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The Wilpons' Mets Money Woes Continue

batmagadanleadoff Jun 05 2020 01:27 PM

New York Mets' Citi Field Debt Is Downgraded To Below Investment Grade Mike Ozanian Mike OzanianForbes Staff SportsMoney It may have just gotten a little tougher for Fred Wilpon to hang on to the New York Mets. This afternoon, credit rating agency S&P Global Ratings announced it was lowering its ratings to BB+, from BBB, on the New York City Industrial Development Agency's series 2006 $547.4 million payment-in-lieu-of-taxes (PILOT) bonds, $58.4 million installment purchase bonds, $7.1 million lease revenue bonds, and series 2009 $82.28 million PILOT bonds issued for Queens Ballpark Co. LLC (Citi Field), the baseball team's ballpark. S&P said it was also assigning a recovery rating of 1, reflecting an expectation for very high (90-100%; rounded estimate: 95%) recovery in the event of a default. The team made a PILOT bond payment of $44 million in 2019. The BB+ rating is the first step toward being rated below investment grade. Specifically, an insurer rated BBB has good financial security characteristics but is more likely to be affected by adverse business conditions than are higher-rated insurers while an insurer rated BB or lower is regarded as having vulnerable characteristics that may outweigh its strengths. The Mets—owned by Sterling Equities, which is controlled by [Fred] Wilpon, his son Jeff, and Saul Katz—have been on the block for a while. A deal with Steve Cohen broke down in February. Most recently, former MLB All-Star Alex Rodriguez and Jennifer Lopez were trying to raise money to buy the team, which Forbes valued at $2.4 billion in early April. In early May, I wrote that the couple had ended their attempt to buy the team because they couldn't get sufficient funds. But it was reported five days ago that Rodriguez and Lopez are taking another shot. The Mets are losing money and have a mountain of debt: $350 million on the team and perhaps another $450 million on SNY, their 65%-owned regional sports network. According to my sources, it is likely the team has added to its leverage by borrowing from the league's expanded credit facility to deal with the lack of ballpark revenue during the sport's shutdown this season. The ratings agency said: “A combination of cash on hand and liquidity can keep the project afloat until June 2021. We estimate cash and liquidity in the form of its debt service reserve can cover operations and maintenance (O&M) and debt service obligations for QBC if the entire 2020 season is canceled, and if this occurred would be sufficient to support the first of two debt service obligations in 2021.” In mid-May, MLB's owners submitted a plan to the players' union to play an 82-game regular season starting in July. The players took to that proposal like a batter would a 98-mile-an-hour fastball at his head. Most recently, the owners rejected an offer from the players for a 114-game schedule. Even with a shorter season, my math shows the owners losing an enormous amount of money because fans will be kept from attending games as a result of the pandemic. The outlook for Citi Field is troubling. “The CreditWatch negative placement reflects our concerns over the continued impact COVID-19 is having on the QBC (Citi Field) given that MLB is likely to cancel a significant portion of the 2020 season, that the 2021 season could entail limited attendance due to social distancing, and that destabilization could extend into 2022, a potential strike year,” S&P wrote. “Using debt service reserves may be necessary as early as December as we do not assume or rely on any team support. Additional draws could occur in 2021, depending on how the revenue profile unfolds. “Beginning with the anticipated MLB announcement, we are expecting to gradually clarify the extent of cancellations in the season, including potential cancellation of all fan-attended games, as well as any social distancing requirements once games begin, and refine and publish our financial forecast as a function of our assessment of QBC. We could lower the rating if we conclude there is likely to be a substantial draw on reserves to pay debt service in 2020 and 2021.” More serious problems would occur should there be a work stoppage prior to the next collective bargaining agreement. “An insufficient liquidity position could expose Citi Field to additional financial risk if a 2022 MLB players strike occurs,” the ratings agency noted. “If liquidity is drawn this year or next, the replenishment of the debt service reserve, if used, is unlikely to be quick. The current collective bargaining agreement with players sunsets at the end of 2021, and if a players strike occurred, pre-existing 2020 or 2021 draws on the debt service reserve account may not be adequate to support the stadium through the strike.” To be fair, the Mets would not be the only team whose owners' financial mettle woul be tested by a work stoppage. Tthe Texas Rangers, for example, had to make $100 million in capital calls from their investors to pay for their new ballpark, which has yet to host a single game. https://www.forbes.com/sites/mikeozanian/2020/06/04/new-york-mets-citi-field-debt-gets-downgraded-to-below-investment-grade/#3330f69b7439

