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Keep Your Eye On The Ball

By Howard Megdal ~ February 3rd, 2011. Filed under: Howard Megdal, New York Mets.

Some people may be tired of the reporting and discussion of Mets ownership and Bernie Madoff, and that is understandable. The group identifying itself as Mets fans is made up of people who care about baseball, and not necessarily finance.

But make no mistake: the resolution of Irving Picard’s suit against Fred Wilpon is not a mere distraction. Reasonable people can disagree about the need for steroids coverage, but it is indisputably re-litigating the past. The result of Picard’s suit, and the financial maneuvering it forces upon Fred Wilpon, will impact the way the Mets are run for years to come. This will be true whether with a new owner, a financially-compromised Wilpon ownership, or a minority partner empowered in some way with the team (authority or cut of profits).

Probably the least surprising part of today came when Darren Rovell of CNBC tweeted that Picard has asked the judge to unseal the details of the case after a lawyer for Fred Wilpon spoke on the record to him. This came on the heels of today’s piece in the New York Daily News, as clear a declaration as possible by the Wilpons that they were finished letting this play out through leaks in the press for one side while they remained silent.

In other words, both sides are raising the stakes. The Wilpons had to know, the moment they authorized their lawyers to disparage the suit, that Picard would move to have its contents unsealed (and the Wilpons would have little grounds to continue to insist on absolute confidentiality.) Simply put, this was either a deliberate attempt to grab the initiative, or a poorly-thought-out emotional response through their lawyers.

What comes next will be both fascinating and immensely informative. The Wilpons’ lawyers claimed that Picard’s suit is without merit- his response was to call off settlement talks and move aggressively to unseal the suit. That is the move of someone who is either interested in publicly shaming the Wilpons back to the settlement table, or someone who believes his case has enough merit that he doesn’t need to move much on his final number.

So what else will be key indicators of whether the Wilpons need to sell a minority stake in the team or the whole thing?

Start with the Picard number. Is it $1 billion, as has been previously reported? Is it well shy of that? Wherever that starts doesn’t mean that is where it will end up- but it is a lot easier to get down from $300 million than from $900 million. And $300 million may be reachable while holding onto the team; $900 million almost certainly isn’t.

For instance, Forbes reports that the Mets are worth negative $225 million, debt included.  By the Forbes math, the Wilpons could sell a 60 percent stake in SNY and come out with $1 billion. But that assumes some things, such as the Wilpons also selling the team. After all, the team’s debts aren’t worth -$225 million- their debts PLUS the equity in the team comes to $225 million. A very different thing, to be sure.

That’s why it comes as no surprise that, less than a week after Jeff Wilpon said SNY would not be sold, the New York Times reported that SNY is likely a necessary part of any Wilpon financial reorganization. The writer, Richard Sandomir, also pointed out the extent to which SNY has been compromised by dividend payments taken from future returns as well, diluting the value of the network. Don’t think it is worthless, however- it’s easily the most valuable part of the Wilpon Mets-related holdings. But there are some indications, according to the New York Post, that the Wilpons could not attach SNY to any team sale. That could account for Jeff Wilpon’s definitive statement about SNY being wholly separate from any sale of the team.

So how do you cut through the complicated financial structures here? It’s pretty simple, really. We’re likely about to find out the full contents of Picard’s suit against the Wilpons- the starting number, the messy details, and so forth. If Picard recovers anywhere near $1 billion, it is practically impossible to see how the Wilpons hold onto the Mets, particularly without selling SNY in the process.

Beyond that initial information, see what happens next. Do the Wilpons continue to attack Picard in the press? How does Picard respond? So far, Picard’s response has been merely to ask for the judge to unseal the suit. He took a similar approach with the estate of Jeffry M. Picower and his hedge fund, asking for roughly $7 billion. The settlement, incidentally, came to $7.2 billion.

But really, that number is what to watch out of a potential unsealing, though much of the reporting will be about details concerning the way the Mets were run. It is the number itself that will tell not about how the Mets were run, but who will run them in the years ahead.

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Howard Megdal is the Editor-in-Chief of The Perpetual Post. He covers baseball, basketball and soccer for Capital New York, MLBTradeRumors.com, New York Baseball Digest and has written for ESPN.com as well as numerous other publications. He is the Poet Laureate for SBNation New York. His book about Jewish baseball players, “The Baseball Talmud,” is available for purchase on Amazon.com and wherever books are sold. His next book, "Taking The Field", is available for pre-order on Amazon.com and will publish in May 2011.

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1 Response to Keep Your Eye On The Ball

  1. Jeff from Delaware

    The Texas Rangers ballclub was put up for auction in 2010. Somebody bought them. They then went on to the World Series.

    That oughta be enough for any Met fan to understand the media frenzy going on right now. Owners don’t play the game, nor do lawyers, accountants or even politicians.

    If you get 25 guys who really want to win, the rest don’t matter.

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