Selig didn't inform exec. committee of $25M Nov. 2010 loan to Wilpon until Jan. 2011-report
- the club has faced cash shortfall issues for at least a year. "...
- The direct intervention of Commissioner Bud Selig to help sustain the operations of the franchise — confirmed by the Mets on Friday — is perhaps the most striking evidence yet of the financial distress that for many months has plagued the team’s owners, Fred Wilpon and Saul Katz....
The Mets have exhausted baseball’s standard bank line of credit, tens of millions of dollars that Mr. Selig and the sport’s owners make available to teams for a variety of reasons in the course of any year. The owners also have more than $400 million in debt on the team. Thus, the additional money provided by Mr. Selig — done in secret last November — might have been crucial in keeping the club functioning. Three weeks ago, after months spent denying that they were in any significant financial trouble, Mr. Wilpon and Mr. Katz announced that they were willing to sell 25 percent of the club, which is valued by Forbes magazine at $858 million. In recent days, the men indicated they were willing to sell even a larger share of the team, but they have insisted they do not want to give up majority ownership.
Mr. Selig’s decision to give what amounts to extraordinary assistance to one of the sport’s most prominent and highly valued teams — one owned by Mr. Wilpon, a man Mr. Selig has long regarded as a close personal friend — could anger other team owners, who might wonder why their money is being used to rescue a team with a $140 million payroll.
Mr. Wilpon, in Florida for spring training, said Friday that he would not talk about the Mets’ finances. Asked directly whether baseball had been assisting him, Mr. Wilpon walked away, saying he did not want to discuss the team’s finances with a reporter.
- Later Friday, after being informed The Times was preparing a story on baseball’s financial assistance, the Mets issued a statement:
“We said in October that we expected to have a short-term liquidity issue. To address this, we did receive a loan from Major League Baseball in November. Beyond that, we will not discuss the matter any further.”
One team executive in baseball said the Mets had not yet repaid the loan, and that Selig had only informed baseball’s executive committee of the loan
- last month.
The lawsuit filed by Mr. Picard in federal bankruptcy court in Manhattan in December portrays the Mets as something of a financial weak sister to Mr. Wilpon and Mr. Katz’s profitable real estate and television properties, regularly needing cash infusions from the other businesses to compete in the National League East.
Mr. Selig, who has been commissioner for nearly two decades, has broad powers to help prop up ailing franchises or to effectively take financial control of them, if, for instance,
- he fears they could go bankrupt.
“The fact that the loan is coming from baseball would be a jarring event because, as with the Texas Rangers, the league is effectively a lender of last resort,” said Marc Ganis, a sports industry consultant. “It would indicate the team cannot get loans from normal commercial sources, which could be taken as a sign of very significant problems.”
Mr. Selig, in making these kinds of extraordinary loans, typically would use baseball’s line of credit with several banks, including Bank of America. It is not known what interest rate the Mets were charged by baseball.
- The decision by Mr. Selig to assist the Rangers last year angered the owners of some rival teams. The Rangers eventually used some of the money to obtain the pitcher Cliff Lee, who then led the club to its first World Series appearance.
Baseball, in involving itself with struggling franchises, enjoys a powerful status. In the event of a bankruptcy, it gets its loans repaid first — ahead of banks, and perhaps even Mr. Picard, the Madoff trustee. The banks holding hundreds of millions in loans to Mr. Wilpon and Mr. Katz, then, might be distressed to learn of Mr. Selig’s intervention. It is possible, however, that Mr. Wilpon would have had to inform the banks of the existence of the loan in November.
According to one person briefed on baseball’s involvement with the troubles of the Mets, the club has faced cash shortfall issues
- for at least a year.
If the Mets are in such financial straits, it raises real questions about their ability to sign talented players and avoid another season of poor performance and disappointing ticket sales. While they are committed to a payroll of roughly $140 million — about what it was a year ago — they spent very little this off-season, despite a poor showing on the field last year.
The efforts by Mr. Wilpon and Mr. Katz to sell a portion of the club have generated modest levels of interest. Fewer than 12 potential buyers have applied to Major League Baseball for the right to examine the finances of the Mets, a necessary
- first step before bidding for the team."
2/25/11, "Baseball gave $25 million lifeline to Mets," NY Times, Michael S. SchmidtTweet Stumbleupon StumbleUpon