What may have seemed like a weekend at Bernie’s has turned into something far larger for the Wilpon family and the New York Mets. Bernie, is of course, Bernie Madoff, who was involved in the largest stock market ponzi scheme in US history. The Wilpons, through their Sterling Equities, funneled more than half-a-billion dollars in investments through Madoff. But, according to a suit filed by one Irving Picard, a trustee seeking to recover money lost in the Madoff ponzi scheme, Sterling saw a net gain of $48 million, as opposed to a loss in their investments.
The weight of that, and possibly other aspects such as sagging attendance and other debt service, has forced the Wilpons to now put up a stake of the club up for sale.
Fred Wilpon, Chairman and Chief Executive Officer of the Mets, and Jeff Wilpon, Chief Operating Officer of the New York Mets, issued a statement saying, “As Sterling Equities announced in December, we are engaged in discussions to settle a lawsuit brought against us and other Sterling partners and members of our families by the Trustee in the Madoff bankruptcy. We are not permitted to comment on these confidential negotiations while they are ongoing.”
The two added, ”However, to address the air of uncertainty created by this lawsuit, and to provide additional assurance that the New York Mets will continue to have the necessary resources to fully compete and win, we are looking at a number of potential options including the addition of one or more strategic partners. To explore this, we have retained Steve Greenberg, a Managing Director at Allen & Company, as our advisor.”
It is unclear what percentage of the club is being sold, but according to Fred and Jeff Wilpon, they will be looking to retain a controlling interest.
“Regardless of the outcome of this exploration, Sterling will remain the principal ownership group of the Mets and continue to control and manage the team's operations. The Mets have been a major part of our families for more than 30 years and that is not going to change.”
The question then becomes, who might be interested in being a part of such a structure. One or more silent partners might view the Mets as a solid investment over time.
According to Forbes, the club has never ranked lower than the third most valuable franchise in baseball when looking at information back to 2001. The Mets were approaching the $1 billion mark in 2009 ($912 million) when Citi Field opened, but saw a 6 percent decline for 2009 because the club cut ticket prices after seeing a backlash due to high seat pricing during the down economy. According to Forbes, “The move to Citi Field was a huge upgrade from Shea Stadium. The 54 new luxury suites and 7,600 club seats generated $95 million which was three times the premium seat revenue at Shea.” The club also has the most lucrative naming rights deal to date, a $400 million, 20-year deal with Citigroup that sees $20 million annually. The following shows the value of the Mets, according to the Forbes reports.
What seems clearer is who would likely not be interested. While there has been considerable discussion about whether current Dallas Mavericks owner Mark Cuban would be approved as a managing partner of any MLB club, Cuban would seem to not have an interest in playing the part of minority owner of any club – he is not the silent partner type.
Finally, maybe the person smiling the widest today is author Erin Arvedlund, who said in 2009 that Fred Wilpon would be forced to sell the team because of losses related to the Bernie Madoff scheme. While that isn't technically true (it is the legal proceedings that will determine that), it is an interesting thing to watch given that it was 2009. Dave Howard, the Mets' executive vice president of business operations, went on Fox Business Network, and said that the club would not be sold -- minority or otherwise -- grilling Arvedlund on the matter. Here's the clip from 2009:
Mets stake in RSN written by Pete Toms,
January 28, 2011
The Mets majority stake in RSN SNY also has to be a significant factor in any valuation of the frnachise.
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Fans should be stakeholders written by Esteban,
January 30, 2011
The Wilpoons should allow fans to be minority stake holders. Take out any influence of big money profiteers and let fans buy shares. This would creat a good model such as the Green Bay Packers in the NFL where a team seeks to become a partner in the City they play and not just a profit-seeking business entity which fans already view teh Mets to be. Also, the City of NY has already subsidized the Mets heavily in the sweetheart deal we gave the team for Citifield.
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Public ownership written by Maury Brown,
January 30, 2011
On public owning the Mets, or any other MLB team, for that matter: League would never allow it. And, NFL will never allow another situation like the Packers to occur.
Nice idea. Impractical and improbable from league perspective.
+1
What Will Bud Say? written by Larry@IIATMS,
January 30, 2011
Maury, care to comment on the authority of the Commissioner's office to approve any sale of an interest in the Mets? Would it matter if the sale did not involve a majority interest or a potentially controlling interest?
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Erin Arvedlund was still wrong written by ChrisNY,
January 30, 2011
At the time Arvedlund wrote her book, there was no lawsuit. Nor was there any talk of any impending lawsuits. She made her prediction in the context of the then current financial state of the Mets. At that point in time -- prior to any lawsuit -- the Mets were fine financially. It is only in light of the recent lawsuit, filed just less than two months ago, that the Mets feel compelled to sell a portion of the club. So Arvedlund was wrong at the time.
Moreover, I believe Arvedlund's position was that the Wilpons would be forced to sell their entire ownership in the club. Even in the context of the current lawsuit, that is not true. If the Wilpons sell 25% of the Mets, they will still own more of the Mets than the Steinbrenners ownership portion of the Yankees, which surprisingly is just 32%. So what's the big deal?
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... written by ChrisNY,
January 30, 2011
As for a potential sale not involving a controlling interest, I don't see why Selig or MLB would have any problem with that. Why would they? I also don't think they would have any right to influence the Wilpons in this matter. I think the meeting this week is just to keep Selig apprised of the situation. And to put to rest unfounded fears that the sky is falling.
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Why I Asked written by Larry@IIATMS,
January 30, 2011
Chris, what if the Wilpons sell a minority interest, but allow the minority owners the right to approve any increase in the team's budget, or the right to veto any player signing over $10 million, or the right to force the team to vote against any league expansion, or provide that all owners have to agree to approve the new collective bargaining agreement? Minority owners are not necessarily silent partners.
What if the Wilpons sell a 45% interest in the Mets in March, then seek to sell a 25% interest in April? On the second sale, the 45% owner may be deemed to have a "controlling" interest. Are we saying that the Commissioner has no right to approve the first sale, but can veto the second sale because he didn't like the group who bought in the first sale?
Which is why I asked Maury to clarify.
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... written by ChrisNY,
January 31, 2011
Larry, fair question and one I would be interested in having an answer to myself.
However, my guess is that MLB does not get involved unless there is a significant change in ownership or a questionable transaction is going on. And in this case, the Wilpons will still have controlling interest in the club, so I don't see where Selig will have anything to say other than to want to be rea*sured that the Wilpons have things under control and are not in dire straights.
But I would like to hear Maury Brown's take on this aspect.
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Agreed written by Larry@IIATMS,
January 31, 2011
Chris, I suspect that you are right. Maybe Maury will make us buy his book to find out!
Maury Brown 
What may have seemed like a weekend at Bernie’s has turned into something far larger for the Wilpon family and the New York Mets. Bernie, is of course, Bernie Madoff, who was involved in the largest stock market ponzi scheme in US history. The Wilpons, through their Sterling Equities, funneled more than half-a-billion dollars in investments through Madoff. But, according to a suit filed by one Irving Picard, a trustee seeking to recover money lost in the Madoff ponzi scheme, Sterling saw a net gain of $48 million, as opposed to a loss in their investments.
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