Master Index of Archived Threads


Mets Money

metirish Apr 28 2011 07:33 AM

Can some financial wiz here clue me in as the machinations of owing Bret Saberhagen $250,000 annually through 2029? Report: Mets' financial liabilities are around $625 million Just how deep in the hole is the troubled franchise of the New York Mets? As owners now shop a 49% stake in the team, it's been widely reported that the franchise has around $430 million in bank debt. But a potential investor who spoke to Fortune on condition of anonymity points out that the team's liabilities are closer to $625 million, from a buyer's perspective. The $430 million figure reflects the loans refinanced last year by the team's main lender, JPMorgan Chase. But Sterling Equities, the group led by Fred Wilpon and Saul Katz that holds ownership stake in the Mets, has opened its books to interested investors, and those books disclose other financial commitments that give a more complete picture of the Mets' true obligations beyond bank debt. According to the source, Mets financial statements disclose another $100 million in what the team calls "contingent liabilities." Much of that is deferred compensation still due to players long gone from the Mets roster. The documents give two examples of these liabilities: Bobby Bonilla, who left the team in 1996 and has $1.2 million per year coming to him for the next 25 years, and Bret Saberhagen, who left in 1995 and is owed $250,000 annually through 2029. Investors were not shown a full list of the contingent liabilities; they were only informed that the figure is $100 million, and that these two particular commitments are examples. The source adds another $70 million to the team's overall liabilities to cover this year's losses. The Mets lost $50 million in 2010 and are projected to lose $60 million this season. But they've already seen an 11% decline in attendance this year, which makes it likely that the team will lose closer to $70 million. Part of the franchise's annual obligations is an annual $50 million municipal bond payment for financing Citi Field -- these payments come from Queens Ballpark Company, a "wholly owned subsidiary of the New York Mets," according to the Sterling Equities website. Combine the $430 million bank debt with the contingent liabilities and expected losses this season, and finally, add the $25 million owed back to the MLB from a loan made to the team in November, and a new owner would own part of a team that's roughly $625 million in the hole. A spokesman for the Mets would not comment on the negotiations or the investor's information. Meanwhile, the owners will have to deal with a pesky lawsuit from Irving Picard, the bankruptcy trustee tasked with recovering money for victims of Bernard Madoff's Ponzi scheme. The $1 billion lawsuit accuses Wilpon and his partners of being aware of the scam while feeding more money into it. The official statement on the matter from Wilpon, Katz and the other Sterling Equities partners, as of March 20, reads: "Let us be very clear: we did not know that Madoff was engaged in a fraud. There were no red flags and we received no warnings." The team may end up reaching a settlement, which is yet another potential cost a buyer might take into consideration. What the Mets want now, of course, is to find a Mets fan or a group of fans with pockets deep enough to buy a 49% share of the team for around $200 million. Such a deal wouldn't solve everything, but it would give the Mets a good start on the right path. Wilpon and Katz could pay back the $25 million loan to MLB (given by Bud Selig in November, though they didn't reveal it until February). They'd have funds to help cover this season's losses. They could set aside a reserve, if they need it, for the Picard lawsuit. And of course, they could continue doling out their $145 million payroll. At the very least, Fred Wilpon, Saul Katz, and Mets fans can feel happy when they compare the dire situation in Queens to a similar, but worse, crunch in Los Angeles. The Dodgers are in about the same level of bank debt, but have additional liabilities at estimated levels much higher than the Mets. And Selig has refused to bail out Dodgers owner Frank McCourt, whose team has been taken over by the MLB, the way that he bailed out the Mets with a $25 million loan back in November. For now, Mets fans will keep watching the field, and hope that the people watching the books keep an eye on the ball. Read more: http://sportsillustrated.cnn.com/2011/b ... z1KpBI3poj

Edgy DC Apr 28 2011 07:40 AM Re: Mets Money

Those deferred compensation obligations seem manageable, though. It's not like Bonilla is going to foreclose on the team. The payment schedule is entrenched, and not hanging over them in coming months like some other obligations will be. Steve Phillips borrowing from the future like that though. He wouldn't be a very good hero for the tea party movement.

metirish Apr 28 2011 07:45 AM Re: Mets Money

Edgy DC wrote: Those deferred compensation obligations seem manageable, though. It's not like Bonilla is going to foreclose on the team. The payment schedule is entrenched, and not hanging over them in coming months like some other obligations will be. Steve Phillips borrowing from the future like that though. He wouldn't be a very good hero for the tea party movement. it seems like terrible money management though no? , they could get jobs in the Irish banking system these money gurus.

