, not so much. There is nothing but mountains of debt up ahead.
2. Because We Can Do It
“Everything that was in the past — you guys saw the pain we went through — is gone,” Wilpon said in February 2013, “the payroll will be commensurate with anything we’ve ever done, because we can do it.”
Well, except for the part that he had signed away his control over expanding the payroll to the banks, which is entirely despicable by itself. At any rate, no such payroll increase has yet to materialize, just a kind of con man’s math. Take away, put back less, and call it a net gain. But I feel his pain. Yes, I do.
3. Make Sure That The Banks Got Paid Off All Of The Debt
It wasn’t as people had written, the reason,” Wilpon said last year, denying that the reason payroll was slashed was because of the Madoff situation. “It was a balance there. Because we had to make sure that the banks got paid off all of the debt.”
Really? Banks all paid off? Then why the lockstep celebration by some Mets fans that you just got re-financing on old debt that you were unable to pay? Here’s the reality. The franchise remains leveraged to the brink of critical mass. This new restructuring only pushed the balloon payment out 7 years. There’s several hundred million dollars of debt still attached to the club, plus the refinancing of the SNY network — said to be in excess of $700 million — and the hundreds of millions of dollars in debt on Citi Field. Even the bonds issued to finance the stadium have been rated “junk status” by Standard & Poor’s.
There are those analysts who think when you factor the net present value of those payments as debt, there is no equity value left in the Mets.
4. I’ll Take Them At Their Word
Commissioner Selig in 2012, showing that he’s pretty skilled at double talk and enabling himself, when asked after an owner’s meeting about the financial situation of the Mets and whether the Mets had the resources to field a competitive team, revealed this:
“They (the Wilpons) said they do and I think they do. It just depends. It’s interesting how you rebuild or how you do things. Spending money doesn’t guarantee anybody anything. I want to be very careful here. As far as the Mets are concerned, I know they’re very comfortable where they are and they’re very optimistic. I’ll take them at their word.”
Why not? They’re pretty up front and transparent kind of guys, after all. Here’s the thing, though, and Selig knew this was true at the time he gave his blessings. Rarely enforced and easily manipulated, MLB has a rule that prohibits teams from operating at debt levels greater than ten times operating income. Selig already knew that the Mets and their debt-to-value ratio of 60% not only exceeded the standard, but put it in a more tenuous position than the Dodgers at the time who had a 54% debt-to-value ratio.
Like McCourt in LA who ransacked the Dodgers and depleted revenue from the operating capital for his own gain at the detriment of the LA Dodgers, how is what Wilpon has done with his debt any different? Before anyone cries that teams are not a public trust, and therefore can do anything they want with the team’s revenue, think about what happened to McCourt.
McCourt was run out of baseball by the commissioner, another Wilpon buddy from the old days, who relies on owners to back his initiatives and, well, pay his salary. New owners stepped in, who actually had the financial resources required to run a major league team, and McCourt, who had treated the team as his own piggy bank and brought it to its knees (sound familiar?) then makes a fortune in the sale. You can just hear McCourt gloating about the financial solvency of his family, can’t you? Why hasn’t the commissioner stepped in here and for the sake of the game put an end to the ownership of this franchise who can’t legitimately operate a major market baseball team — in fact, never has been able to run this team without leveraging the fraudulent activities of Madoff and his fairy tale returns almost from the start? Asked and answered.
5. He Does Not Have Restrictions
“He’ll have all the opportunity in the world to bring anybody he wants in,” team COO Jeff Wilpon said on 2011, referring to Sandy Alderson and his payroll, “The way for him to do that is to bring the ideas to us and we’ll talk about it. But he does not have restrictions. We’ll deal with everything on a case-by-case basis.”
Apparently deceitful double talk is genetic. We now know for a fact that there were payroll restrictions, a bank induced salary cap. When the news just broke that the Wilpons had restructured $250 million in debt and that, this time, the loan didn’t include payroll restrictions included in the agreement, even the hardened and the cynical had to be shocked.
Anything goes, I guess, especially when you are drowning in debt. Even if it meant running the organization into the ground, which it has. And so began the Wilpon’s convenient embrace of lowering payrolls as a testament to baseball purity, and farm system team building worship — with Sandy Alderson playing the part of the hometown sheriff coming to clean up the wild west. Only problem, who are the bad guys, and who are the good guys?
It’s one thing to have the Mets organization not be able to sustain itself because of bad contracts and when lack of winning causes revenues to drop to where it impacts the actual operation of the team. This austerity and payroll reducing and refocusing on the farm system because that’s a more pure and fundamentally sound way to build a baseball team has been nothing more than a deliberate charade to cover up the ultimate distribution of the money — back into the Wilpon’s teetering empire. Its nothing more than a pickpocket’s diversion. But, hey, have a heart. Whose going to gentrify Willet’s Point if the Wilpon’s don’t?
In the financial world, people go to prison based on the truthfulness of what they say, or don’t say publicly — especially when financial gain is tied in, or manipulation for financial gain is the intent (sort of like pumping up the team with lies to sell more tickets … to pay more debt down that has nothing whatsoever to do with the baseball team itself, which is not illegal in this case, just slimy).
While many losing teams have been turned into winners in less than three years, the GM can be patient and detached as he ‘rebuilds’ the farm system with high school players, because fielding a competitive major league baseball team befitting a major market isn’t even the primary goal. Anyone who thinks that this ownership will be able to potentially pay Harvey (assuming a return to glory) a contract in line with the $215 million paid to Kershaw, which is what it will take and which will happen before this just restructured balloon payment of $250 million comes due, is in need of longterm psychiatric therapy.