A decision by a federal court in Manhattan yesterday could potentially force the current ownership of the New York Mets to sell their majority stake in the club. The unanimous ruling by a three judge panel in the United States Court of Appeals for the Second Circuit said that the formula that the trustee for the Bernie Madoff victims was sound, and therefore Fred Wilpon and Saul Katz will likely be on the hook for at least $300 million.
As reported by The New York Times, “the three-judge panel, said the trustee’s central formula for deciding how to recoup and redistribute the money that had moved through Madoff’s vast Ponzi scheme was appropriate” and that Picaard had determined”that investors who had taken more money out of their accounts with Madoff than they had put in had to return their ‘net winnings’.”
Picard, the trustee in the case said in a statement that he hoped the ruling by the court “can be the final word on the issue.”
While the ownership of the Mets can appeal to the Supreme Court, the chances of the case being heard, let alone won, is very thin.
The only chance for Wilpon and Katz would be to have the $300 million amount lowered. As further reported by the NY Times:
Wilpon and Katz may well argue that the $300 million figure should be reduced because they had many accounts over the years that wound up “net losers.” But even settling a portion of the claim may require the owners to sell off additional assets — from their real estate or hedge fund or cable television businesses.
A separate hearing set for Friday could well be Wilpon and Katz last stand. A hearing in Federal District Court in Manhattan in front of Judge Jed S. Rakoff will determine whether Picard’s claim for an additional $700 million should be awarded. The owners are seeking to have that case dismissed.
All this is occurring as a $200 million minority investment from David Einhorn has yet to materialize. That deal was supposed to be closed at the end of June.
The latest setback highlights one of three key owner issues facing Major League Baseball as they begin their quarterly ownership meetings today in Cooperstown. On Monday, the league said they had delayed the vote to approve the sale transfer of the Houston Astros to Jim Crane, and the Dodgers are embroiled in a heated bankruptcy case that could force current owner Frank McCourt out.
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, and is a contributor to Forbes SportsMoney blog.. He 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 (select his name in the dropdown provided).
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