There are certain commodities or goods that one buys that are expected to lose value.
The minute you drive a new car off the lot, it’s worth, in most cases, significantly less, being one such example. But when it comes to professional sports franchises in the four major sports, the arrow has been pointing up, way up, for over a decade.
Apparently, not so with the New York Mets franchise. As reported by Josh Kosman of the New York Post, current Met majority owner Fred Wilpon, is buying back a 12 percent stake of the team for roughly $180 million dollars. This would value the Mets at about $1.5 billion which is significantly less than the $2.1 billion Forbes magazine valued it at last spring. This represents a 28 percent decrease in about one year.
Wilpon is buying the stake from cable firms Comcast and Charter Communications which purchased its share of the team in 2012. Wilpon sold the shares to raise cash to offset the major losses suffered from the Bernie Madoff Ponzi scheme over a decade ago. He sold 48 percent of the team in 12 lots worth $20 million each. That put the Mets valuation in 2012 at about $500 million.
Comcast and Charter Communications had been looking to sell its share of the team since last summer. It finally found a willing buyer, but under the terms of its agreement with the Mets, majority ownership had the right to match the price and acquire the shares. Fred Wilpon exercised his right to do just that for a valuation considerably lower than expected. Some might call this a good business deal, while others will feel the Mets are just not worth the money that Forbes and others have placed on it. While a discount was expected for the re-buy of the shares, the amount of the discount surprised many financial observers.
When the transaction closes, the Wilpons ownership stake of the team will rise from 52 percent to about 68 percent, according to the Post.
The deal is reportedly a cash transaction. If so, this could significantly impair the ability of the Mets to spend money during this and perhaps future seasons. Although the Wilpons have evidently recovered from the Madoff scheme, $180 million is still a large amount of cash, and since Major League Baseball has rules on how much debt a team can carry, it will be interesting to see if this impacts players like Jacob deGrom who is seeking an extension of his contract.
Of further interest is the role of current Met COO Jeff Wilpon. He was a major stumbling block in the deal that had to be overcome due to his reputation of being “meddlesome and tightfisted,” the Post noted. With $180 million less in the coffers, it remains to be seen just how much tighter his fists will become.
The Mets have not commented on the transaction, but no doubt Mets fans will. If players like deGrom and others get well deserved extensions and the Mets show payroll flexibility, then this acquisition will be nothing but a blip on the radar. But if it affects the product on the field, and the Mets sell or trade valuable assets, this will further punctuate the loathsome reputations the Wilpons have as owners with the New York fan base.
