Mets: Why Steve Cohen’s bid to become the new owner still has its bumps

New York Mets fans are excited for Steve Cohen to take over as the owner. However, nothing is official yet and there’s plenty of red tape to cut through.

Billionaire hedge fund titan Steve Cohen lifted all of us New York Mets fans’ spirits sky high a few weeks ago when it was announced that he and the Wilpon family were in serious negotiations to transfer the controlling rights and a majority stake of the baseball team within the next five years.

Needless to say, this news is nothing short of a Christmas miracle for us Mets fans, who have had to endure decades of either costly acquisitions that went nowhere or who have seen our ball club spend frugally to the point that the team could never reach its truest potential.

But this time, it looks like the tides may have turned in our favor with the recent developments; or maybe not.

According to last week’s article in Forbes magazine regarding the details of the acquisition, Cohen may be able to purchase up to 79% of the Mets team rather quickly and still may not have full control of the franchise. The Mets are believed to have roughly $350 million in debt still owed for various acquisitions and signings through this past decade, and the club itself is valued at $2.25 billion.

According to the details of the deal hammered out by both parties, Cohen would be able to cut a check for $1.6 billion and be given an immediate 75% stake into the Mets team as a result. This can happen in as little as a year from now should the hedge fund titan decide to go pony up his money immediately.

The only problem is, according to the terms of the contract and the rules of Major League Baseball, Cohen would still be considered a “limited partner” even if he has 75% to 79% control of the Mets, as the Wilpons will still be the team’s official CEO and COO up until the end of the 2024 season. This stipulation is stated in the deal’s details itself.

But that in and of itself shouldn’t be of any concern, as the positions of CEO and COO will probably be in title name only for the Wilpons over the next five seasons. We can safely assume that anyone who invests $1.6 billion of their own fortune to run any sort of business more than likely will be calling the shots the instant that large monetary transaction goes through.

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Whether it’s behind the scenes or in front of the media cameras will merely be semantics at that stage and won’t mean much.

But the part that should be concerning for us Mets fans is the MLB rule that states that all future potential owners of Major League baseball teams must have at least a three quarters approval vote from the other MLB owners once up to 80% of a team is bought.

Only then can new buyers officially have the controlling rights over a team switched to their hands. Anything less than 75% of the other MLB owners’ approval votes and the deal immediately falls by the wayside.

To say that this rejection scenario would be considered a nightmare for us fans would be the understatement of the year. To have all our hopes for a better run organization and to finally be major buyers of top tier free agent talent could be dashed on a voting approval rule that’s to take place at the end of the 2024 season. I honestly don’t even want to fathom how this would make me feel right now.

Short term, this means we could see major offseason player free agent spending as early as next Winter, should Cohen purchase a large majority stake in the franchise between now and then. After all, it will be his money that the Wilpons go out and start buying talent with on the open market. So there should be little motive for being thrifty. But long term, all those potential acquisitions and high priced contracts could be sold back off if the owner’s vote doesn’t go through after the 2024 season.

And that scenario has happened before in Major League Baseball.

Back in 2012, former agent Jeff Moorad bought 49% of the San Diego Padres with hopes of being able to buy the remainder once he was voted in by the other owners.

Unfortunately, there were eight who didn’t approve of him becoming the new owner of the Padres due to bad past business partnership deals with him and the owners kept him out.  A similar scenario also would have happened in 2012 if presidential nominee Jeb Bush were to be named the “controlling” investor in a group deal to buy the Miami Marlins.

That deal quickly fell apart as many of the other owners were having reservations selling to high powered political figure at the time. Eventually, Derek Jeter became the new “controlling” investor a few years later, which led to an approval by three-quarters of the other MLB franchise owners to sell him and his investment group the Marlins franchise.

Keep in mind that Steve Cohen has a bit of a checkered past in his current occupation that has allowed him to amass the $9.6 billion fortune he currently sits on.

Back from 2013 to 2017, the SEC had sought to have Cohen banned for life from the securities industry for failing to supervise hedge fund employees who were involved in insider trading practices. He eventually reached a civil settlement that restricted him from serving as the supervisor of his own hedge fund until the end of 2018. The other owners may look back at this scandal and think twice before giving him their majority vote of approval five years from now.

After all, the financial suffering the Mets’ owners took after the Bernie Madoff scandal a decade ago still bore negative ramifications up until 2015. The other owners could look at Cohen as another liability to Mets franchise financially down the road should another legal financial scandal come down on him and his assets take a major hit from the U.S. government or the SEC.

But for now, we can only hope Mr. Cohen both keeps his nose clean in his business practices going forward and simultaneously butters up to the “owners club” who hold his ownership fate in their hands. God knows Fred Wilpon isn’t getting any younger, and in five years he may sell to the first decent offer that comes along should Cohen get rejected.

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And the last thing we need is another owner with a new name but the same 40+ years of frugality and mediocre to bad signing decisions to run our beloved franchise.