Gwreck Apr 28 2011 07:56 AM Re: Mets Money

There are a couple ways of handling these deferred compensation payments. One way is to purchase an annuity or similar investment device at a lump sum, and then 5 or 10 or 20 years down the road, the annuity makes the guaranteed payments (ie. $250k a year in Saberhagen's case). It's a good bet for both parties: it's less in total cost for the Mets, and guarantees future income for the athlete. It has been speculated, however, that the Mets were using Madoff as the investment vehicle to make those future payments. If true, that's a bigger problem, and would mean that they have to come up with the cash each year to those players rather than having already paid for it. -- Also, I think it's probably unfair to stick that on Phillips; wouldn't those contracts have been Al Harazin or Joe McIlvane-era?

metirish Apr 28 2011 08:01 AM Re: Mets Money

I agree it's a super deal for the player and I suppose if the Mets didn't have the Madoff mess no one would even be talking about the deferred payments.

Benjamin Grimm Apr 28 2011 08:02 AM Re: Mets Money

The Bonilla thing stems from 1999, which was during Phillips' reign. But you may be right about Saberhagen predating Phillips.

Ceetar Apr 28 2011 08:31 AM Re: Mets Money

Besides exaggerating their losses this year based on an attendence drop in a cold rainy April, The expectation seems to be that the only income the Wilpons have is the Mets. They don't have to pay whatever the settlement ends up being from there alone, they do have other assets. Ones which the finances of are probably not as well known as the Mets. What percentage of Sterling is the Mets anyway?

metsguyinmichigan Apr 28 2011 08:41 AM Re: Mets Money

Is it even possible that the Mets actually lost money -- or is it one of those bookkeeping things where money goes into different pots? Seems impossible that a team in the biggest market with a cable station and a new ballpark with 25,000 season ticket-holders and is part of the MLB tv and web contracts and licensing deals could possibly be losing money.

Gwreck Apr 28 2011 08:44 AM Re: Mets Money Edited 1 time(s), most recently on Apr 28 2011 08:48 AM

Whether one agrees with the projected attendance for the year is a red herring. The difference is $10 M of a total estimated liability of $625 M. The total amount of Sterling's other holdings is of course not public information.

Gwreck Apr 28 2011 08:47 AM Re: Mets Money

metsguyinmichigan wrote: Is it even possible that the Mets actually lost money -- or is it one of those bookkeeping things where money goes into different pots? Seems impossible that a team in the biggest market with a cable station and a new ballpark with 25,000 season ticket-holders and is part of the MLB tv and web contracts and licensing deals could possibly be losing money. They don't have 25,000 season ticket holders. The Times has reported that the full-season equivalents are down to 10,000 this year. The new ballpark has huge debt obligations ($50M per year). You've got to sell a lot of Shackburgers to make that up, and it's tough to do that when attendance is down. Your points re: the TV revenue and MLB revenue are well taken, but if MLB is also making $25M emergency loans to the Mets then chances are that it's not enough to put the Mets in the black.

Edgy DC Apr 28 2011 08:52 AM Re: Mets Money

Nor is it clear whether those are a whole bunch of Wilpon playthings that could be tapped out to prop up the Mets, or they're overseen by boards that the Wilpons only partially control, representing other investors, or indeed --- like the Mets --- largely owned by banks expecting them to keep operating to finance payments on debts. But I think the Wilpon plaything scenario is unlikely, or else that play would have been made by now.

Ceetar Apr 28 2011 09:01 AM Re: Mets Money

If they continue this winning streak into July, I guarentee they'll make money this year. The article throws out "expected to lose 60million this year" and we're just supposed to accept it? I can believe they could definitely lose money this year, but will it be that much? I wonder how much each 'fan' is worth? given revenue and concessions and parking and ad views and whatever else. Also, the 25k (that might factor in the overlap of season plans that make up a full plan maybe?) figures represent tickets sold, which are presumably less valuable than actual turnstiles. An uptick in interest of the team means more of those 25k will get used (and more revenue by being _in_ the park), less will be available for resale, and those fans that normally would buy them may turn to the Mets to actually buy tickets first hand. I'm curious what the revenue swing would be from say 2.4 million fans to 3 million. At an (probably low) average of $20 a ticket thats 12million right there. Not including parking, concessions and telling Pepsi more fans are seeing your ads, give us more money for 2012. Much like it's too premature to completely write off the Mets as miserable losers this season, it's probably too early to project how much money they might make this year or next. It does seem like a lot of the Wilpons problems lessen with a winning baseball team. Who knows, reach September with the playoffs insight and you could get a lot of revenue via early season ticket signups with playoff perks.

