Greenlight Capital Inc. President David Einhorn is in exclusive negotiations to buy a minority stake in the New York Mets for $200 million.
Einhorn said on a media conference call that he wouldn’t have a hand in operating the money-losing Major League Baseball franchise. The Mets, in a statement, described Einhorn as a “preferred partner” and said a final agreement is expected by late June. Any sale would require approval from Major League Baseball.
“This is something of great personal interest,” said Einhorn, 42, who grew up in New Jersey as a Mets fan. “The Wilpons remain in control of the team. That’s the way everyone should view it. I look forward to working with them.”
Fred Wilpon, the Mets chairman and chief executive officer, said in a statement that Einhorn’s investment “immediately improves” the franchise’s financial position. The Mets’ owners are attempting to pay off debts and resolve a $1 billion lawsuit by the trustee representing people who lost money in the Ponzi scheme run by Bernard L. Madoff.
The Mets are carrying $427 million in debt and could lose as much as $70 million this year, Wilpon told Sports Illustrated in a story this month.
“David’s intelligence, integrity and success in both business and civic affairs provides us with another perspective in evaluating what is best for this organization and our fans,” Wilpon said. “We welcome his input.”
New York-based Greenlight Capital manages $7.8 billion in assets. Einhorn said his partnership with the Mets is a personal investment unrelated to funds managed at Greenlight.
Einhorn said he lived in New Jersey until he was 7 years old and in 1975 dressed up in a homemade Mets’ jersey for Halloween. He then moved to Milwaukee, where he was “eventually won over” by the Brewers and one of his closest friends lived next door to Bud Selig, now Major League Baseball commissioner.
“If we hit it really, really far, it would go into the Seligs’s yard and it would be a home run,” Einhorn said. “So the Seligs have been familiar to me for a long time.”
Einhorn said baseball remains one of his passions. He now lives in Westchester County, New York, where he has coached his daughter’s recreational league team, and yesterday ended his presentation at the Ira Sohn investment conference with the words, “Go Mets.”
Einhorn said the opportunity to become a part owner of the Mets is “exciting beyond my wildest childhood dreams.” He said he considers this a long-term investment and isn’t worried about the team’s financial situation.
“I can’t say I have any particular concerns in this area,” said Einhorn, who declined to disclose specifics about his agreement. “I do expect financial fortunes of the team to improve over time.”
Trustee Irving Picard, who is liquidating Madoff’s business, is seeking to recover $295 million in alleged phony profits made by Sterling Equities Inc., the team ownership group that Wilpon and Mets co-owner Saul Katz set up, and as much as $700 million in principal. Wilpon and Katz have said they were duped by Madoff and are seeking to move the suit to district court from bankruptcy court, today asking a federal judge in New York whether Picard has a right to sue them.
The team was valued at $747 million when Forbes magazine released its annual list of franchises in March. That’s a drop of 13 percent from last year’s valuation by Forbes, which said the Mets had a negative operating income of $6.2 million in 2010. The Mets needed an emergency loan of $25 million from MLB last November.
The financial challenges led Wilpon to announce in January that the Mets had hired Steve Greenberg, a managing director at Allen & Co., to seek investors for a 25 percent stake in the club. The owners later said they would sell up to 49 percent and Sports Illustrated reported that 36 candidates sought information about a possible stake. Einhorn said he contacted the Mets’ investment bankers after a newspaper story in January that the team wanted to sell a minority interest.
“From the very first meeting with Fred, we just hit it off,” said Einhorn, adding he wasn’t interested in owning a stake in SportsNet New York, the franchise’s television network. “I explained what my interest was as a baseball fan. It’s been a very smooth, productive relationship.”
The Mets have struggled on the field and in the stands in recent seasons. Attendance has slumped at 3-year-old Citi Field, which cost $800 million to build, and the Mets haven’t made the playoffs since 2006 even with a combined payroll surpassed only by the New York Yankees and Boston Red Sox.
The Mets’ attendance has dropped to 28,565 this season, down from 38,941 during their inaugural 2009 season at 41,800-seat Citi Field. New York has had a losing record the past two seasons and is 23-25 this year, 6 1/2 games behind the Philadelphia Phillies in the National League’s East division.
Wilpon criticized the only three players in the Mets’ starting lineup who have been All-Stars -- third baseman David Wright, outfielder Carlos Beltran and shortstop Jose Reyes -- in a New Yorker magazine story this week. Wilpon, who bought the Mets with Katz in 2002 for $391 million, apologized to them days later.
“Baseball is a tough sport,” Einhorn said. “Over time, there’s going to be losing seasons and tough seasons, winning seasons and hopefully championship seasons. I hope to experience all of those.”