David Einhorn has backed out of deal to purchase a minority interest
in the New York Mets
David Einhorn, who was supposed to become a minority partner in the beleaguered New York Mets, back out of the deal today, according to a statement by the Mets. Einhorn had been in an exclusive negotiating agreement with the club to invest $200 million as a non-controlling interest in the Mets. The deal’s structure had the Mets paying back Einhorn in three-years. If not paid off in that amount of time, Einhorn would be able to purchase the majority controlling interest in the Mets for just $1. The exclusive window to close the deal technically died at the end of June, but the sides had been working together since. The Mets released a statement saying:
The New York Mets' Owners announced today that their period of exclusive negotiations with David Einhorn regarding a minority, non-operating interest in the Mets has expired and Ownership has decided not to extend the exclusive negotiating period any further. After months of negotiation, the parties were unable to reach agreement, and Mets Ownership has decided to explore other options.
Ownership has provided additional capital to cover all 2011 losses and is moving forward with the necessary resources to continue to operate the franchise. Ownership will explore other strategic transactions and is under no financial pressure to do a deal on any particular schedule.
"We are very confident in the team's plans - both off and on the field," said Mets Chairman and CEO Fred Wilpon. "We will engage with other individuals, some who have been previously vetted by Major League Baseball, along with other interested parties, regarding a potential minority investment into the franchise. My partners and I thank David for his interest in considering this opportunity and wish him well in the future."
Sterling Equities, which technically own the Mets, have been under siege by the trustee for the Bernie Madoff victims. The trustee, Irving Picard, was issued a win in court recently when it was found that his claim of the Mets ownership actually profiting from multiple of investments with Madoff produced a profit. Picard showed, and the court agreed, that Sterling owes $300 million.
That hit, the reports that the Mets will lose $70 million this year from issues such as attendance decline, and the aforementioned hits of Einhorn backing out and the Madoff case, will put the Mets under even more pressure. Questions as to whether the club will file for bankruptcy continue to linger.
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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