Benjamin Grimm Jun 05 2020 01:31 PM Re: The Wilpons' Mets Money Woes Continue

It may have just gotten a little tougher for Fred Wilpon to hang on to the New York Mets. That's really all we need to know, isn't it?

Ceetar Jun 05 2020 01:32 PM Re: The Wilpons' Mets Money Woes Continue

oh god debt grading. I think my eyes just glazed over thinking about it. I think that hammer/nail guy that used to write 3 times a day about how the Mets were going to lose the team in 2010 always got a lot of mileage off this stuff.

batmagadanleadoff Jun 05 2020 01:43 PM Re: The Wilpons' Mets Money Woes Continue

=Ceetar post_id=38242 time=1591385531 user_id=102] oh god debt grading. I think my eyes just glazed over thinking about it. I think that hammer/nail guy that used to write 3 times a day about how the Mets were going to lose the team in 2010 always got a lot of mileage off this stuff.

I swear to god, as I was posting this article, I thought about you and the inevitable response you'd post, somehow criticizing or undercutting the article's premise. I guess you're rooting for eff 'n Jeff.

Ceetar Jun 05 2020 02:03 PM Re: The Wilpons' Mets Money Woes Continue

I'm rooting for A-Rod right now. but I just don't care about the debt rating, and I don't think it has a ton of bearing, never did. I admit I'm not extremely well versed in it, but it's all tied into the creative accounting stuff that teams/debt does. I know, theoretically, that Forbes should have a good handle on it. Do they? does this writer? particularly as it pertains to something as singular as a baseball franchise? Particularly when the headline contradicts the article (it wasn't rated below investment grade, it was the "first step to being rated below investment grade", BBB->BB+ with next being BB? what does investment grade even mean? It seems like it means "more affected by adverse business conditions" which means.. I dunno, it's a fucking bank. They don't know the Wilpons finances, only how much they pay on the loan. So like, does this mean they don't pay as much back as they "should"? I just want facts and real information, not clickbait headlines and nonsense projection from it, that's all. I'm not sure this means anything and that it doesn't just go away the second it's confirmed normal 2021 with fans in the seats. edited to add: This is specific to the _Wilpons_ ability to repay the loan, profit, etc. It doesn't change the loan amount one bit, and doesn't really affect the sale price. Those loan valuations will change as soon as the team is sold, based on the new owners finances.

batmagadanleadoff Jun 05 2020 02:12 PM Re: The Wilpons' Mets Money Woes Continue

=Ceetar post_id=38248 time=1591387407 user_id=102] edited to add: This is specific to the _Wilpons_ ability to repay the loan, profit, etc. It doesn't change the loan amount one bit, and doesn't really affect the sale price. Those loan valuations will change as soon as the team is sold, based on the new owners finances.

It's not that simple. The premise is that unless the Wilpons sell the Mets, they won't be able to generate the money to pay off their debt. Time is running out on them.

