Whats does $25M loan say about Wilpons?
“It’s not a good sign,” said Michael Cramer, a former minority owner and president of the Texas Rangers from 1998-2004.
“There’s no way you hit up the MLB credit agreement for a liquidity loan for $25 million unless you just don’t have the cash or any other way to do it,” said Cramer, director of the Texas Program in Sports and Media at the University of Texas at Austin. “My gut is that’s not a good sign.”
The loan was revealed on Friday and confirmed by the Mets. The team said in a statement that the money was to help with “a short-term liquidity issue.” The Mets said they would have no further comment. An MLB spokesman also did not comment.
The question of whether Fred Wilpon and Saul Katz will be able to continue owning the Mets has been open ever since they announced last month that they were looking to sell up to 25 percent of the team. At that time, the Mets cited uncertainty surrounding a lawsuit from the trustee for victims of Bernard Madoff that seeks to recover as much as $1 billion from the team’s owners.
The lawsuit was filed on Dec. 7, making the timing of the $25 million loan from MLB curious. It’s possible the Mets had already exhausted all outside sources of cash and had gone through a $75 million line of credit that MLB makes available to all clubs annually, Cramer said.
“It’s hard to say exactly what was happening,” Cramer said. “But it’s unlikely they had the availability of other cash or other assets or the ability to get another loan, which is why they tapped the MLB facility.”
Forbes has reported that the Mets have $375 million of debt on the franchise and owe $695 million on Citi Field -- a ballpark that is named after a bailed-out bank. So Wilpon turned to commissioner Bud Selig, his longtime friend, in what some in baseball privately perceive as a last-ditch attempt to stave off a full sale of the team.
Wilpon maintains the Mets owners will keep control of the franchise and will be “vindicated” in the Madoff lawsuit.
The last struggling franchise known to get money from MLB’s loan program was Cramer’s former club. Last May, Selig agreed to prop up Texas with $21.5 million in loans while the franchise was in bankruptcy under then-owner Tom Hicks. After a lengthy auction process, the team was sold to a group that included Hall of Fame pitcher Nolan Ryan.
MLB’s loan to the Rangers became public because the team’s finances were an open book in bankruptcy court. Usually, MLB does not inform the public when it makes a loan to a team, which is not surprising because it also doesn’t always inform the other team owners.
The New York Times reported on Friday that baseball’s executive committee was not told of the Mets’ loan until last month. The secrecy is typical, Cramer said. But the type of loan the Mets received is not.
“When I was there, this type of loan wasn’t that common, and that’s a good thing,” Cramer said. “It’s just not that common. There were some teams that had some financial issues and we as another team would not necessarily have known what other teams’ issues were, nor if MLB was issuing money.
“Before the 2002 labor negotiations, there were probably six or seven teams we were told were in grave financial difficulties that probably had similar loans. I can’t tell you that I know any facts because MLB didn’t necessarily disclose it to the rest of the league.”
Selig has shown a willingness to use his powers to aid financially troubled franchises before. He helped orchestrate a three-team ownership swap in 2001 that led to Florida Marlins owner John Henry buying the Boston Red Sox and Montreal Expos owner Jeffrey Loria buying the Marlins.
The Expos were left as an MLB-owned orphan and were run by future Mets general manager Omar Minaya until the franchise was sold in 2004 and moved to Washington to become the Nationals.
In 2000, MLB guaranteed a $20 million bank loan for the Arizona Diamondbacks, who had greatly outspent their revenues in their first years of existence. Owner Jerry Colangelo said he was “appalled” that his franchise was seen as having financial problems. In 2004, Colangelo was ousted in a takeover by his minority partners.
Just this week, the Los Angeles Times reported that Selig nixed a bail-out proposal from baseball’s other financially troubled big-market franchise, the Dodgers. Selig reportedly rejected Dodger owner Frank McCourt’s bid to take a $200 million loan from the Fox TV network. McCourt has been engaged in a bitter divorce that has left the team in financial limbo.