Mets’ Owners Get ‘Massive Relief’ From Madoff Settlement
The owners of the New York Mets can spend opening day focused on David Wright’s bat and not BernardMadoff’s fraud after agreeing to settle a $303 million lawsuit brought by the liquidator of the convicted con man’s firm.
Fred Wilpon and Saul Katz will pay $162 million as part of a settlement that was announced only minutes before their trial was scheduled to start today in New York.
The deal reached with trustee Irving Picard is a “massive relief” to Wilpon, whose club slashed payroll during the offseason and is scheduled to open the Major League Baseball campaign on April 5 at home against the Atlanta Braves, Leo Hindery, former chief executive office of the Yankees Entertainment & Sports Network, said in an interview with Bloomberg television.
“He can go back to turning his attention to the Mets,” said Hindery, managing director at InterMedia Partners LP, adding that he considers the team co-owner a close friend. “His primary objective was to remove this overhang and get back to playing baseball.”
Wilpon, speaking outside of the courthouse with Katz’s left arm draped over his shoulders, reiterated that neither he nor Katz knew Madoff was swindling clients, and that he was eager to return the focus to the Mets, who are in spring training in Port St. Lucie, Florida.
“The first order of business and our first priority will be getting down to Florida tomorrow, getting to spring training and trying to bring the New York Mets back to the prominence that our fans deserve,” said Wilpon, whose club lost $70 million last season, according to General Manager Sandy Alderson.
Wilpon and Katz will pay the money over a five years beginning in 2016, U.S. District Judge Jed Rakoff said. The agreement was brokered by former New York Governor Mario Cuomo, who was appointed by the bankruptcy court to mediate. Picard alleged that the owners were sophisticated investors and should have known that Madoff was running a Ponzi Scheme. As part of the settlement, Picard dropped all claims that the owners ignored the fraud.
Additionally, Wilpon and Katz won’t have to pay much out of pocket because they’re eligible to share in up to $178 million - - their losses -- from the pool of money that Picard collects from net winners in their Madoff accounts. Those proceeds will be credited toward what they owe. It wasn’t immediately clear how much they would have to pay.
Madoff’s Ponzi scheme cost investors an estimated $20 billion in principal, according to Picard.
The Mets cut payroll during the offseason to about $90 million from about $140 million, the largest one-year drop in major-league history. The club lost shortstop Jose Reyes, last season’s National League batting champion, to the Miami Marlins after he was offered more money and a longer contract.
“I’m sure there’s a great amount of relief in that everyone can move forward,” Joe Bailey, a former chief executive officer of the Dallas Cowboys and chief operating officer of the Miami Dolphins who is now a managing director at RSR Partners, a corporate board and executive search firm, said in a telephone interview. “If you don’t have control over financial assets, it does not allow you to execute the strategy that you have in place.”
The Mets have only two players, pitchers Zack Wheeler and Matt Harvey, ranked among Baseball America’s top 100 prospects. The roster has only a few household names, including the 29- year-old Wright, a five-time All-Star whose production slipped last season, and former Cy Young Award winner Johan Santana, a 33-year-old left-hander who missed last season with shoulder trouble.
Plea to Fans
The payroll and minor-league talent pool don’t bode well for a speedy turnaround from 2011, when the Mets finished fourth out of five teams in the National League East. The club, which won the World Series in 1969 and 1986, last made the playoffs in 2006. Wilpon asked fans to “stick with us.”
“We’ll be there,” Wilpon said. “We have done it before, twice in the 33 years. We will do it again.”
The Mets are seeking a recapitalization from the sale of 10-or-so minority shares, each netting the owners $20 million. The money will be used to repay a $25 million loan from baseball and a $40 million loan from Bank of America Corp.
The Wall Street Journal, quoting two people with direct knowledge of the deals who requested anonymity, reported today on its website that the Mets had closed on the sale of 12 minority stakes in the team for $240 million and used the money to repay those loans from MLB and Bank of America.
Convincing fans to return to Citi Field might be the most important thing for Wilpon and Katz. The owners make money from ticket sales to 81 home games a year. Bondholders get all revenue from luxury suites premiums; some ticket sales from club and premium seats; food, beverage and merchandise concessions; advertising and most of the naming rights; some sponsorships; and parking.
Revenue from the stadium fell 12 percent in 2011 as attendance dropped to 2.29 million, according to Standard & Poors analyst Jodi Hecht. Baseball-reference.com said the Mets’ 2010 home attendance was 2.6 million.
“It takes the stigma away, and fans pay attention,” said Cramer, the director of the Texas Program in Sports and Media at the University of Texas. “With this, I think they would be willing to give the team a break.”
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