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Friday, December 14, 2012

MLB: Mets deferred money (to David Wright)

“David Wright will have to wait until 2025 to receive all the money from his $138 million, eight-year contract with the Mets.

The deal includes $15.5 million in salary that is being deferred without interest. The money is to be paid in equal installments of $3.1 million each June 30 from 2021-25.”

RA Dickey is not amused.

NattyBoh Posted: December 14, 2012 at 12:33 AM | 26 comment(s) Login to Bookmark
  Tags: david wright, madoff, mets, wilpons

Reader Comments and Retorts

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Statements posted here are those of our readers and do not represent the BaseballThinkFactory. Names are provided by the poster and are not verified. We ask that posters follow our submission policy. Please report any inappropriate comments.

   1. GregD Posted: December 14, 2012 at 01:15 AM (#4324495)
without interest?
   2. charityslave is thinking about baseball Posted: December 14, 2012 at 01:19 AM (#4324499)
Bobby Bonilla scoffs at this.
   3. Jim (jimmuscomp) Posted: December 14, 2012 at 02:57 AM (#4324524)
The Dickey line KILLED me.
   4. Squash Posted: December 14, 2012 at 04:03 AM (#4324532)
So it's actually a 13-year $138m deal?
   5. bobm Posted: December 14, 2012 at 08:13 AM (#4324549)
I think this is an AP story.

FTFA:

Wright’s previous contract called for him to make $16 million next season, and the All-Star third baseman’s 2013 salary was reduced to $11 million, of which $3 million will be deferred. That means the Mets will have an $8 million cash savings next year.


But don't worry, the Mets have a plethora of cash on hand.

Also FTFA:

Wright would get $500,000 if he wins the NL MVP, $1 million for his second MVP award and $1.5 million for his third or more. ... He also has provisions for two awards that don’t currently exist: $150,000 for NLDS MVP and $100,000 for The Associated Press MVP or Player of the Year [emphasis added]


   6. bobm Posted: December 14, 2012 at 08:18 AM (#4324550)
More in Mets' liquidity news, from Jayson Stark / ESPN:

The Mets will defer $3 million of Wright's $11 million salary in 2013, then $2.5 million annually from 2014 through 2018. Because of the deferrals, the total deal is valued at $134,015,678 by the Major League Baseball Players Association, sources said. ... The team originally pressed for a greater percentage of deferred money, a demand that nearly caused discussions to unravel, according to a baseball official who was consulted on the negotiations. However, subsequent negotiations succeeded in reducing the deferred money to a level that was amenable to both sides. [Emphasis added]
   7. Bourbon Samurai in Asia Posted: December 14, 2012 at 10:32 AM (#4324594)
He also has provisions for two awards that don’t currently exist: $150,000 for NLDS MVP and $100,000 for The Associated Press MVP or Player of the Year


Now THAT is good agenting!
   8. snapper (history's 42nd greatest monster) Posted: December 14, 2012 at 10:50 AM (#4324614)
Now THAT is good agenting!

If you ever sign any kind of media related contract, they have crazy language about usage rights. They claim rights to content for all forms of distribution existing or ever created in the future, for (literally) the whole universe.
   9. Squash Posted: December 14, 2012 at 12:41 PM (#4324753)
They claim rights to content for all forms of distribution existing or ever created in the future, for (literally) the whole universe.

Colloquially referred to as the VHS/DVD provision.
   10. Esoteric Posted: December 14, 2012 at 12:48 PM (#4324759)
But don't worry, the Mets have a plethora of cash on hand.
It was precisely my knowledge of the significant amount of deferred money on Wright's extension that led me to speculate that one of the Mets' problems with Dickey is a lack of cash on hand. And everyone here told me I was an idiot. But I really do think it's an issue.
   11. PreservedFish Posted: December 14, 2012 at 01:27 PM (#4324788)
It must be an issue. Sure, they don't have to pay that cash for 18 months, but being penniless must be scary.
   12. billyshears Posted: December 14, 2012 at 01:27 PM (#4324789)
It was precisely my knowledge of the significant amount of deferred money on Wright's extension that led me to speculate that one of the Mets' problems with Dickey is a lack of cash on hand. And everyone here told me I was an idiot. But I really do think it's an issue.


