Ownership deal highlights difference between Wilpon, McCourt

Mostly it means that calls for Commissioner Selig to step in with the Mets the same way he has with the Dodgers, or accusing him of having a double standard with his good friend Fred Wilpon have mostly been premature. The Mets and the Wilpons might be in financial trouble, but for the most part they’ve gone about trying to shore up their short-term issues in a responsible way by seeking to sell a stake in the team. They’ve done that now, and not only is this a great deal for Einhorn, it’s a great deal for MLB and the Mets franchise. I can only assume this will alleviate most of the Mets’ cash flow problems in the short run, while insulating the franchise itself from associate risk in the long run.

Why? Because Wilpon is putting the risk on himself. If things don’t go as planned and the Wilpons aren’t able to return Einhorn’s investment, then Wilpon simply has to sell more of his stake to Einhorn and lose his majority owner status.…

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McCourt and Wilpon in very different circumstances.

Before anyone starts, this post is not about blogger Chass, I promise. He just happened to succinctly sum up a question a lot of people have been asking about the difference between the Mets and the Dodgers.

It is pretty easy to see a bit of hypocrisy and corruption on the surface here. Selig is obviously embarrassed and infuriated by the McCourt’s and clearly want them out of baseball, and his friendship with Wilpon is well documented. Given that, it’s easy to see the discrepancy in terms of Bud giving preferential treatment to his friends. But once you dig a little bit below the surface, I think the situations become pretty different.

In the case of the Dodgers, the basic financial situation is as follows; the McCourts are financial hucksters who have built a fortune on a ton of leverage. They basically leveraged their way up to buying an asset with a large revenue stream, and then took as much of that revenue as they could for themselves to finance a ridiculously opulent personal lifestyle.…

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Midnight Tweets (updates on Gardner, Wilpons & very cool Mariano/Mettalica vid)

(A daily recapping of the news and notes via Twitter that may be of interest to Yankee fans and baseball fans alike)

From WFANs Sweeney Murti Plixi page

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Things Go From Bad to Terrible for the Wilpons

When the Mets negotiated their larger contracts with star players — complex deals with signing bonuses and performance incentives — they sometimes adopted the strategy of placing deferred money owed the players with Mr. Madoff’s investment firm. They would have to pay the player, but the owners of the club would be able to make money for themselves in the meantime. There never seemed to be much doubt about that, according to several people with knowledge of the arrangements.

[...]

But Mr. Wilpon involved more than his team with Mr. Madoff. He also encouraged certain friends to invest.

[...]

“The numbers were always going up and never going down,” Mr. Tischler said. “I was withdrawing $65,000 to $70,000 a year from my Madoff accounts. They were part of my living expenses.

“It was terrific,” he said, “until the day of the disaster.”

[...]

“The relationship between Fred and Bernie became closer and closer because Bernie was returning more and more to Fred in terms of his investments while Bernie is getting exposure from Fred and Saul,” said Jerry Reisman, a lawyer in Garden City, N.Y., who has represented 10 or so commercial real estate investors who lost a total of some $150 million to Mr.

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Wilpon’s insistence on selling only a non-controlling interest is going to be tested

I’ll turn back to the Chass article which also gets at the kernel of why control is required, or at least attainable:

Why would anyone buy, at a high price, a minority interest and be partners with Fred and his son?” asked a lawyer who has been involved in baseball. [...]

Jeff Wilpon, the Mets’ chief operating officer, would be the first member of the family to run the Mets after Fred is no longer active. But Jeff is also a potential problem for the family. “Most buyers won’t want anything to do with Jeff Wilpon,” the lawyer said. “He’s a light weight and has a bad reputation. I can’t imagine a buyer not wanting an option to buy him out when Fred dies.”

Jeff Wilpon is typical of many sons of wealthy owners. They are in their positions only because their fathers own the teams, having done nothing to earn their jobs and exhibiting a lack of baseball knowledge.

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Wilpons’ integrity in question?

Chass continues:

It’s the possibility that Wilpon knew or should have known that Madoff was running a Ponzi scheme that has prompted the trustee to seek more money from the Wilpon entities than they gained from their investments.

If Wilpon knew something wasn’t right about the Madoff operation and failed to alert authorities, he could be held liable for losses suffered by other investors Madoff swindled.

“That’s a devastating allegation,” the lawyer said. Noting that the trustee’s lawsuit was filed under seal at the request of Wilpon’s lawyers, he added, “The seal is another reason why Wilpon has to settle. The reason we want to see what is sealed is the same reason Wilpon wanted it sealed. There must be serious allegations that Wilpon did some bad things.”

The most creative aspect of Chass’ piece is the solution he proposes (not that I think it’s possible or even likely):

There are plenty of wealthy people, in New York alone and especially Mets fans, who could make that kind of investment, but [Irving] Picard [the trustee for the victims of Madoff’s massive Ponzi scheme] is closest to the situation and should get the first shot at becoming Wilpon’s partner, particularly because part of the money he would be investing would be coming from Wilpon himself.

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