Sources say Mets reap $240M on 12 minority shares
The shares of the team, at $20 million each, raised $240 million and were used in part to pay off a $25-million loan to Major League Baseball and a $40-million bridge loan to the Bank of America. The rest is earmarked for operating expenses for the 2012 season.
The Mets are expected to comment on the minority sales when Fred and Jeff Wilpon appear at the Mets' spring training facility in Port St. Lucie Tuesday.
None of the investors in the team was officially named. "There are nondisclosure agreements with every investor; none of them want to be public," a source said.
Fred Wilpon previously identified some of the investors as his son, Jeff, the team's chief operating officer; club president Saul Katz, who is Fred Wilpon's brother-in-law, and SNY, the Mets' regional broadcasting network, which will own four shares. Two other sources had named billionaire hedge fund manager Steve Cohen as a shareholder.
The news of the completed sale and repaid debt came after the Wilpons and Katz reached a settlement with the trustee for the victims of Bernard Madoff's Ponzi scheme earlier in the day.
According to sports business experts, the settlement was a victory for the Mets' owners, but there still are challenges ahead for the franchise.
"This is a good day for the Wilpons, but their financial troubles with the Mets are still very significant," said Marc Ganis, president of SportsCorp, a sports consulting firm. "It's really a situation that needs a lot of work before Mets fans can start feeling like a corner has turned."
The most formidable obstacle facing Wilpon in the short term, according to Ganis, is the Mets' cash liquidity problems.
"This team has been bleeding cash for a couple of years now, hemorrhaging cash, and they need to find ways to stem that bleeding," Ganis said.
The completion of the sale of minority shares should help, but the team lost $70 million last season, according to general manager Sandy Alderson, amid declining attendance and revenue, and, in response, slashed their major-league player payroll by $50 million during the offseason.
"The question now is does the settlement free the team up to spend money that they wouldn't have spent before?" said Craig Depken, a sports economist at University of North Carolina Charlotte.
The settlement is a strong first step forward for the Mets' financial picture because it stipulates that the Wilpons won't have to pay anything until the end of the fourth year. If the Wilpons had gone to trial, they faced the possibility of losing nearly $400 million.
"This is the best thing that could have happened," said Michael Cramer, director of sports and media at the University of Texas and the former president of the Texas Rangers. "It also happens on the eve of the beginning of the season and brings a little bit of stability to the face of the franchise.
As for the team itself, Mets manager Terry Collins said he was relieved by the news. "All I can say is that I'm very happy for Fred, Saul and Jeff," Collins said. "It never interfered with our baseball operations and now we can move forward."
Said pitcher R.A. Dickey, "I hope it helps them. But I also hope that it will enable them to do with the club what's best for the club. That's how it impacts us."
With David Lennon