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February 6, 2011

One-Hoppers

Meet the Mess

by Neil deMause

Ever since word first broke two years ago that the Mets' owners, Fred and Jeff Wilpon, had been heavily invested in Bernie Madoff's Ponzi scheme, I've been getting occasional questions along the lines of "What will this mean for the Mets' payroll?" And my reflexive answer has been: "Not much." Just because the Wilpons' personal bank account was taking a beating, my reasoning went, that shouldn't change whether it made financial sense to sign a top-tier free agent to try to boost wins and thus ticket sales—any more than it mattered to the Yankees when George Steinbrenner's ship-building business went kablooey. And, indeed, the Madoff scandal didn't stop the Mets from throwing lots of money at Jason Bay in the hopes that he'd get Met fans dreaming of a World Series. (That Bay ended up reminding them of a different 1980s flashback is another story.)

All that changed, however, with the news that the trustee trying to recoup Madoff's stolen money is seeking to have the Wilpons return up to $1 billion of allegedly ill-gotten gains. This is effectively a cash call, and—not unlike the McCourt divorce battle unwinding in Los Angeles that has helped hamstring the Dodgers' spending—is likely to be a very big deal indeed. It's the difference between finding out that your 401(k) is worth half as much as you thought and abruptly finding you've maxed out your credit card: Neither is much fun, but only one is going to make you go on an all-ramen diet.

Ultimately, though, Madoffgate could be less harmful to the Mets franchise than L'Affaire McCourt has been to the Dodgers, if only because the money at stake is so stupifyingly huge—one billion dollars, people—that it seems likely that the Wilpons will have to very quickly move to sell all or part of the team. The Wall Street Journal's Matt Futterman says if they lose the Madoff suit, the Mets might not even make it through the year with the cash they currently have on hand, meaning that any ownership turnover would have to happen fast—too fast, presumably, for the Wilpons to bother with any interim fire sale of the kind some fans are hand-wringing about. (And that's even if you think the Mets have that many assets they could strip; given their outsized contracts, Carlos Beltran and Oliver Perez are less candidates for a quick cash-in sale than for being freecycled.)

The question Mets fans should be asking, then, isn't what this will mean for payroll, but who'll be the next captains of the Flushing ship? I have zero inside scoop here, and on the whole feel like it's not worth worrying about which particular rich guy is the one bankrolling your team, with one exception: Cablevision, which has already tried to buy both the Mets (and the Yankees—the Dolans aren't choosy), and would no doubt love a second shot at them.

For New Yorkers familiar with Cablevision's stewardship of the Knicks and Rangers, the prospect of them landing the Mets as well brings up all kinds of nightmare scenarios, up to and including using control of the Mets' SNY cable channel to try to extort fans into signing up for their cable service—remember, this is the company that decided to hold an entire newspaper hostage for similar reasons. Or they could just decide to make Isiah Thomas their third-base coach. Either way, it wouldn't be pretty.

A Cablevision takeover of the Mets is probably unlikely: Consider that Bud Selig already arm-twisted the Red Sox to take a lower sale price in order to keep James Dolan from ending up in the MLB owners' club. And there are sure to be plenty of other rich guys around who'd love to land one of the three most valuable teams in baseball. Depending on how successful the Madoff trustee is with his lawsuit, and how soon the Wilpons run out of cash, Selig might need to scramble a bit to ensure the whole mess doesn't end up in bankruptcy court, where his superpowers to decide winning bids would have less sway. But given past precedent, it's always a safe bet that Bud will find a way to keep the wrong lizard from getting in.

Neil deMause is an author of Baseball Prospectus. 
Click here to see Neil's other articles. You can contact Neil by clicking here

11 comments have been left for this article. (Click to hide comments)

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BP staff member Jay Jaffe
BP staff

A couple of points:

1. I don't see the resolution to this as likely to come particularly quickly. I expect the Wilpons to fight tooth and nail in the courts, which could take years to resolve.

2. I'm not sure I see this a less harmful to the Mets' franchise than the McCourt divorce has been to the Dodgers. With the McCourts, you've got two rich, spoiled assholes taking money out of the team and fighting each other in public, but basically, the peripheral damage to others is relatively small, and there's no criminal wrongdoing at the center off the case.

The Madoff situation, on the other hand, has wrecked lives, and the suit against the Wilpons alleges that they consciously disregarded signs of fraud and that they profited from tainted money. That's a whole lot worse, and probably harder to overcome on the PR front.

Feb 06, 2011 09:49 AM
 
BP staff member Neil deMause
BP staff

I guess I'm making a distinction here between damage to the Mets franchise and damage to the Mets ownership. The Wilpons' name is going to be mud, no doubt, but if a sale happens relatively quickly after the lawsuit is resolved (whenever that is), then the new owners could very quickly absolve themselves of the Madoff stench and be anointed saviors of the Mets by the New York media.

