11:04 am Jan. 7, 2013
Early Friday morning, Bloomberg reported that Fred Wilpon and his partners who own the New York Mets "had obtained at least $700 million in loans."
Then Richard Sandomir of the New York Times reported Saturday something that was confirmed to me by multiple sources, that the Mets' owners actually came away with a lot less: approximately $160 million. That $700 million represents the new total debt against S.N.Y., not the amount of new money available to the team.
The difference is enormous, both in terms of the team's flexibility and affect on ownership's hold of the team.
It means, among other things, that ownership did not get nearly enough new capital to pay off a $320 million debt against the team, due in June 2014, even if they used all the money for that purpose.
We also know that not much of this $160 million will go toward the team on the field.
Ken Davidoff reported Sunday that the Mets have "about $10 million left to spend."
Back on December 18, Davidoff, citing a team official, said the Mets had about $7 million left to spend.
Considering the team deferred approximately $23 million in 2013 budgeted money through the reworking of their contracts with David Wright and Jason Bay, the outlays at that level don't leave any of the $160 million in new money for team building.
So where is it going? Well, a look at how the Mets spent the $240 million they received last March through minority share sales can provide some clues.
Of that $240 million, $110 million went toward paying down team debt (the $320 million they owe in 2014 was originally $430 million). Another $65 million went toward paying back past-due loans owed to Bank of America and Major League Baseball. And the rest covered the financing of team debt, between debt ballon payments on Citi Field of at least $43.7 million, and interest on both their team and S.N.Y. debts.
A larger debt against S.N.Y. (the new debt of greater than $700 million is more than 35 percent larger than the old debt of $450 million against S.N.Y.) almost certainly carries with it a greater annual interest payment against it. The team debt, according to multiple sources, hasn't been refinanced or paid down, so there's the remaining interest payment on that debt of just north of $22 million, at least.
Nor are these payments going anywhere in 2014, though the owners have a far bigger concern by then: the due date of that team debt.
Ultimately, the question of whether Fred Wilpon is the owner of the Mets after June 2014 has everything to do with whether JPMorgan Chase considers him a good enough risk to let him extend the life of that loan. That a 65 percent majority stake in S.N.Y., a company with soaring value, netted just $160 million in new money suggests that even the capital in his last profitable entity is running out.
Standard and Poor's doesn't see the Mets managing to turn a profit in the short term or long term, recently downgrading the rating of the bonds issued to pay for Citi Field. (Moody's still has them rated below investment grade as well, though they recently changed the future outlook from negative to stable.)
That Standard and Poor's outlook pointed out that a return to even 2011 attendance levels of approximately 2.3 million people would lead to annual team losses. That would require an increase in attendance of approximately four percent over 2012. S&P thinks attendance is dropping in 2013, which seems likely, with R.A. Dickey gone from a 74-win team and no major-league free agents signed.
Moody's has attendance static in 2013.
The question of whether JP Morgan Chase will feel a team tied long-term to a below-market television contract and massive interest payments will earn enough money to justify an extension of a $320 million loan is perhaps the only question worth pondering as it relates to the future of Mets' ownership. A similar question exists whenever the date of the new loan against S.N.Y. comes due; whether that new money comes with an extension beyond the original S.N.Y. debt due date of 2015 is still unknown.
The good news, in theory, is that it ought to be a matter of life or death for this ownership group to put the best possible team forward, in order to goose 2013 revenues and suggest, to JP Morgan Chase and others, that things can get better. It's a matter of survival for them, in other words, not to make the fans any more miserable or disaffected than they already are.
But it's not clear they're in a financial to do position to do anything about that. At this point the Mets are choosing between serving their fans and serving their creditors. And it's pretty clear who's winning.
Elsewhere in New York sports:
Iman Shumpert, vital to the Knicks' perimeter defense, could be back very soon.
Tyson Chandler's tap-back has become one of the team's point guards.
Mariano Rivera said his knee is "95 percent" ready.