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Mets approve minority sale to David Einhorn

David Einhorn, president of the hedge fund Greenlight

David Einhorn, president of the hedge fund Greenlight Capital, is to become a minority owner of the New York Mets. Photo Credit: Greenlight Capital via Getty Images

The Mets announced that David Einhorn, a 42-year-old hedge fund manager, has been selected as the "team's preferred partner" and will negotiate exclusively with him to hammer out what the team called a "minority, non-operating investment in the team."

In a prepared release, the Mets said a $200-million investment by Einhorn is subject to "negotiation of a mutually acceptable definitive agreement for the transaction as well as required approvals by Major League Baseball. The parties expect to enter into definitive agreements by late June."

Einhorn is the president of Greenlight Capital Inc.

"We are very excited about David joining our ownership group for several reasons," Mets owner Fred Wilpon said in the news release. "David's investment immediately improves the franchise's financial position. Equally important, David's intelligence, integrity and success in both business and civic affairs provides us with another perspective in evaluating what is best for this organization and our fans, and we welcome his input. In partnership with David, we look forward to achieving our ultimate goal of again becoming World Series champions."

"Having an opportunity to become part of the Mets franchise is exciting beyond my wildest childhood dreams," Einhorn said in the release. "I spent my first seven years living in New Jersey and rooting for the Mets. In 1975, I even dressed in a homemade jersey as a Met for Halloween. I have been a baseball fan for my entire life and have enjoyed teaching the game as the coach of my daughter's Little League team. I look forward to partnering with the Wilpon and Katz families through the good seasons, the tough seasons and especially the championship seasons."

In a conference call with reporters, Einhorn confirmed what the Wilpons have said all along -- that their minority partner will not have any control over day-to-day operations of the club.

"The management isn't going to change here," Einhorn said. "I'm making a minority investment. It's not a control investment. Mr. Fred Wilpon is going to be the control holder throughout this investment."

Einhorn's investment will not include a stake in the Mets' cable network, SNY.

"I'm not really interested in owning a TV station," he said. "My excitement here has to do with the baseball team. The TV station was never really part of the negotiations that I participated in because that's not really been of interest to me."

Einhorn also reassured fans his hedge fund will not be linked to his investment with the Mets.

"This is a personal investment. It's not related to any of the funds we manage professionally at Greenlight," Einhorn said. "As for the investment [in the Mets], all I can really say is I'm very comfortable with the financial arrangements that we're contemplating for this transaction . . . I'm optimistic that the financials for the team will improve over time."

The announcement likely ends a four-month search by the Mets to find a partner prepared to infuse cash into an organization that has a reported debt of $427 million. The Mets said in January that Fred Wilpon and partner Saul Katz would sell up to 25 percent of the team.

The Mets intend to use the proceeds from the partial sale for operating expenses, to reduce debt and pay back a $25-million loan secured last November from Major League Baseball. The Mets also have a $52-million line of credit with MLB.

Wilpon, in this week's Sports Illustrated, said the team was "bleeding cash" and could lose as much as $70 million for the 2011 season.

The Mets have a 2011 payroll of about $140 million, which breaks down to about $11.6 million every two weeks during the season. Even with the cash infusion, the payroll is expected to drop significantly next season.

The team, which has been valued at $747 million by Forbes Magazine, has also been saddled with a $1-billion suit brought against Wilpon and Katz by the trustee in the Bernard Madoff Ponzi scheme. None of the proceeds from the partial sale are expected to go toward any settlement in that matter, which is being mediated by former Gov. Mario Cuomo.

The Mets hired the investment banking firm of Allen & Co. to conduct the sale with the negotiations handled by managing director Steve Greenberg, the former deputy commissioner of baseball who helped the team secure its $400-million naming rights deal for Citi Field. Greenberg is also a longtime friend of Wilpon.

Greenberg said at the outset that the Mets would not entertain offers for majority control of the team. Up to a dozen prospective candidates paid $25,000 to become involved in the process, which included vetting by MLB and the right to view the team's financial records.

Those publicly expressing initial interest, ranging from a Long Island liquor mogul, Martin Luther King III, former Met Ed Kranepool and Glaceau Vitaminwater founder and thoroughbred racing owner Michael Repole, were not known to have become an official part of the process.

Eight candidates were said to have made bids. MLB commissioner Bud Selig had said he was receiving daily updates on the progress of the sale and supported the team's initiative to find a solution to its financial problems, saying in one interview, "Fred Wilpon is doing what he should do. He's looking for an economic mechanism that will bring equity into the club: Sheer raw cash to put it in the most candid way."

Wilpon has had control of the Mets since buying out former partner Nelson Doubleday for $135 million in 2002. Wilpon and Doubleday bought the team for $21.1 million in 1980, though Wilpon owned only 1 percent at the time. Wilpon and Doubleday became equal partners in 1986.

The issue of control -- now and in the future -- has been broached by some purported bidders. All of the bidders signed confidentiality agreements preventing them from openly discussing the transaction, but at least two dropped out citing control issues. One said the investment of $200 million, weighed against the team's debt, would create an equal partnership. This week, another raised the issue of the Mets including a portion of SNY, its regional sports network, in the deal. The Mets did not want to yield on that matter.

Einhorn downplayed the idea of potentially taking a larger stake in the club if the Wilpons' financial struggles continue.

"We don't even have a completed transaction yet, so I think we really need to keep our eye on the ball, that's a good baseball metaphor -- and see if we can't close that down."

Einhorn moved to Milwaukee when he was a child, and his best friend was a neighbor of MLB commissioner Bud Selig.

"We played a lot of softball in the yard. If we hit it really, really far it went into the Seligs' yard and that would be a home run and that would sort of be rightfield," Einhorn said. "So the Seligs have been familiar to me for a long time."

Einhorn graduated summa cum laude from Cornell University, where he earned a bachelor's degree in government. He's married and has three children. Einhorn is the author of "Fooling Some of the People All of the Time: A Long Short (and Now Complete) Story," published in 2010.

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