Ceetar Jun 05 2020 02:20 PM Re: The Wilpons' Mets Money Woes Continue

edited to add: This is specific to the _Wilpons_ ability to repay the loan, profit, etc. It doesn't change the loan amount one bit, and doesn't really affect the sale price. Those loan valuations will change as soon as the team is sold, based on the new owners finances. It's not that simple. The premise is that unless the Wilpons sell the Mets, they won't be able to generate the money to pay off their debt. Time is running out on them. we've been hearing that story for over a decade though, and we have even LESS insight into their finances now. I don't know exactly what this means: "S&P said it was also assigning a recovery rating of 1, reflecting an expectation for very high (90-100%; rounded estimate: 95%) recovery in the event of a default." I assume it means they'll go after Wilpon assets outside of baseball to recover the money? or perhaps they're just saying if they can't pay, they'll have to sell, and part of that sale will be paying the debt? But again,still above or at investment grade. So they must expect a payment this year. (or already got one?) And we're about to get a little more tangible info on their income for this year as it pertains to SNY/etc if games are going to happen, etc. I'm just not buying it is all.

batmagadanleadoff Jun 05 2020 02:27 PM Re: The Wilpons' Mets Money Woes Continue

=Ceetar post_id=38252 time=1591388424 user_id=102] =batmagadanleadoff post_id=38250 time=1591387973 user_id=68] =Ceetar post_id=38248 time=1591387407 user_id=102] edited to add: This is specific to the _Wilpons_ ability to repay the loan, profit, etc. It doesn't change the loan amount one bit, and doesn't really affect the sale price. Those loan valuations will change as soon as the team is sold, based on the new owners finances.

It's not that simple. The premise is that unless the Wilpons sell the Mets, they won't be able to generate the money to pay off their debt. Time is running out on them.


we've been hearing that story for over a decade though ....


They've been buying time, treading water. They sold off 49% of the team. Then they entered into another round of re-financing and more borrowing -- all against the recent astronomical increase in the value of the Mets franchise thanks to record-setting revenue streams for MLB -- all in hopes that they'd turn a corner. They haven't. And now this pandemic -- which has likely hurt the Mets more than any other MLB team, heck -- probably more than any other American team sports franchise.

MFS62 Jun 05 2020 02:39 PM Re: The Wilpons' Mets Money Woes Continue

I don't know exactly what this means: "S&P said it was also assigning a recovery rating of 1, reflecting an expectation for very high (90-100%; rounded estimate: 95%) recovery in the event of a default." Not sure either, but it sounds like either: 1) if they sell, the buyers will recover close to their investment (very quickly?) or 2) the Wilpons will be able to sell for close to the amount of their indebtedness. Later

Johnny Lunchbucket Jun 05 2020 02:41 PM Re: The Wilpons' Mets Money Woes Continue

It means if you loaned a dollar to Fred Wilpon he's likely to pay you 90 to 95 cents for it. Also, makes it more expensive for Fred to access more money.

batmagadanleadoff Jun 05 2020 02:48 PM Re: The Wilpons' Mets Money Woes Continue

I'm just not buying it is all. To your point, it looked for a while, until very recently, that the Wilpons would ultimately survive the Madoff devastation and get to hold onto the Mets for a very long time, especially when the value of the Mets increased into the billions. That's billions ... with an "s". But then the Wilpons were hit with two death blows, all within a year of each other. So, if you'll recall.... First, Saul Katz and the Katz family decided that they'd prefer to cash out their Mets holdings, rather than continue to part-own the Mets into the long term. And the Wilpons are too tapped out, too extended, to come up with the money needed to buy out the Katz family. And then this pandemic.

kcmets Jun 05 2020 03:02 PM Re: The Wilpons' Mets Money Woes Continue

Johnny Lunchbucket wrote: It means if you loaned a dollar to Fred Wilpon he's likely to pay you 90 to 95 cents for it. And a 10 cent coupon. Hard to believe 'Freddie Coupon' caricatures are over two decades old now.

