Bridge to Nowhere

By Taryn “The Coop” Cooper

I feel the need to address the Mets recent situation and most specifically the financials of this team.  This team is as close to being a “public trust” as it could be, in that we as fans and consumers put money into it and take to forums such as this to air our grievances and think we can control the destiny of our team.  Yet at the same time, because they are owned by a private equity entity (The Sterling Equities group) and realistically, the team does not have to disclose it’s financials, a lot of information that’s based on what the public can see (like corporate bonds that are filed with the SEC) and some things are leaked out in the media, it’s a lot of connecting the dots that’s going on, and we’re left to figure out what’s going on by speculation based on the information we’re given.  There’s a little push and pull here.

There are a few variables to the equation I want to bring up before addressing the news that the Sterling ownership group has taken out yet another loan, this time a bridge facility from an actual financial institution Bank of America, when they haven’t paid their $25 million loan from MLB granted by Bud Selig on behalf of all the MLB team owners.  (That was long).  One is the payroll restrictions that clearly Sandy Alderson has imposed on the team for the time being (now in the neighborhood of $95-$100 million).  Two is this great schematic that Amazin Avenue has brought up yesterday, with two glaring eyesores in Johan Santana and Jason Bay in the current payroll.  Yowch.

A few things that jumped into my head as the loan news hit.  One is that I think it’s great that Selig thinks that the Mets will have no problem paying the $25 million loan they have taken out. Has he asked the other MLB owners about this? Are they concerned about it?  The other is that if Bank of America is granting a loan — granted, a bridge loan which typically isn’t the best type of loan to take out due to higher interest rates and quicker turn-around for payment times (the only place I have found a “due date” for this loan is March, according to Howard Megdal’s piece today).  Bridge loans can be good for cash-strapped organizations that need a “bridge” to cover the gaps in payroll or operating expenses or whatever.

It’s hard for me to say that it doesn’t “look good” for the Mets though because a financial institution (that is reluctant to dole out money in this day and age) extended them a loan.  They could be paying their bills for the most part, but right now it’s robbing Peter to pay Paul, the type of money they’re getting involved with.

"I'm the Barber of Seville...Figaro! Figaro!"

Jeff Wilpon may have told us a few months ago that their minority investor process was “none of our business” but it could be going along okay for all we know.  To be clear, I could personally give a rat’s ass who is a 1% owner in the Mets, let alone the 25-1% pieces they seem to want to sell (at least that’s how it’s being pitched for now).  But I do want to know if someone like a David Einhorn was coming in at 25% total.  That stuff interests me because it’s one guy.  The Wilpons knew, though, somehow Einhorn wanted to sweep in if they couldn’t pay their bills.  Until checks start bouncing and players aren’t getting paid, we have nothing to worry about…well, let me rephrase that.  The Sterling ownership group has nothing to worry about.  We know that for the time being, we’re stuck with these idiots running our team into the ground.

I don’t have any concerns about the Mets, as I’ve told you before,” Selig said during a World Series news conference in October. “They are working on an alternative financing plan and they seem to be very encouraged, and I’m encouraged. I do have a lot of worries today, but frankly, the Mets are not one of them.”

An “Alternative Financing Plan” (the emphasis is mine, above).  Isn’t that what got the Mets into trouble in the first place? From Bobby Bonilla’s annuity pay-out after he left the team, from using fictitious profits from being involved with Bernie Madoff all those years to buy out Nelson Doubleday in 2002, to using MLB as their personal piggy bank, isn’t “alternative financing” or “financial voodoo” more aptly, what the Wilpons are all about? No, this should not surprise us because like many things in their lives, the Wilpon/Katz consortium has once again tried to help a little too much.  Help themselves, that is.

So let’s break this mofo down.  The numbers that the ownership group owes, on paper that we know of at least, consist of this new $40 million bridge loan, plus an overdue $25 million loan from MLB (which was also supposed to tie them over, clearly not enough).  Concurrently, their advisors at Allen & Company are running an auction for several stakes of the team for “minority investors” so they don’t have to worry about sharks coming in and feasting at the sight of blood in the water for the owners.  Then at the same time, as Megdal stated on the Happy Recap podcast two nights ago, the ownership group has a $430 million debt due against the team and $450 million due against SNY, total of $880 million due by 2015.  Did I mention they owe $600 million against the stadium?  Throw away the Madoff decision, which hasn’t even been figured in but actually may work out to Wilpon/Katz favor (since this Irving Picard dude lost his getting a billion out of them suit), but we have no idea what legal fees are being owed in conjunction with that.  Theoretically though, that could come out of the Sterling Equities coffer, not just the Mets, since that’s who the lawsuit is against.

