This past week, ownership for the Mets and Cubs were both rocked with major financial crises that could influence how they conduct business.
Last Monday, the Tribune Co., which owns the Chicago Cubs, filed for Chapter 11 protection from creditors. Tribune reported last week that it had $7.6 billion in assets and debt of $12.9 billion.
On Friday, Bernard Madoff was charged by the SEC in a Ponzi scheme that could be the largest swindle in history. Investors could be hit with losses of up to $50 billion. At the time of Madoff’s arrest it was reported that he was working with 23 clients.
Among those is Fred Wilpon, owner of the New York Mets. His investment firm, Sterling Equities, also made investments with Madoff, a man that Wilpon had known and entrusted for more than 40 years.
Both crisis’s skirt the edges of both MLB organizations.
The Cubs’ assets, which include Wrigley Field, and a 25 percent stake in Comcast SportsNet Chicago, were not reported as part of the Chapter 11 bankruptcy papers. Those assets are up for sale as Tribune owner Sam Zell looks to pay down debt.
For the Mets, reportedly the Madoff scandal isn’t directly tied to their assets.
For both, the public line has been, “It’s business as usual.”
That may be the public line but questions remain.
For the Cubs, the best example may be the Jake Peavy deal. In any other free agency cycle, we may have seen the Padres and Cubs consummate a deal. But, with the sale of the Cubs in the balance, the deal was quashed based on concerns surrounding Peavy’s contract which will see him $11 million in 2009 and has $63 million remaining over of his contract. While it was not the only reason the deal has yet to happen (it could occur later toward the trade deadline), there were concerns by those bidding to purchase the Cubs that the added salary, coupled with the backloaded contracts of key players on the Cubs roster, would add more debt for an already tenuous sale process.
For the Mets, the question becomes, how much will the personal losses of Fred Wilpon impact the organization? According to a report in Saturday’s New York Times, both Bob DuPuy, the president and COO of MLB, along with Commissioner Selig, talked to Wilpon and they believe that the organization is insulated from Madoff’s Ponzi scheme.
“Any fraud that has been committed against Fred is something of deep distress to all of us and we feel very badly about the entire matter, but we all believe that this will not affect the team,” DuPuy said in a telephone interview to the New York Times.
DuPuy said that Mets were a separate entity from Wilpon’s private investments and Sterling Equities. With Omar Minaya reaching an agreement with J.J. Putz, and finalizing a deal with Francisco Rodriguez, one would hope so.
For one organization, the right cross to its ownership may be over soon, while the other may just now be feeling any ancillary effects. The Cubs sale is reportedly on track to be completed before spring training. As for the Mets, it may not be known what, if any impact the Madoff scandal will have until much later. Either way, it certainly easy to say that this year it’s not “business as usual” for the Cubs and Mets.
Maury Brown is the Founder and President of the Business of Sports Network, which includes The Biz of Baseball, The Biz of Football, The Biz of Basketball and The Biz of Hockey. He is contributor to Baseball Prospectus, and is available as a freelance writer. Brown's full bio is here. He looks forward to your comments via email and can be contacted through the Business of Sports Network.
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