Ceetar Jun 05 2020 04:57 PM Re: The Wilpons' Mets Money Woes Continue

I'm just not buying it is all. To your point, it looked for a while, until very recently, that the Wilpons would ultimately survive the Madoff devastation and get to hold onto the Mets for a very long time, especially when the value of the Mets increased into the billions. That's billions ... with an "s". But then the Wilpons were hit with two death blows, all within a year of each other. So, if you'll recall.... First, Saul Katz and the Katz family decided that they'd prefer to cash out their Mets holdings, rather than continue to part-own the Mets into the long term. And the Wilpons are too tapped out, too extended, to come up with the money needed to buy out the Katz family. And then this pandemic. the value of the Mets increasing doesn't actually get the Mets any more money (though I do believe it makes borrowing money easier) but yeah, the Katz thing. I don't (we don't) know the details of that exactly. Every moment they wake, normally, makes them more money, so you can't imagine them being in a dire hurry, until now anyway. Perfect storm (like an economic collapse the same time Maddoff gets caught at the same time you just financed a new stadium) So do they want out _now_? Hell, it looks like we're going to play. the Mets are good, a playoff berth and a few wins easily pays for just the loan payments, plus the projections for next year off a good run means more advertising money, more eyeballs, etc. better valuation, (bet the debt rating goes up) So i ask again, how desperate and serious are the Katz? Something doesn't add up here, which of course, why would it? all this financial stuff going on between (And not just the Mets) TV and stadium and personal and who knows what else is only one step above Maddoff anyway.

Edgy MD Jun 05 2020 08:16 PM Re: The Wilpons' Mets Money Woes Continue

You guys act like there are no more Russian oligarchs to prop this team up.

Fman99 Jun 05 2020 08:42 PM Re: The Wilpons' Mets Money Woes Continue

We need a CPF GoFundMe. Let's buy this fucking team and fix it. WHO'S WITH ME

Ceetar Jun 06 2020 07:57 AM Re: The Wilpons' Mets Money Woes Continue

i mean, besides the team building aspect of it, like 99% of other complaints with the team would be ameliorated with a real fan board that was included in decision making. "What give aways should we have?" "Which music should we play?" "Who should we honor?" all that stuff. so yeah, I'm in for whatever my next stimulus check is.

MFS62 Jun 06 2020 08:02 AM Re: The Wilpons' Mets Money Woes Continue

And let's not forget Bernie. The Judge didn't: https://www.yahoo.com/finance/m/5006fe5d-18b8-3d30-86fc-16515c7ae9e4/judge-denies-early-release.html Later

batmagadanleadoff Jun 21 2020 04:44 PM Re: The Wilpons' Mets Money Woes Continue

Source: Wilpons won't put much in Mets in 2021 if they don't sell, Steve Cohen ‘dodged a bullet' Excerpt: ... the Mets were expected to lose approximately $214 million during the shortened year in a report last month by the Associated Press. Only the Yankees and Los Angeles Dodgers stand to lose more. The difference between those three franchises, though, is that the Yankees and Dodgers are committed to consistently competing. That's not the case for the Mets. A source with knowledge of the organization's front office admitted to amNewYork Metro on Monday that the coronavirus-shortened 2020 season and the financial ramifications that come with it will “hurt the Mets more than most,” because the Fred and Jeff Wilpon — the owners of the club — will essentially stop pumping money into the team. “They run such a cheap operation,” the source added. “Given the fan base and market, they should be spending two times more than what they are.” “They are doing just enough to keep the fans coming, nothing more.” https://www.amny.com/sports/source-wilpons-wont-put-much-in-mets-in-2021-if-they-dont-sell-steve-cohen-dodged-a-bullet/

kcmets Jun 21 2020 05:31 PM Re: The Wilpons' Mets Money Woes Continue

They run such a cheap operation,” the source added. “Given the fan base and market, they should be spending two times more than what they are.” “They are doing just enough to keep the fans coming, nothing more.” I know things are slow for the writers, and they have to file content and put grub on the table, but this filler is twenty-year old yawn material. The real story, and it's not new here either, is why MLB hasn't made the Wilpons shape things up to big market standards or ship out.