New York Mets Deny Report Einhorn Could Gain Control for Additional $1
The New York Mets denied a report that Greenlight Capital Inc. President David Einhorn could gain control of the franchise for $1 more than the $200 million he’s agreed to invest for a minority stake.
Einhorn, 42, in May agreed to buy 33 percent of the franchise for $200 million from the Mets’ owners, who are attempting to pay off debt and resolve a $1 billion suit by the trustee representing people who lost money in the Ponzi scheme run by Bernard L. Madoff.
As part of the agreement, Einhorn has an option to own 60 percent of the franchise in three years, several media organizations, including ESPN.com, reported. Fred Wilpon, majority owner of the franchise, also could opt to return the $200 million, though Einhorn would continue to hold a stake in the team.
If Einhorn were to gain control, the price to raise his interest in the team to 60 percent would be $1, bringing his total investment to $200,000,001, Forbes reported yesterday.
“Like many other media reports speculating on the terms of a potential agreement, yesterday’s was simply false, too,” the Major League Baseball team said today in an e-mailed statement.
Jonathan Doorley, Einhorn’s spokesman, declined to comment on the report.
If the Mets returned his initial investment, Einhorn would keep the 33 percent stake, Forbes also said.
Marc Ganis, president of Sportscorp Ltd., a consulting firm in Chicago, called a $1 price to take a controlling ownership position and a 27 percent increase in equity “eye-opening, if true,” though he also said the debt Einhorn would assume as part of such a deal would be significant.
“One has to look at what obligations he’d be assuming as well,” Ganis, who has helped develop dozens of sports facilities, said in a telephone interview. “He would be taking additional risk.”
The Mets are carrying $427 million in debt and could lose as much as $70 million this season, Wilpon, 74, told Sports Illustrated in a May 30 story. The team also owes an almost $43 million payment in lieu of taxes this year on bonds tied to the construction of Citi Field. That payment is part of $1.4 billion due the New York City Industrial Development Agency through 2046, according to the authority’s financial statement.
“He would be on the hook for providing any capital the team needs to service its debt, which is very significant, especially when you take the stadium debt into account,” Ganis said.
The dispute between Wilpon and trustee Irving Picard is being mediated by former New York Governor Mario Cuomo. Wilpon says he is willing to negotiate a settlement on the $295 million in fictitious profits from his accounts with Madoff but not the $700 million he and his partners invested in the six years before the financier was arrested, Madoff told Sports Illustrated.
The $1 deal with Einhorn, if true, “certainly would indicate that Wilpon is putting all his eggs in the beating Picard basket,” Ganis said.
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