Minority investors are about to come to the Wilpon group’s rescue, still
The great minority-owner search by Fred Wilpon and his partners who own the New York Mets has hit another new deadline, with Newsday reporting late Monday night that the team now expects to sell ten shares worth four percent apiece, at $20 million a pop, by the end of February.
Such a sale could be the only thing preventing a separation of Wilpon from his baseball team.
A $40 million bridge loan the team took out in November, simply to pay a December debt payment due on Citi Field and other offseason expenses, is expected to be paid back in March. So is the $25 million past-due loan provided to the Mets by Major League Baseball. And a ruling next month on a request by Irving Picard, trustee for the Bernie Madoff victims, could force Wilpon and his partners to come up with another $91 million to post a bond.
So that $200 million is needed, and fast. But actually receiving the cash would be something new. Stories about how the Mets are close to receiving it have been around for almost a year.
As recently as a few weeks ago, the Mets were confidently announcing that they expected to close on minority shares by the end of January. General Manager Sandy Alderson told reporters on Jan. 6 that the Mets would have that infusion by the end of the month, and the Daily News reported on Jan. 10 that five potential minority owners had been vetted and would close “within the month.”
This goes back even further, actually. Adam Rubin reported that the Wilpon family had seven commitments, at $20 million apiece, in a story on Dec. 13. And the Times’ Richard Sandomir, just a week later on Dec. 20, detailed the perks (such as quality time with Mr. Met) that those owners would potentially receive, adding that none of the shares had actually been sold, while ownership would be unable to access the cash until all ten shares were sold. Moreover, Sandomir wrote that two of the ownership stakes would be purchased by Wilpon and fellow Sterling Equities partner Saul Katz, making those investments little more than payments to themselves.
The likely reason shares couldn't be sold until all were committed to is that the shares, structured like loans and eligible to either be augmented with three percent annual interest for six years, or bought back at their original price in six years, amount to additional debt, and would need to be approved by the team's current creditors. Without enough money coming in, the current creditors are unlikely to approve further debt, lacking confidence in Wilpon group's viability.
These struggles, and promises, echoed the reporting from Sandomir on Nov. 16, who wrote that a source claimed the Mets had seven “strong buyer commitments.” Sandomir also noted that so far, none of those shares had been sold.
That seemed odd, since back in October, Jeff Wilpon assured Adam Rubin that sales were “going very well.” Wilpon declined to name any of the potential investors.
The investors were supposed to be ”multiple family members and friends,” according to the team's plans following a public divorce from potential minority owner David Einhorn in September. But whoever the friends-and-family types are, it has apparently taken months to come to a deal with them, and none of them has been willing to vouch for Wilpon in the meantime.
Then again, even Einhorn's deal was supposed to be have been finalized for months, before it disintegrated. A little over a month before the talks broke down, the Mets announced they had re-entered exclusive negotiations with Einhorn, after an embarrassing story about Fred Wilpon seeking out another potential bidder was made public. Their negotiating window had expired because Mets creditor J.P. Morgan Chase had held up the deal, making sure the bank's debt wasn't placed behind Einhorn's debt repayment in the pecking order.
That had delayed what was supposed to be a deal finalized by the end of June, according to both Einhorn and the Mets. As Fred Wilpon made clear at the time, the money would go toward a number of current debts, leaving the large array of long-term debt facing the Mets looming larger than ever.
But back in May 2011, Fred Wilpon thought he'd have plenty of time to figure out how to manage all of that debt, along with the potential losses of $386 million from his looming March trial. As he told Sports Illustrated, he already had that $200 million earmarked for debt-repayment and operating costs. Now it was just a simple question of getting it.