When a casino looked like the Mets' best bet
A front-page story in the New York Post on Tuesday detailed a proposal from the owners of the New York Mets to build a casino next to Citi Field.
The story is largely moot at this point, since the proposal was both submitted and rejected over a year ago. The idea is less an indication of ownership's current plans than it is a fascinating period piece which also happens to indicate something about the seriousness of the financial problems from which they've yet to liberate themselves.
Back in September 2011, when the casino proposal (part of a larger proposal including a shopping mall and hotel) was rejected, the Mets' owners, Fred Wilpon and his partners at Sterling Equities, had just publicly parted ways with a major potential investor, David Einhorn. The Wilpon group had agreed to sell a minority stake in the Mets to Einhorn, with the catch that if they couldn't Einhorn out within five years, he would have the right to purchase a majority interest in the team for a token amount.
That left Sterling with a major cash crunch to pay debts, one ultimately satisfied by a minority sale in the team primarily to themselves and to S.N.Y., in exchange for an extension of the television rights deal.
By contrast, the casino offered something over the longer term. If Sterling could hold onto the team, a casino could draw more people to the area in and around Citi Field. In essence, it was Sterling Equities taking the Mets from an entity that should have been making money in its own right, but wasn't, and using it as the center of a real estate venture that, theoretically, would.
But what about Major League Baseball's ban on team owners also owning and operating casinos? As should come as no surprise, implementation of that rule has varied under current commissioner Bud Selig.
Most notably, current Detroit Tiger owner Mike Illitch doesn't own any interests in casinos. But his wife, Marian, became the owner of the Motor City Casino in 2005, and has purchased interests in casinos across the country in the years since.
The proposed Willets Point casino called for the Shinnecock tribe to operate the casino. Marian Illitch's Triple M Development was also involved in the project's development.
It is hard to imagine Selig would have refused Sterling the right to move forward on the project, with another team owner's wife previously given dispensation for doing so. Also, at the time the proposal had been submitted, Selig was not shy about doing favors for the Mets' owners, with a friendship with Fred Wilpon commonly cited as a reason why.
The partnership with the city makes sense for both sides. If Sterling can come up with the capital and build this, as owners of Citi Field they have a greater interest in seeing the project reach its maximum potential than any other potential builder. As for Sterling, having the city turn over so much prime acreage is obviously a prize in itself.
Whether state action to make the building of casinos in-state easier would revive the idea remains to be seen; both city Economic Development Corporation spokesman Ben Branham and Deputy Mayor Howard Wolfson used the phrase "ruled out" in responses to the Post story Tuesday morning.
To be sure, Sterling needs money as much as ever. That cash infusion from minority ownership stakes has been spent already, and another $160 million borrowed against their S.N.Y. ownership stake does little beyond helping to finance their massive debts, while neither paying down the approximately $320 million owed against the team due in June 2014, nor actually increasing the principal due against S.N.Y. in 2015.
In fact, the "$162 million for which team brass are still on the hook following the Bernie Madoff Ponzi-scheme debacle" referenced in the Post's lead isn't an immediate concern at all. It isn't due to be paid until at least April 2016, long after both of the other far more onerous loans come due. The total is far less than $162 million already, since part of the settlement stipulates that other money reclaimed by the trustee between now and April 2016 goes toward paying down that $162 million. And functionally, the owners will only need to pay out $29 million, even then, should the trustee's other work fail to clear the debt entirely.
For the Madoff settlement to become a financial problem for the Mets' owners now, the Wilpon group would first have to clear a number of far higher hurdles, something the trustee himself didn't believe was likely to happen.
For the Citi Field Casino owned by the current owners of the Mets to become a reality, a long-since-defeated proposal would need to be resurrected and approved, the state legislature will need to act to make it legal, and then the owners themselves will need to overcome massive financial obstacles simply to hold onto the team, then further invest in the somehow resurrected casino itself.
Funny picture of Mr. Met rolling the dice, though.
UPDATE: A spokesman for Queens Development Group, the joint venture between Sterling Equities and Related Companies, sends over the following statement:
An initial concept submitted two years ago floated the possibility of Indian gaming and was dismissed by the city.
Our plans for Willets Point DO NOT include an Indian or commercial casino, which is illegal. Even if it were legal, it would not be allowed under the environmental process we are undertaking and our agreement with the City prohibits this use.
The $3 billion investment we are making in Willets Point will clean up land that has experienced a century of environmental contamination and will result in a mixed-use community that will create thousands of jobs, affordable housing and significant economic activity for the area.
And here's a statement from Nick Kelly, a spokesman for the New York City Economic Development Corporation:
There is no casino being built at Willets Point, period. A proposal in 2011 that included a gaming use was rejected. And the agreement with the Queens Development Group to clean up and transform this long-blighted area into a dynamic, mixed-use district expressly prohibits any gaming uses. We look forward to continuing the public approvals process for this critical project that will remediate over 20 acres of toxic land and create thousands of jobs, hundreds of affordable housing units and billions in economic activity.