I don't see a scenario, in other words, where the Mets have to trade David Wright or something in order to make payroll. There's no crisis until the lawsuit is resolved, and once that happens, they have to sell in relatively short order. So there's less risk of a drawn-out McCourt-style doldrums, anyway.

Feb 06, 2011 10:17 AM
 
BP staff member Jay Jaffe
BP staff

"Quick sale" isn't a term that exists in the MLB vocabulary, and because all of this is going to drag on for awhile, it's going to damage the Mets' brand, affecting both the Wilpons and the general perception of the team inside the game and out for the next year or so. I don't see the Mets selling off Wright, but I'd guess Reyes is gone by the end of the year (which may be warranted).

Furthermore, I have to laugh at the suggestion (not yours) that the team would be in a position to sign Pujols if/when he comes up for free agency, or that he'd choose to join this circus, since the chances of a new, controlling ownership being in place by, say, November would seem to be pretty slim. Which is what I mean about the damage to the brand - the ability to attract marquee free agents is part of that.

Feb 06, 2011 12:04 PM
 
ScottyB

The big question is the $ of the settlement. If it is close to the $300M to repay their false profits, the Mets should be able to sell a minority stake and be generally ok.

If the deal includes a punitive component that jacks the amount up near $1B, then they need to liquidate like Tom Hicks did.

Nice bunch of owners Bud has assembled, huh?

Feb 06, 2011 10:58 AM
rating: 0
 
BP staff member Steven Goldman
BP staff

The Wilpons predate Bud--he didn't pick them just like he didn't pick the Steinbrenners or Jerry Reinsdorf or any other old hand.

Feb 06, 2011 11:20 AM
 
Hoff

I almost worry that in fact Isiah becoming a 3b coach is now destiny.

You make a good outline of the situation, but I think you have to look at the clubs offseason. They(we?) didn't spend a dime. Now, their may not have been worthy deals per se, but we also weren't selling. If this is a rebuilding year or not, a lot of the direction depends on the production of beltran bey and reyes, both in the possibility of making a run and trading for value.

Still, despite being faced with a situation where there wasn't enough available pitching to guarantee a contender the inaction has to be in part affected by this confusion. The wilpons must have known about this. The only other explanation of the saving is that we're doing a weird rebuild, or are holding out on picking up big contracts until next years 1b free for all is done. Assuming no madoff issues, the mets, who will be shedding plenty of payroll, would probably be the best candidates to sign pujols. Ike davis be damned. funny that 300 million seems to be one the figures discussed, cause thats about what its going to take to sign him. And he's worth every damn penny. Here's hoping the wilpons find a way to make it happen.

Feb 06, 2011 11:19 AM
rating: 0
 
ScottyB

My guess (based on no insider info at all, so take it for what it's worth (not a lot)) is that Sandy and company knew there may be some small fallout from, but nothing like this.

Sandy also probably looked at the current situation and the $60M+ coming off the books next year (Beltran, Perez, Castillo, KRod (I hope), Reyes), and saw this as a year to stuff the front office full of great assistants (DePodesta, Krivinsky), fix the scouting and development systems and make only minor moves. This would then set up making a few big signings next year.

It looks increasingly like the Mets will now probably take the savings at the end of the year and keep it, instead of reinvesting it. blurg.

Feb 06, 2011 11:51 AM
rating: 0
 
BP staff member Neil deMause
BP staff

I agree with you, but I really doubt that the Mets' offseason moves (or lack thereof) have much to do with the Madoff situation. It's more about the Ollie Perez/Beltran/Reyes/Castillo situation. Once some of those big contracts come off the books, the Wilpons will be more willing to open their wallets again.

(And yes, I've advocated in the past that teams should just treat salaries like that as sunk costs and move on, figuring that signing a genuinely good player will pay off in increased ticket sales, playoff money, etc. But it's pretty clear by now that most owners can't think beyond "I'm picking a payroll number, and that's how much money my GM has to spend, for good or ill.")

Feb 06, 2011 11:53 AM
 
BP staff member Neil deMause
BP staff

ScottyB jumped in - I was responding to Jesse. I really don't see what keeping the savings from the expiring contracts would get the Wilpons - even if they haven't sold by next winter, $60m isn't going to save them if they do lose the lawsuit - but I realize these kinds of decisions often aren't rational.

Feb 06, 2011 19:05 PM
 
amazin_mess

If Dolan takes over the Mets, I'm finding another team.

Feb 06, 2011 11:23 AM
rating: 0
 
amazin_mess

As far as Pujols on the Mets, it's all about the money. Should Pujols hit free agency and the Mets offer more than anyone else, they'd have a great shot at signing him.

Feb 07, 2011 03:10 AM
rating: 0
 
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