Gwreck Apr 28 2011 09:27 AM Re: Mets Money

Ceetar wrote: Also, the 25k (that might factor in the overlap of season plans that make up a full plan maybe?) figures represent tickets sold, which are presumably less valuable than actual turnstiles. 1. There is no "25k" season ticket base. 2. The Times reported that the Mets have sold 10,000 "full season-equivalents." That number includes all partial plans. Tickets sold is always a greater number than actual turnstile count.

Ceetar Apr 28 2011 09:38 AM Re: Mets Money

Gwreck wrote: Ceetar wrote: Also, the 25k (that might factor in the overlap of season plans that make up a full plan maybe?) figures represent tickets sold, which are presumably less valuable than actual turnstiles. 1. There is no "25k" season ticket base. 2. The Times reported that the Mets have sold 10,000 "full season-equivalents." That number includes all partial plans. Tickets sold is always a greater number than actual turnstile count. That seems low to me. I didn't think that number reflect the whole thing. was that 'resales' or new signups or what? my point was that the differential between sales and turnstile lessens when the team is doing well.

batmagadanleadoff Apr 28 2011 09:41 AM Re: Mets Money

metirish wrote: Can some financial wiz here clue me in as the machinations of owing Bret Saberhagen $250,000 annually through 2029? This seems to be chump change -- one brushstroke in the big picture. Among the Mets major financial problems are that they're projecting $70M losses for 2011 and that they owe MLB $25M. So even if they [crossout]sucker[/crossout] find a buyer that'll give 'em $200M for a non-controlling interest in the team, half of that $200M is already gone. That leaves $100M to cover debt service on the almost half a billion dollars in Mets over-leveraged loans and the $300M in alleged fictitious profits that Sterling is virtually sure to lose. The Picard lawsuit is all about how much over and above $300M will Sterling and the Mets ultimately owe. By the way, those projected losses for 2011 were made by people with access to the Mets' books -- either the Mets themselves, potential investors or bankers and lawyers in on the Mets' financial dealings.

metsguyinmichigan Apr 28 2011 09:57 AM Re: Mets Money

The reason I was skeptical was one of the school districts I cover was painting a dire financial picture pointing to what it considered a low fund balance and the trouble that could cause. But then we actually sat down with the budget and someone who actually knows how to read those things, and he pointed out that, yeah, the general fund balance was low, but that was because they diverted a bunch of money into different accounts set aside for different programs, and, in fact the district had millions and millions of dollars it wasn't telling folks about. Those were "dedicated" fund balances -- but there was nothing stopping them from using that money for any purpose it wanted. But it was politically advantageous to cry poverty (they were in the middle of a rough contract negotiation with the teachers.) So I'm always suspicious of such things.

Ceetar Apr 28 2011 10:01 AM Re: Mets Money

metsguyinmichigan wrote: The reason I was skeptical was one of the school districts I cover was painting a dire financial picture pointing to what it considered a low fund balance and the trouble that could cause. But then we actually sat down with the budget and someone who actually knows how to read those things, and he pointed out that, yeah, the general fund balance was low, but that was because they diverted a bunch of money into different accounts set aside for different programs, and, in fact the district had millions and millions of dollars it wasn't telling folks about. Those were "dedicated" fund balances -- but there was nothing stopping them from using that money for any purpose it wanted. But it was politically advantageous to cry poverty (they were in the middle of a rough contract negotiation with the teachers.) So I'm always suspicious of such things. I imagine it's in the Wilpons best interest to appear like paupers on their last inch of rope right now.

LeiterWagnerFasterStrongr Apr 28 2011 10:10 AM Re: Mets Money

Ceetar wrote: I imagine it's in the Wilpons best interest to appear like paupers on their last inch of rope right now. In terms of the clawback, sure. In terms of virtually everything else? Oh, haaaaaayells, no.

metirish Apr 28 2011 10:19 AM Re: Mets Money

LeiterWagnerFasterStrongr wrote: Ceetar wrote: I imagine it's in the Wilpons best interest to appear like paupers on their last inch of rope right now. In terms of the clawback, sure. In terms of virtually everything else? Oh, haaaaaayells, no. I just heard from a source with knowledge of the area that Jeff has moved in to a shack behind Citi Field , he's fighting the eminent domain eviction tooth and nail now, Wallace Matthews is out there right now writing about it.

