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Thanks to Megdal.
Am I going out on a limb in predicting that the Mets will come this close to acquiring a top free agent outfielder this offseason?
Just to get this out of the way before the legions descend arguing that a completely ordinary financial transaction is a sign of the Mets' financial ruin:
1. Debt is a major component of corporate finance.
2. Companies is sound financial shape refinance their debt all the time.
3. Everybody wants to refinance without repaying principal because, who would actually want to repay principal if you could borrow at a decent rate.
4) companies in desperate financial shape should be assumed to remain in desperate financial shape until they show evidence otherwise
To tell you the truth, not really. For one, I think the passage of time without calamity is fairly good evidence that things are going ok. For another, I think the Mets have shown evidence that things are not as bad as they appeared - they raised $240 mil in equity, have engaged in at least 1 refinancing and appear to be on the cusp of another. People (outside of limited classes of investors) tend not too infuse all that much capital in a business if the ship is sinking.
Team owners remain confident that with the value of the team rising, they will not need to pony up any cash during the refinancing
So long as revenue is declining, with no reasonable prospect of growth, there is no basis for the team's value to rise.
Ignoring increases in asset value, this might be true if the market for the Mets was rational (economically speaking). I'm fairly well convinced that the market for a controlling interest in the Mets is not a rational one.
People (outside of limited classes of investors) tend not too infuse all that much capital in a business if the ship is sinking.
How much debt did the Mets take on for launching SNY? I find it very difficult to believe that between whatever money they get for SNY subscriber fees and advertising, along with the revenues for Citi Field that they couldn't easily afford a $80M payroll.
If the Mets kept all Met revenue and only had to service Met debt, then yes there would be absolutely no reason whatsoever the Mets couldn't easily afford an $80 million payroll.
Things are not ok from a fan perspective though, for them the worst outcome is that the financially weak owner manages to hang on to the Mets but their ability to spend is hamstrung until the far future, which is the scenario that is unfolding.
A bankruptcy and an auction would be a far better outcome for anybody interested in seeing winning baseball.
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