Different players, same game. On November 6, 2020, the Wipons’ reign of terror gave way to Steve Cohen, the richest owner in baseball and lifelong New York Mets fan from Long Island.
Gone, fans thought, were the days of financial scandals and sifting through the bargain bin for free agents.
Bernie Madoff no longer held the franchise hostage. The Mets were poised to finally resume operations as a big market juggernaut.
The internet versus Wall Street enters the Mets world
By now, you’ve probably immersed yourself in the madness that has transformed the global financial market. The insanity stems from a revolution developed within Reddit, the popular message board site that touts itself as, “the front page of the internet.”
Over the past several weeks, reddit posters – “redditors” – have developed strategies to profit from buying up stock from GameStop and other poorly performing companies. The plan quickly gained momentum and has since caused an unprecedented financial situation.
And yes, somehow the New York Mets find themselves in the middle of it.
I will leave the most complicated details to the professionals, but the foundation for the chaos was laid by hedge funds who had attempted to profit off the companies’ failures.
Dubbed “shorting” or “short selling,” investment firms, most notably Melvin Capital Management, wagered billions in predicting that stock prices for companies like GameStop would decrease. Short selling is a common practice among more sophisticated investors and is perfectly legal.
If correct in their prediction that GameStop stock would plummet, a seemingly safe bet for a brick-and-mortar video game company that has been hemorrhaging before and during the pandemic, Melvin would earn significant profits.
However, due to the coordinated effort on Reddit, regular people, most of who had little to no investing experience, exploited the short selling effort and gobbled up GameStop stock, increasing the stock price by over $300 in about one week.
As a result, Melvin Capital and other short sellers suffered an estimated $19 billion in losses.
Melvin Capital is headed by Gabe Plotkin, friend and former employee of Steve Cohen. On Monday, Cohen contributed an additional $750 million to his existing investment in Melvin, attempting to cushion the company’s epic financial fall.
While seemingly legitimate, Cohen’s role is problematic because the situation has led some to question whether this has hindered his ability to be an effective team owner.
Cohen suspected of wrongdoing by investors, celebrities, financial professionals
Cohen’s company, Point72 Asset Management, had $1 billion invested in Melvin Capital prior to this week’s events. Point72 has suffered 15% losses this month mostly due to its investment in Melvin and has since nearly doubled its stake in the struggling hedge fund.
While Cohen’s position in a struggling company is worrisome, the bigger issue is that his actions raise legitimate doubt about his morals and judgment.
On Thursday, the popular stock trading app Robinhood, as well as other platforms, prohibited users from buying GameStop stock.
The restrictions sparked incredible outrage from investors, celebrities, and politicians on both sides of the aisle. This has already led to a class action lawsuit and a Securities and Exchange Commission (“SEC”) investigation.
Some high profile figures, most notably Barstool Sports czar Dave Portnoy, blasted Cohen, accusing him of directing platforms to limit trading and even calling for criminal charges.
Portnoy himself is a controversial figure and his reaction was done, at least in part, to solicit views to Barstool. Still, the stock trading restrictions undoubtedly benefited Cohen’s financial interests.
Cohen publicly denied wrongdoing and engaged in a tense, but civil, exchange with Portnoy. He would eventually deactivate his Twitter account citing threats to his family in a statement:
"“I’ve really enjoyed the back and forth with Mets fans on Twitter which was unfortunately overtaken this week by misinformation unrelated to the Mets that led to our family getting personal threats,” Cohen said in a statement. “So I’m going to take a break for now. We have other ways to listen to your suggestions and remain committed to doing that. I love our team, this community, and our fans, who are the best in baseball. Bottom line is that this week’s events in no way affect our resources and drive to put a championship team on the field. #LGM!”"
Threats to one’s family are inexcusable and Cohen made the correct decision in deactivating his account.
But one cannot deny that the events leading up to Cohen’s Twitter exit raise serious concerns.
Mets ownership again thrust into the controversial spotlight
Fundamentally, there is nothing unlawful about Cohen contributing his own money to a particular company. Judging the bare facts, none of Cohen’s actions will land him in court.
However, there is another court – the court of public opinion – that has already begun building a case against him.
There are also the fans that shudder as they are forced to remember the Madoff scandal that crippled the franchise for over a decade. Many already are concerned that history may be repeating itself.
Small-time investors are also justified to question Cohen’s actions. The SEC sued Cohen’s previous firm, eventually costing him nearly $2 billion in fines.
Cohen’s past casts legitimate doubt on his integrity. Now, he is connected to another controversial company, one that has already lost billions and is suspected by the Twitter mob of using its influence to manipulate the stock market.