Gwreck Apr 28 2011 10:24 AM Re: Mets Money

Ceetar wrote: That seems low to me. I didn't think that number reflect the whole thing. was that 'resales' or new signups or what? Yes, that number does reflect "the whole thing." If you don't want to believe the New York Times and would rather rely on your instinct of what "seems low to you," you're free to do so.

Ceetar Apr 28 2011 11:40 AM Re: Mets Money

LeiterWagnerFasterStrongr wrote: Ceetar wrote: I imagine it's in the Wilpons best interest to appear like paupers on their last inch of rope right now. In terms of the clawback, sure. In terms of virtually everything else? Oh, haaaaaayells, no. yeah, that's what I meant. I don't really care if they come or go, unless they start running the Mets like they are paupers, in which case I'll spot them the cab fare to Laguardia.

duan Apr 28 2011 01:58 PM Re: Mets Money

the big problem here is the "SNY is off limits" if SNY is making profits it is doing though primarily on the basis of it getting the Mets broadcasts at a 'discounted' rate. , the rate may still be higher then what the mets WERE getting but it doesn't actually matter, SNY needs the Mets games to continue to earn profits. Now, that didn't really matter a huge amount when SNY was owned by the people who owned the mets and some other key strategic partners, but if you imagine that you're going to buy into the METS but not get a proportional portion of SNY then it's clear to see that your investment in the loss making Mets is effectively subsidising the profits of the people you bought your chunk of the mets off. SNY will become part of the deal. It'll have to be.

Ashie62 Apr 28 2011 03:55 PM Re: Mets Money

Ceetar wrote: If they continue this winning streak into July, I guarentee they'll make money this year. The article throws out "expected to lose 60million this year" and we're just supposed to accept it? I can believe they could definitely lose money this year, but will it be that much? I wonder how much each 'fan' is worth? given revenue and concessions and parking and ad views and whatever else. Also, the 25k (that might factor in the overlap of season plans that make up a full plan maybe?) figures represent tickets sold, which are presumably less valuable than actual turnstiles. An uptick in interest of the team means more of those 25k will get used (and more revenue by being _in_ the park), less will be available for resale, and those fans that normally would buy them may turn to the Mets to actually buy tickets first hand. I'm curious what the revenue swing would be from say 2.4 million fans to 3 million. At an (probably low) average of $20 a ticket thats 12million right there. Not including parking, concessions and telling Pepsi more fans are seeing your ads, give us more money for 2012. Much like it's too premature to completely write off the Mets as miserable losers this season, it's probably too early to project how much money they might make this year or next. It does seem like a lot of the Wilpons problems lessen with a winning baseball team. Who knows, reach September with the playoffs insight and you could get a lot of revenue via early season ticket signups with playoff perks. No amount of fans through the turnstiles will make the Mets profitable this season. Queens Ballpark Inc. and Sterling are junk rated entities. The debt service is piled high and higher.

Edgy DC Apr 28 2011 09:48 PM Re: Mets Money

Well, you may be certain, but I'm doing a lot of guessing.

Ashie62 Apr 29 2011 06:05 AM Re: Mets Money

I see the article says 200 Million gets 49% of the team..Didn't this start with 200 million getting 20-25% of the team?

G-Fafif Apr 29 2011 06:15 AM Re: Mets Money

Ashie62 wrote: I see the article says 200 Million gets 49% of the team..Didn't this start with 200 million getting 20-25% of the team? And if that's not enough, call in the next ten minutes, and we'll throw in this amazing reading lamp!

Ceetar Apr 29 2011 07:04 AM Re: Mets Money

G-Fafif wrote: Ashie62 wrote: I see the article says 200 Million gets 49% of the team..Didn't this start with 200 million getting 20-25% of the team? And if that's not enough, call in the next ten minutes, and we'll throw in this amazing reading lamp! The Wilpons want 200 million. That's the number they've decided they need to get things running smoothly. The 20-49% is what will be negotiated with the buyer, which is presumably what they're doing now. What percentage of Mr. Met they get is undetermined.