Is the Wilpon family wobbling?
Since the day Bernie Madoff was revealed to be running an enormous Ponzi scheme, any number of scenarios threatened Fred Wilpon's ability to keep control of the New York Mets.
The idea that it might come when his partner Saul Katz sold his stake in the team, as The New York Times reported Monday he wants to, wasn't considered one of them.
Other threats to Wilpon's grip on the team seemed much more likely. There was the immediate loss of capital the team used, from Madoff, to run day-to-day operations. There were the enormous loans Wilpon and his partners took out against the team and their ownership stake in S.N.Y. Finding the money annually to simply finance those loans has left little for them to spend on the team, while the loans themselves hang as spectres over the entire enterprise, the moment the banks decide there's more money to be had by calling in the loans.
There was even the lawsuit brought by Irving Picard, trustee for the Bernie Madoff victims, against Wilpon and his partners. That danger was avoided when the trustee determined Wilpon and his partners were running out of money, and would likely declare bankruptcy rather than pay even a preliminary judgement against them.
Since then, ownership has managed to stick around by leveraging their S.N.Y. ownership stake, selling minority shares, and relying on the rising tide of sports television network values to convince banks not to come calling for the hundreds of millions of dollars they owe against the team. They are likely hoping to do the same with their more than $600 million owed against S.N.Y., loans due next year.
In the meantime, ownership has gamely held on. There's been little secret about why: Fred Wilpon, as Michael S. Schmidt reported, considers the Mets a "family heirloom," and desperately wants to pass it on to his son, Jeff.
The Times story, if true, makes that picture look much more dire. Katz denied the story, and the Daily News, a relatively friendly outlet for the Wilpons, quoted "a source with knowledge of the situation" as saying the story was "bull----. Complete and utter bull---. It's not like him to be saying something like that."
(Schmidt is well plugged-in with Major League Baseball sources, with his reporting on performance-enhancing drugs, not to mention Iraq, has been utterly beyond reproach.)
As for the Mets, they've angrily made denials on plans involving the sale of the team before, such as this interview with author Erin Arvedlund on Fox Business Network, where then-Mets executive David Howard impugns Arvedlund's integrity. It's more fun to watch when you know that her prediction they'd have to sell part of the team ultimately came true.
But the Katz scenario is something entirely different—it's more than just business. Saul Katz's wife is Fred Wilpon's sister. They've been business partners for more than 40 years. Even the partial sale of the team, a few shares from the parent company to Fred Wilpon, Jeff Wilpon and Saul Katz personally, along with a bunch to Comcast/Time Warner, the minority owners of S.N.Y., didn't seem to threaten the Wilpon/Katz stranglehold on the team, as long as they remained unified. And nobody seemed to doubt that.
The other blind quote in the Daily News, from someone "close to Katz and the Wilpon family," emphasizes this: "They've been partners and brothers-in-law for their entire working lives, a half-century. And they intend to stay partners for the rest of their lives. Saul has no intention of selling his share of the team and never had any attention of selling. This is just out of the blue."
Schmidt's reporting reiterates this, making it clear that Katz's desire to stick around has more to do with loyalty to Wilpon than an interest in owning the Mets.
A pair of notable facts that come out of Schmidt's reporting bear watching, though.
One: "If Katz were to sell his share of the team to someone other than Wilpon, it would create questions as to whether Wilpon, who currently serves as the team’s chairman of the board and chief executive, could maintain his role as the club’s ultimate decision maker."
The clear implication, and this isn't a surprise to anybody who's ever talked to anyone who has dealt with Jeff Wilpon, is that should Comcast/Time Warner grab majority control of the team, keeping Fred and Jeff around in decision-making capacity wouldn't be likely. At that point, exactly how much the pair would want to stay in an ownership situation that only lost them money, without the prospect of keeping control of the team, could be fundamentally different.
After all, a financially sound way out back in 2011, the deal Wilpon originally agreed to with David Einhorn, ultimately failed when Wilpon decided he didn't want to lose control of the team and asked Bud Selig to intervene, and strike a provision in the deal that would have forced Wilpon to assist Einhorn in trying to grab majority ownership of the team.
Speaking of Selig and intervening, the other issue raised in Schmidt's piece was "several people in baseball briefed on the issue" acknowledging that the team's finances remain "troublesome."
That's a euphemistic way of pointing out that Wilpon and Katz have been using television profits from S.N.Y., a network that profits exclusively because it has a below-market deal to show the Mets, to finance their enormous debts.
Whether Selig, or his eventual successor as commissioner, supposedly taking over next year, will ever force the Mets' owners to sell, as they did for precisely this reason with Frank McCourt and the Dodgers, is also unknown. Selig's longtime friendship with Wilpon has repeatedly been cited when Selig has helped Wilpon through not only the post-Madoff years, but his bitter divorce from Mets owner Nelson Doubleday back in 2002.
But it seems reasonable to assume if both Katz's own family member and decades-long partner is starting to wonder about the viability of the Wilpon succession plan, Selig's successor, especially if he comes from the small group in the M.L.B. offices likely to have been briefed on Mets finances, might feel the same way.
The idea has always been that Fred Wilpon would only sell the Mets if he had no other option.
But if Saul Katz decides the time of losing money every year and spiraling attendance is over, it won't be up to Fred anymore.