Mets Money: New Year, New Financing – Same Problems

Here it is Mets fans, the club’s new bottom line.  On January 4th, a report on Bloomberg.com credited an unnamed source with saying Mets ownership has potentially secured up to $700 million dollars in combined new loans and refinancing on their existing debt and obligations.  The team has made no official comment.  But that doesn’t mean I’m shy an opinion.

If this is indeed the case, further speculation as to how deep in the hole the Wilpons really are is pointless.  For now we (potentially) know.  Consider the Wilpons were over extended even before the Madoff scandal broke, and how a steady flow of sweet, fictitious investment returns is what really wound up funding team operations.  We all understand that very well by now.  But whether borrowing money against Madoff accounts or receiving financing through banks, since the day Fred Wilpon cut Nelson Doubleday a check a decade ago for his half of the team, he has been juggling heavy debt in one form or another.  But good grief, how the sum has grown.  When you factor in the few extra bucks, the $700 million dollar figure is in line with last year’s guestimations which placed the Wilpon’s overall calamity within the $600+ million dollar range.

Feb 19, 2011; Port St. Lucie, FL, USA; New York Mets owner Fred Wilpon talks to manager Terry Collins during New York Mets Spring Training workout at Digital Domain Park . Mandatory Credit: Noah K. Murray/THE STAR-LEDGER via USA TODAY Sports

Far be it for me to be unsympathetic.  But I continue to have a problem when the owner builds a new park, promises the banks, and budgets the future based on arrogant 3.5 million yearly attendance projections, then deems anything less a loss.  The team already projected a $70 million dollar loss built into the 2013 season.  And here’s my problem with Wilpon’s math.  The Mets drew (more like paid and didn’t show up) 2.2 million fans last season.  The same is expected for the 2013 regular  season.  Once upon a time, drawing that many used to be a standard of success.  However in this millennium of new parks, apparently those are distressing numbers.  Truth is, numbers say more and more people are attending baseball games.  Just not in Queens I guess.

As Sandy Alderson continues team building along a 2014 time line, restructuring debt will no doubt give the Wilpons more operational flexibility moving forward.  Sure.  But they will still have to contend with an increasing lack of fan confidence in ownership for at least another season, and even less confidence their debt obligations won’t hinder the team beyond the 2014 season.  For now, Fred Wilpon seems supremely confident he can continue renegotiating debt and running from the real problem at hand, which is he over extended himself a decade ago.  If Fred promised his original Citi Field lenders over three million fans per season, I would like to know what he promised this new lender.  What is supremely clear to all is the Wilpons are relying on their gate related income to get them back in black.

Also ponder how effective last year’s sale of $20 million dollar shares in the club could have been, considering Jeff and Fred each dipped into their own wallets to buy several shares themselves?  In the end, the maneuver bought them one year of operations and perhaps earned them a measure of confidence among prospective creditors for being resilient, and, let’s say it – crafty as well.  Whatever the case, their sell-off worked.  For there is a new, patient, money lender on the hook for a very costly block of cheddar.  But to me, everything spoken here is all voodoo economics at its most basic level, which is stealing from Paul to pay Peter.  They’ve borrowed from banks, against investments, they’ve borrowed from MLB, SNY, and even from themselves.  With their options dwindling, they still managed to somehow find a new enabler.

This takes us back to feeling confident.  I’m not entirely impressed with their ability to sign David Wright because payroll was already scaled back, and Wright will only be pulling in on average, a three-plus million dollar raise.  So to me, re-signing Wright was not a display of financial health, nor a glimpse into the Wilpon’s future.  In the short term, the 2013 season will be a test of fan patience and confidence.  The 2014 season and beyond are much harder to gauge because I feel Mr. Wilpon’s issues no longer involve a competitive team.  This is now purely about money and time.  Crashing the gate this season with three million fans will not change Mr. Wilpon’s situation much.  Over the next three seasons, even a good team will not change his situation much.  He is in fact, in a race against himself.  It has taken ten short years to get to this point.  How much longer can this ownership last before everything implodes upon them?  One would have thought it would have happened already.  But Wilpon/Katz determination is winning the day.  Somehow, their doomsday clock is still ticking.