As the Mets' owners end 2011 on a downgrade, how much more will the market bear?

Citi Field. (paul.hadsall, via flickr)
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2011 was not a good year for Fred Wilpon, his partners or, related, the Mets. Things are not looking much better for 2012. 

In fact, it is getting hard to keep track of the number of fronts on which Wilpon and the other partners in Sterling Equities, the company that owns the Mets, are facing battles. The team lost $70 million in 2011, with the promise of more losses to come as ownership's cost-cutting measures take their toll on the field. (Carlos Beltran, Francisco Rodriguez and, most crucially, Jose Reyes departed for financial reasons, and the Mets have a cut-rate roster for 2012.

Meanwhile, the Wilpon group's debt problem is so large—$430 million due against the team in 2014, $450 million due against the Sterling-owned TV network, SNY, in 2015, and nearly $600 million still due in debt payments on Citi Field—cash flow is so poor, and an unresolved legal fight with the trustee for the Bernie Madoff victims is so potentially problematic that Standard and Poor's just reduced the rating on the stadium bonds to BB+, a step below investment grade, and revised the outlook to "negative". That represents an “expectation that the current trends may continue,” according the full research document on the project released by the company this week.

Tucked into the S&P report are several indicators that the ratings service simply doesn't take the word of Fred Wilpon and his partners to mean much anymore. While the Mets reported 2011 attendance at 2.34 million, S&P has the number at 2.29 million. The company's report notes that the Mets project attendance for 2012 to rebound to 2.5 million. It is almost impossible to construct a scenario in which a 10 percent increase in attendance represents a reasonable expectation, given the fact that most of the team's most popular players are gone.

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What seems likelier at this point is that fan discontent with the Mets, as an organization, has reached some sort of critical mass. In the course of a year, the public has become far more aware of ownership's financial problems. Anger among the team's supporters is at an extraordinary level, with even the most innocuous postings on Metsblog.com, for instance, attracting dozens of exhortations to Fred Wilpon to liberate the team from its ruinous off-the-field problems by selling it. And these are the committed fans; many others are simply tuning the Reyes-less Mets out.

S&P forecasts the current trends to continue. By their estimates, the Mets would still draw more than two million fans in 2012, and the suites up for renewal—that would be a third of them—would sell at a comparable rate.

It is hard to ignore the parallels between the current death-spiral of the Mets and the one that occurred in the late 1970s under owner Lorinda de Roulet. Season-to-season attendance dipped 27 percent after the Mets traded Tom Seaver, who was one of the few players in Mets history to have meant as much to the team's fans as Jose Reyes. (Seaver was dealt on June 15, by which point it had been clear for months that he was on his way out.) A similar post-Reyes drop would leave the Mets' attendance at less than 1.7 million, to say nothing of the decline in revenues from a similar fall in the sale of luxury suites.

The good news here, in theory, is that the lack of demand to watch next year's Mets has made it easier for the Mets owners to offer up a number of those luxury suites to be offered up as inducements to potential minority owners, as they seek approximately ten takers to purchase four-percent minority shares in the team at a cost of $20 million per share, with the goal of raising $200 million by March.

So far, though, neither the promise of a suite nor of face-time with Mr. Met has convinced anyone to purchase any shares, according to Forbes. Which may in turn make a bond rating on a debt next due in June (two payments per year are due on the stadium debt, one in June, one in December) irrelevant: At this point, it's not at all clear that the current owners will still be around in June to worry about debt or anything else.

Ownership took out a $40 million bridge loan from Bank of America last month simply to pay December's stadium debt and have operating capital until March. The theory was that ownership could get minority owners in place by March, repay the $40 million loan and repay the $25 million it owes Major League Baseball that is long past due.

The remainder of the capital would get them through a season of operating losses, interest payments on both the $430 million due against the team (which totaled $30 million last year) and the $450 million against SNY (which totaled $20 million last year). Presumably, some of that money would also go toward paying down some of the principal in each of those loans, since JPMorgan Chase, which holds the debt against the team, signed off on the bridge loan.

Add to that the legal expenses for the Wilpon group that will only increase in the lead-up to a March 19 trial. Wilpon and his partners are being sued by Irving Picard, the trustee for the Bernie Madoff victims, for $386 million. And don't forget, the lion's share of the expenses incurred by a baseball team come when the season starts. The dramatically slashed payroll is still around $90 million.

That's an awful lot to do with $200 million, even if the Mets do find buyers for those Mr. Met-inclusive investment packages. And that's a big "if."

Opening Day is April 5.