Now, to play devil’s advocate here…the Wilpon/Katz consortium is incredibly visible because of their stature in a large market and as owners of a baseball team.  A few things have come to mind in this so-called witch hunt (for lack of a better term) of finding out how badly the Mets ownership group truly is.  As an example, I know that the Yankees operate in the red and they are seen as a “profitable” team.  Truly profitable teams are also seen as the smaller markets because the owners just pocket the revenue sharing and don’t realistically go to improve the team.  Sadly, every time the Mets team has tried to invest into doing better, it’s failed miserably.  This was also way before the Madoff news ever hit.

But I don’t think it’s an unrealistic question to see how many other teams operate like the Mets do, taking out loans but don’t live in a fishbowl where fans are disgruntled and want to know the why of things?  I know that $880 million on top of $600 million on top of $65 million that we KNOW of doesn’t look good.  But comparatively to say, the Los Angeles Dodgers who are now under bankruptcy, how was their debt strategy?  Is it comparable?  Or are the Mets ownership team a lot more worse-off?  I can say this: many teams may take out muni bonds to finance a stadium build…but the Mets financed it by that and by thinking their fictitious profits would continue to sustain them.

Quite frankly, I think that Selig being an enabler for this bad behavior is disgusting.  It was evident he had an axe to grind with Frank McCourt and disallowing him from trying to better the franchise with a potential saving deal with FOX.  The New York National League franchise is too big to fail, in his eyes, and doesn’t want panic in the streets.  Clearly, this man does not read Twitter.

Right now, the Mets are in limbo as long as this ownership is allowed to keep on keepin’ on.  Say what you want, but they owe a lot of money, but are not entirely cashed-in as they are being kept afloat by the powers that be.  After all, they are still paying their bills for what it’s worth and no paychecks are bouncing (yet, anyway).  We might see more unfold in March, but for the time being they are being kept afloat.

ALL IS WELL!!!!!!!

Yet at the same time, they are not able to sink more money into making this a winning team.  This is large market team, with lots of potential streams of revenue that were supposed to be depended on, yet are not to be relied on. Alderson may have thought he had more wiggle room for the payroll but is obviously the front-and-center guy taking questions from the media about the team’s operating expenses.  He’s not about to throw ownership and his bosses under the bus but the reality is, he’s being kept from making moves that he needs to make.  Such as: getting a backup catcher.  A backup catcher would break the proverbial bank he has in mind for the team’s shoestring budget.  A flippin’ backup catcher!

So what does this all mean?  At the root of it all, we’ve got an ownership group that’s not completely broke but not wealthy either.  They claim to “love” the team, but if they loved it so much they’d find a way to make it successful again.  Putting Sandy Alderson and his FEMA Dream Team analysts on the job is one way (but they were forced by the hand of Selig to do at least that).  Yet, things that could be construed as being a potential future star, such as Jon Niese, may need to be put on auction block to get more prospects.  Or Ike Davis’ name was floated around.  We can argue till we’re blue in the face about who is untouchable, but the reality is, if Ike Davis is traded, they better be in serious talks with Prince Fielder to play first base at CitiField!!  My point is, Jon Niese and Ike Davis are the types of players you build around.  We can argue about the long-term effects of Jose Reyes playing for the Mets and the benefits of a long-term contract for him.  Yet there is never anything wrong about building around young cheap players who are under team control for awhile.

I’m tired of trying to look at this from every angle because quite honestly, it’s exhausting and all it’s done is create infighting amongst the Twitterati.  I know the team is not broke.  But things are not looking up right now, from a fan’s stand point.  Not right this very minute.  Doesn’t mean we can’t be excited about the long-term future of the team because there is an adult in charge of the team operations at least.  Yet, I won’t shed any tears if the current ownership group is forced out by whatever measures.

3 responses to “Bridge to Nowhere

  1. Sure, it’s extremely troubling to hear about high interest loans being taken out by the team. It’s very concerning to hear about the team not being able to make payroll without a loan from MLB. It’s downright disgusting to hear about operational costs being consolidating by firing low level and mid level employees.

    But in the end all we are left with are theories and conjecture about the Mets books – as none of this stuff is publicly disclosed for us to dissect.

    So I choose to judge the Wilpons and the front office on the baseball product they give us – something they must disclose to the public.

    And sister, it aint pretty. The baseball product is just downright bad. And as much as I hope that the future will be bright for Wheeler, Harvey, Familia, Mejia, Fulmer, Nimmo, Havens, Duda, Ike etc… I have a hard time seeing sustainable success from an organization that is banking everything on a batch of kids, most of whom have not even hit AAA yet.

    It’s a formula for failure, wrought with risk and set up to sabotage the very same young players Alderson and company are hitching the fate of this organization to.

    Judge the Wilpons and front office on the baseball fact sheet, and there’s plenty of reason to be angry as a fan and hopeful for a change in ownership.

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