Cohen exercises poor judgment on and off Twitter
The Wilpon/Madoff fiasco and Cohen mess are vastly different situations.
Cohen’s actions very likely will not affect team operations. He has the capital and acumen to invest how he wants while not jeopardizing team success.
But, unlike the Wilpons, it isn’t Cohen’s business sense that puts the franchise in danger.
Rather, it is his cockiness, poor judgment, and attraction to controversy that have officially lit the fuse on yet another ticking time bomb in Flushing.
Cohen’s first, now deleted statement, regarding the situation was ill-timed and immature:
“Tough crowd on Twitter tonight,” Cohen tweeted Wednesday. “Hey stock jockeys keep bringing it.”
On Thursday, Cohen doubled down, defending himself against Portnoy and once declaring that he was “just trying to make a living like (Portnoy).”
Again, there is no issue with Cohen strictly contributing his own money to another company. He is free to continue to do business during his Mets reign.
But it is alarming that a man supposedly smart enough to amass a $14 billion fortune would exercise such bad judgment while also being entrusted to pilot a big-market franchise.
At best, Cohen’s role in all of this is a public relations nightmare. At worst, he is a criminal.
Criminal charges against Cohen are unlikely, but his checkered past rightfully still raises questions.
He has lost the benefit of the doubt and owes fans and investors legitimate answers. He has self-casted himself as a villain in the ongoing David versus Goliath struggle between Wall Street suits and the common people.
Cohen had to know that his contributions to Melvin would be met with ire. It is also puzzling that his actions made the news so quickly, almost as if Cohen wanted the fans to know that he is still the rich, powerful puppet master that can get the world to do what he wants.
His actions and subsequent social media activity portray a man that is self-interested and tone deaf. He reminded his loyal subjects that he is in charge and that they are at his mercy. He welcomes the heel role and delights at patronizing the public.
It is the absolute last thing the Mets franchise needs. The tumultuous Wilpon era is still fresh. The Mets have played zero games with Cohen as the owner and already he has made, at least, controversial financial decisions. He has unnecessarily thrusted the team into a non-baseball story that invites the public to once again roll their eyes at the franchise.
Boomer Esiason, former NFL quarterback and current co-host of WFAN radio’s weekly morning show, Boomer & Gio, eloquently summed up Cohen’s malfeasance:
"“The other thing is, he also put out another (tweet): ‘Hey stock jockeys, keep bringing it.’ So he’s discounting the Reddit WallStreetBets people as ‘stock jockeys’ and taking shots at them like he knows what’s going on because he’s sitting in this hedge fund king chair making all these decisions. I hate that. That’s why, I told you this morning when I came in, I said, ‘You know what? I swear to God, I’m not going to go to another Met game until I find out exactly what’s going on here.’ This actually makes me sick to my stomach.”"
Esiason highlights the tense situation perfectly. Cohen’s tweets show that he likes letting people know that he is in charge. He likes prodding at the little guy. It is a mindset that works on Wall Street but it serves no good purpose as a baseball owner.
Less than two weeks ago, the Mets fired general manager Jared Porter a little over a month into his tenure for harassing a female coworker. Just as the fire from that story was doused, Cohen thrusted the Mets into another off-field controversy, while subjecting Mets fans to more embarrassment and suspicion.
The stock market and the Mets should never be discussed in the same article. If team ownership gets involved in stock trading, its actions should not make national news.
Cohen should have realized that and made sure that his contributions were kept out of the spotlight or at least have prepared to proactively control the narrative. Doing neither was foolish.
The situation also adds more fodder to those like White Sox owner Jerry Reinsdorf that previously opposed Cohen’s acquisition of the team.
Cohen should have had the awareness to address his contributions immediately. Cohen chose to buy a baseball team in New York City, a role that comes with public scrutiny that is not experienced as a stock trader. He needs to realize that his business actions that had previously gone unnoticed will be investigated for how they may affect team operations.
Instead, figures like Dave Portnoy brought Cohen into the spotlight and formed the narrative of a shady, possibly criminal baseball owner. And worse is that the narrative is justifiable.
As a fan himself, Cohen should know how sensitive the fanbase is to its owner’s business decisions. Whether fair or not, Cohen inherited a team whose previous leaders sacrificed success for personal profits. There is zero tolerance for a repeated situation.
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This is not a good look for Steve Cohen. It is a serious lapse in judgment combined with unchecked arrogance. While it probably won’t affect the overall product on the field, Steve Cohen has proven that he is not the perfect owner after all.