There are some things that, once you see/read/hear them, you instantly know every other alternative has been considered and there’s no other alternative. The sick entering hospice care. The Angels trading for Vernon Wells. Ever since the Madoff news broke, the Wilpon’s claimed the Mets organization was largely unaffected by the scam. And now, the Mets are hiring investment bankers as they are pursuing minority investors, aka “strategic partners”:
The Wilpon family, stung by losses and litigation stemming from convicted swindler Bernard Madoff’s Ponzi scheme, is considering selling a minority stake in the the New York Mets to infuse cash into the organization.
Principal owner Fred Wilpon and chief operating officer Jeff Wilpon announced Friday they had hired Steve Greenberg, managing director of Allen & Company, to explore “potential options including the addition of one or more strategic partners.”
Color me concerned. And here’s what made me chuckle:
The Wilpons added that regardless of the outcome, they intend to maintain the majority, controlling interest in the Mets.
Let’s get one thing straight: The Metsies might want to keep the team, or rather control of the team, but if there’s a person/group out there with the resources, you can be sure that they will make a run at outright ownership of the organization. Selling a minority interest, say 30-40%, will require more than $250 million dollars, according to Forbes valuations (via BoB). I am not sure how many singular groups will have an interest in forking over that much cash without control. Now, if the Wilpon’s are considering cutting this into bite-sized pieces (<5% each), maybe there are enough people interested. There will be more to come, to be sure.
[Note: HBT has the full PR here]
This is pretty far from the area of my financial expertise. But Jason, if what you're suggesting is that the Wilpons will be unable to raise money AND retain control of the Mets, I agree … so long as the Mets are trying to raise a serious amount of money. There are a couple of rules of thumb here, but probably the most important rule is that when it comes to a distressed business, new money is more powerful than old. I would expect that the "new money" here would seek control in some fashion, or would structure a way to take control if the Mets fail to achieve specified financial benchmarks.
Problem is, I think that a change of control of the Mets requires approval of The Commissioner of Baseball. The Mets' money-raising effort may have a few twists and turns before it's over.