Mets’ Growing Debt a Worry for MLB

It’s no secret that the New York Mets are in financial trouble. The club’s profits have long been short of what Fred Wilpon or Saul Katz (the owners) would like them to be. The real worrying for the survival of the team began after the public found out that they had been investing with the fraudulent (to say the least) Bernie Madoff and that they lost nearly $500 million as a result. 

The main tool utilized in the owners’ rebuilding efforts has been the loan. The following is a list of the loans they must pay off and their respective due dates:

$430 million from a group of lenders..........................................................2014

$25 million from MLB................................overdue/payment recently extended

$40 million from Bank of America.........................................taken out recently

$450 million for SNY.................................................................................2015

On top of all this, the team’s bond payments on Citi Field rose from $19 million to 43.7 last year. As Richard Sandomir of the New York Times wrote: “That is a lot of borrowing for a team that lost $70 million last season and had faltering attendance.”

Fred Wilpon (left) and Jeff Wilpon (right)

The ownership’s recent response has been searching for minority owners. The Wilpons found a potential fit in David Einhorn, a young hedge fund manager. The two sides reached a deal granting Einhorn a one-third stake in return for a $200 million loan (yes, another one). This deal fell through, however, when Einhorn supposedly backed out last minute. Howard Megdal, author of the e-book Wilpon’s Folly, says that in reality, Fred Wilpon contacted MLB commissioner Bud Selig for help escaping the deal. This wouldn’t be surprising as the transaction offered a possible path to Einhorn’s becoming the Mets majority owner, something the Wilpons have made clear they don’t want.

Even more recently, the Wilpons have honed in on 7-10 potential investors of $20 million each. According to the New York Times, the desperate offer includes perks such as access to club mascot Mr. Met, a Mets business card with the “owner” title, and the privilege of attending a so-called “Owners’ workout” day at Citi Field.

I’m no financier, but I don’t see how the current owners can hang onto the team much longer. Mets fans are losing hope and most (including myself) would be happy to see a change in ownership.  The current ownership must accept the fact that they’ve lost financial control over the club. There is no plausible way for them to escape this debt still the majority owners of the club. Once they realize this and sell the team, the club can regain its balance and build up to years of successful baseball.