Uncertainty abounds for Wilpons

Mets owners Jeff and Fred Wilpon. Mets owners Jeff and Fred Wilpon. Photo Credit: AP, 2010

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It was only a week ago when the Wilpons made the surprising announcement that they are willing to sell 20 to 25 percent of the team "to address the air of uncertainty" stemming from the lawsuit they face in the Bernard Madoff fraud case. That statement looms even larger now that they're staring at the possibility of the case going to court.

"When [Fred] Wilpon gave his press conference the other day, he quite accurately said the issue is uncertainty," said Andrew Zimbalist, a sports economist at Smith College. "Now, because of the fact that settlement talks have broken, he's got all the uncertainty, if not more than what he had last week."

Officially, the settlement talks between the Wilpons and the special trustee in the Madoff fraud case were declared dead in court motions filed Thursday.

But according to one lawyer familiar with these types of negotiations, it's much more likely that the talks broke down long before the two sides went public with that development.

Mike Cramer, former president and minority owner of the Texas Rangers, said settlement talks in cases such as this typically take place even before a lawsuit is filed.

"Their settlement talks broke down months ago," Cramer said of the Wilpons. "The parties knew they were not on the same page about a settlement, probably before that lawsuit was filed."

The lawsuit was unsealed Friday, revealing that special trustee Irving Picard is trying to recover more than $300 million from the Wilpons and their Sterling Equities associates in what the lawsuit alleges to be "fictitious profits."

Many of the sports economists reached Friday still expect a settlement ultimately, but given the events of the past week, that day appears to be a long way off.

"This certainly means this isn't over as quickly as you would like," said Robert Boland, a professor of sports business at New York University's Tisch Center for sports management.

Boland thinks a minority owner actually might be more willing to come forward now, viewing the lawsuit as a path to take control if the Wilpons lose big.

But experts say the key remains whether the Wilpons are willing to include a "first right of refusal" clause, which gives the potential limited partner the legal recourse to match whatever price the Wilpons get if they ever do decide to sell their majority stake.

"Let's say a Mark Cuban," Boland said. "It would give him the opportunity to buy 25 percent and be the most solvent standing party should the Wilpons need further cash."

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Cuban has said that the Wilpons would have to approach him about joining their ownership group, adding that a "first right of refusal" clause would be a significant piece of any deal.

The other effect of the unsealing of the lawsuit, according to Boland, is that it "keeps the pressure on the franchise for a considerable period of time."

Boland also believes Major League Baseball has to be concerned. "You can't have one of your marquee franchises treading water or encumbered by a lawsuit," he said.

MLB has declined to comment on the matter since the lawsuit was filed in December.

Meanwhile, the worst-case scenario for the Wilpons remains the full sale of the team, something Fred Wilpon has said he doesn't see happening.

But as the cloud of uncertainty persists, anything is possible.

"They clearly are trying to get a certain number thrown into the pool," Cramer said, referring to the Wilpons' pool of monetary funds, "and if they're unable to get a minority interest sold, which is very, very difficult, that might lead to the majority interest being sold."

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