Experts: Mets will find others to invest
The Mets will probably be able to find other investors to make up for the $200 million lost in the scuttled deal with billionaire David Einhorn, sports economists said Thursday.
They predicted co-owners Fred Wilpon and Saul Katz would succeed in lining up friends, family members, business associates and Wall Street executives who had expressed interest in becoming minority owners in the team before Einhorn was declared a "preferred partner" in late May.
"Wilpon is going to need an infusion of capital, but my guess is there are people other than Einhorn who are ready to make a deal," said Andrew Zimbalist, a sports economist at Smith College. "I think it will work out."
However, the pursuit of new investors will take time, possibly extending into 2012, the experts said.
The Mets acknowledged as much Thursday, saying its owners had "provided additional capital to cover all 2011 losses" and were "moving forward with necessary resources to continue to operate the franchise." The owners are "under no financial pressure to do a deal on any particular schedule," the team said.
Wilpon and Katz are fighting a lawsuit seeking to recoup hundreds of millions of dollars from them on behalf of investors swindled by Bernard Madoff's Ponzi scheme. The trustee representing the investors has alleged the Mets owners reaped a windfall from Madoff and either did know or should have known that he was a fraud. The owners have denied wrongdoing.
The Madoff suit "hangs like a cloud over the Mets and increases the risk to investors in the team," said Wayne McDonnell, an expert in the baseball business at New York University's Tisch Center for sports management.
The Mets owners "have their back up against the wall here," McDonnell said. "They aren't going to get another high-profile person to give them $200 million" -- making recruitment of smaller investors their best hope.
McDonnell said Einhorn, a hedge-fund manager, would have been good for the team because of his friendship with baseball commissioner Bud Selig, down-to-earth demeanor and business acumen.
But Zimbalist called the terms under which Einhorn would have put $200 million into the Mets -- with a path to majority ownership -- "too rich and unfairly favoring him."
Zimbalist predicted other hedge-fund managers would be interested in minority ownership, particularly if the price is lower.
The experts agreed the Mets were undervalued and therefore could attract enough investors. Einhorn's exit won't have "a chilling effect," said sports economist Craig Depken of the University of North Carolina at Charlotte. "The team's finances will play a bigger role [in luring partners] and it's very common for teams to have multiple minority investors."