Refinancing for Wilpons, probably more of same for Mets

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The New York Post reported late Thursday night that the owners of the New York Mets are nearing a deal to re-finance their $250 million loan against the team, which had been set to come due in June.

The news has enormous ramifications for ownership's ability to hold onto the team, and perhaps the ability to spend, though the Post's assertion that "the Mets’ owners appear to be on the verge of finally putting the team’s financial problems behind them" is, unfortunately, awfully premature.

Let's start with what we know. Fred Wilpon, Saul Katz and his partners faced a $250 million loan due in June, with no real way to pay it. A seven-year re-finance would push back the date of the loan until 2021, and the Post reports the partners will not have to pay down any portion of the debt as part of the deal, which would shift the loan to Bank of America.

That's precisely the thing that keeps them from having to sell the club in 2014, for instance, to pay the debt.

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Also worth noting from the Post piece is the idea that "There are no payroll limits written into the re-worked loan." As I've reported, their current team loan allowed for no such new spending.

There are some gaps still to work out here, though. Yes, re-financing this loan means the owners don't need to come up with $250 million by June. However, there's the not small matter of the loan the ownership group has taken out against its majority stake in S.N.Y. That was originally $450 million, and swelled beyond $600 million last winter, when the owners borrowed against the increased value of the sports network, to pay things like debt financing, and even day-to-day expenses.

That loan remains due in 2015. 

Moreover, it hasn't been the loans coming due that have cost the Mets' owners tens of millions of dollars each year, but the financing of those loans. A re-fi, at the same interest rate, will keep those obligations in place moving forward. And unlike the loan taking last winter, which provided $160 million in capital, or the sale of minority shares in the team back in March 2012, which provided $240 million in capital, all this manuever does is keep Wilpon and his partners from having to pay any money out.

So really, the only way this redounds to the benefit of Mets fans, as opposed to just Fred Wilpon and his partners, is if they have a ton of money sitting around, money they've been dying to spend on the team, but couldn't because of those darn loan covenants.

If they had that money, though, there's a pretty good chance the trustee would have known about it back in 2012, when he determined the Mets owners were out of money.

And while things like the new national television deal in Major League Baseball means the Mets have a bit more money coming in, that may not do much more than offset any further losses from further drops in attendance. According to a December 2013 Standard and Poor's report on the team's bond issue (and subsequent debt obligation), revenue is expected to drop another two percent this year. And Standard and Poor's has been unduly optimistic before, having expected attendance to stay flat in 2013, instead of seeing it decline another 4.7 percent in 2013.

For the record, Standard and Poor's rates the team's financial situation a BB, or translated: "Less vulnerable in the near-term but faces major ongoing uncertainties to adverse business, financial and economic conditions.

Still, this gives ownership another year to get things turned around on the field, with the hope that a winning team on a shoestring budget can start to produce revenue. There's also that Willets Point project, which should provide revenue, or at least something else to borrow against, at some point.

And fortunately for them, nothing has increased in value quite like sports networks, so as long as that bubble doesn't bust before they go to their lender asking for more time on the 2015 loan, they might just hold onto the Mets after 2015, too. All they have to do is keep on making their loan payments. If it was that pesky stiuplation in their last loan, the money can start flowing toward making the Mets better on the field, at last.

But if it was the absence of money, from all that debt financing, it's hard to see how this news will change much of anything.