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Perfect Storm Making Mets Fans Dreams Come True?

For years now, if you gave most Mets fans three wishes, the first two would have been for their owners to sell the team. For better or worse, fairly or not, the New York Mets ownership has been blamed by many as being the root of all evil in Metsville.

It is fair to say that the Mets organization seems to continually step in it over and over again. If you abide by the adage that, “The fish always rots from the head down,” then it is easy to make the case that the Mets troubles often directly or indirectly emanate from the top.

Many fans have had trouble seeing the light at the end of this tunnel. It appeared, with owner and Chairman Fred Wilpon’s son Jeff seemingly running the franchise, that the succession plan was in place and the Mets would be the Wilpons’ show for all eternity. Collections were raised and billboards purchased, yet nothing could shake the Wilpons’ grip on the franchise that has always prided itself for its miracles.

The chain of events that have led fans to this “New Hope,” could actually be viewed as a miracle in itself. Let’s pick up the story where the Mets’ owners unfortunate and complicated interaction with the Madoff scandal put their reputation, family fortune and ability to run the team in jeopardy. Subsequently in 2012, the Wilpons’ were forced to raise liquid capital by selling 48% of the team in a dozen blocks of 4% shares, bringing a slew of new minority owners into the organization (including the likes of celebrity Bill Maher and billionaire financial whiz Steve Cohen).

Fast forward to 2018, where two other minority owners, Comcast and Charter Communications, are adamantly trying to divest the shares from their portfolios. While Forbes had the team valued at $2.1B, the desperation of the cable companies forces them to find someone willing to buy, but at a deeply discounted team valuation of only $1.5B.

Here’s where it gets good, the Wilpons’ initial sale of the team provided them with a right to match if any of the minority owners sold their shares. Without guessing if the Wilpons’ liquidity situation has improved, the facts on the ground lead to the conclusion that the family saw this as a significant opportunity.

The head of the family and franchise, Fred, has just turned 83 years old. There are certain realities to that age that must be taken into consideration. Upon his passing, no matter the skill in estate planning, there must inevitably be some capital gains, inheritance and estate tax concerns. If the family had liquidity issues in running the team before, such concerns would almost certainly affect a franchise’s ability to sustain itself. The prospect of minority owner Steve Cohen purchasing controlling interest in the franchise probably didn’t just arise.

Thus, the Wilpons’ essentially repurchased that 12% of the team in March of 2019 at a franchise valuation of $1.5B and are now reselling it months later to Cohen at a reported franchise value of $2.6B (nearly a $300M profit in only a couple of months just on that 12%). In the process, they would stand to retain their involvement “running the team” for the next five years. This would presumably ensure that if at some point in that time, MLB President Rob Manfred is handing a trophy over to the Mets, either Fred or his son will be there to accept it. They get to continue to call themselves owners and enjoy all the other perks that go with it. Most importantly, they maximize their return on the franchise and avoid the embarrassment and the financial loss of being forced to sell the team in a desperate and leveraged situation if/when Fred Wilpon should pass on.

It is a completely logical financial move that essentially makes the timing and nature of this transaction an offer they can’t refuse. Perhaps if the family handled the baseball operations as skillfully as this plan, they would have already been handed that trophy by now.

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Erik Scheibe

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