As I continue to read more and more into this Wilpon-Madoff lawsuit, one thing seems to jump out at me: how reliant the Wilpons were on Madoff for day-to-day operations of their empire. What rings alarms to me is how they used Madoff as their own personal bank. Not just for business ventures or large investments, no they relied on Madoff to meet payroll, pay for stadium operations, and for players deferred money payments. Madoff was woven into the day-to-day operations of the Mets. The reason they did this is even more alarming. They took the “investments” from Madoff when needed in lieu of “loans” from a traditional bank or even a private fund, because if they took “loans” they would have to disclose that. By taking private “investments” they could keep that secret. Sure seems dishonest to me, at the very least a little shady.
This strikes me as a death-blow for the Wilpon ownership of the Mets. Why? Like the crisis sweeping the country lately, the Wilpons ran the Mets beyond their means. We like to yell and scream about how the Mets are a big market team. Maybe they aren’t? Why did the Wilpons need the infusions of capital from Madoff to run the Mets? I guess a team that hasn’t won anything for nearly 25 years isn’t as much of a money making machine as we thought? Or maybe it was floundered on bad investments. The fact remains is the Mets needed help to run day-to-day operations. This is alarming.
Regardless of what happens with this lawsuit, I think the Wilpons will be forced to sell the team. When you consider what they have already lost, it’s a miracle they still have ownership. They ran the Mets with a lot of help from Madoff, and when Madoff was arrested and his scheme came crumbling down it left the Wilpons in a big crisis. So reliant on the Madoff money for their business deals they were forced to quickly re-organize their debt. Couple on top of that the fact that they thought they had another $500 million that they instantly did not have, and you see Sterling Equities in dire straits. This is saying nothing of a horrendous commercial real estate market for the last few years. It’s apparent the Wilpons by-and-large are hurting. If they weren’t why would they already be selling a 25% stake of the team?
With the Wilpons hurting, so are the Mets. The Wilpons have no cash to pump into the Mets, and their actions back this up. The Mets have made very modest investments into the team in the past few seasons. One exception to that is the Jason Bay deal, and the only way I can explain that anomaly is that they felt they had to invest that money into “hope” to ensure the fans wouldn’t turn their backs on them.
The Mets as a franchise previously relied heavily on “funny money” to cover their day to day expenses. That money is now gone. With it much of the owners fortune. Now your facing a long season as the team is largely predicted to struggle, thus driving attendance even worse. It could be a perfect storm, at the very worst time.
Then consider the lawsuit on top of it all. The Trustee is seeking $1 Billion dollars from the Wilpons. Even if the Wilpons are able to settle this out of court, I don’t see them settling for less then the $300 million that is reportedly what they profited over the years. That’s a big number, especially when you add it onto the $500 million they have already claimed to have lost. By estimates a 25% stake in the Mets on paper would be worth about $215 million. This isn’t taking into account the fact that the Mets, CitiField, and SNY have a lot of debt, so there is no telling what it would actually end up selling for. Would it be enough? Most people seem to think it wouldn’t be, and they’d be forced to sell more, if not everything.