Nobody disputes that the Mets have short-term (and potential long-term) liquidity issues. What's incorrect is the notion that cash on hand has any bearing on an extension that won't begin until 2014, especially considering how few commitments the Mets have in 2014. If Dickey was asking for a signing bonus (or even a significant bump in comp for 2013), then cash on hand might be an issue. There's no indication that Dickey is asking for that though. Quite simply, signing him to an extension with the rumored terms requires no cash.
   13. Esoteric Posted: December 14, 2012 at 01:32 PM (#4324794)
There's no indication that Dickey is asking for that though. Quite simply, signing him to an extension with the rumored terms requires no cash.
Yes, but this presumes that the Mets' liquidity issues would be resolved by the time the contract kicks in. Given that they've lingered for at least a couple of years already, and that the Wilpons' prospects in that regard don't seem to be improving (aren't they still embroiled in Madoff-related litigation?), I'm not so sure that's a safe assumption. I think Alderson is being forced to budget on the assumption that cash-on-hand is going to be a real problem for the next several years.
   14. PreservedFish Posted: December 14, 2012 at 01:45 PM (#4324809)
Are the Mets going to drop down to a $50 million payroll?
   15. thetailor Posted: December 14, 2012 at 02:26 PM (#4324861)
The Mets are or should be a solvent organization. I don't understand why the Wilpons' personal finances should have anything to do with it. It's not like they're pouring equity into the company every year to keep it afloat. The Mets gate receipts and media contracts and such should more than pay for the contracts they pay out.
   16. billyshears Posted: December 14, 2012 at 02:37 PM (#4324872)
The Mets are or should be a solvent organization. I don't understand why the Wilpons' personal finances should have anything to do with it. It's not like they're pouring equity into the company every year to keep it afloat. The Mets gate receipts and media contracts and such should more than pay for the contracts they pay out.


The Mets incurred massive debt to finance the stadium and SNY. The interest payments on that debt are out of the ordinary expenses that cause the Mets to not be profitable until the debt is paid off (at least at normal payroll levels). If the Wilpons have cash to contribute to the team, they could cover shortfalls and the Mets wouldn't have these issues. But post-Madoff, they no longer have enough liquid assets to do so in a significant way.
   17. Crispix reaches boiling point with lackluster play Posted: December 14, 2012 at 02:40 PM (#4324878)
How much does Wright get if he wins the NBA All-Star Weekend Celebrity Game MVP?
   18. depletion Posted: December 14, 2012 at 02:45 PM (#4324884)
I don't understand why the Wilpons' personal finances should have anything to do with it

They have everything to do with it. Their real estate, TV deals, parking concessions, etc. are all tied to Sterling Doubleday Enterprises (or whatever it's called these days). They've borrowed lots of money. They've borrowed money to be paid out in 2014, probably. Esoteric and myself are speculating that no one will lend them money to be paid out in 2014 and 2015. They're tapped out.
Imagine you wanted to buy a new tractor for Tailor Farms LLC - you put up the private home equity owned by Ed Tailor as collateral. Wilpons don't have any more collateral.
   19. Jack Carter, calling Beleaguered Castle Posted: December 14, 2012 at 02:46 PM (#4324885)
And everyone here told me I was an idiot.
Just going with the odds, I think.

I kid! (How can you serve up that kind of softball and not expect someone to swing?)

There's no indication that Dickey is asking for that though. Quite simply, signing him to an extension with the rumored terms requires no cash.

Yes, but this presumes that the Mets' liquidity issues would be resolved by the time the contract kicks in.


I don't think so. It's simply a matter of deciding now instead of closer to 2014 whether you want to spend 3m on Dickey or on someone else. It's not a case where the 3m extra Dickey is asking for is going to mean the team can't field a 25 man roster. And, even if the Mets' payroll in 2014 is going to be 50m, they can still afford to sign Dickey to a 2/26 deal. If the payroll is 30m, though, then no, they can't afford to keep him.

   20. Never Give an Inge (Dave) Posted: December 14, 2012 at 03:06 PM (#4324916)

Anibal Sanchez just got a 5/75 deal according to the headlines. Dickey on a 2/26 deal even a year from now would still be very tradeable if the Mets couldn't meet payroll.

But if it's come to that, then Selig needs to force the Wilpons to sell the team now.
   21. Jack Carter, calling Beleaguered Castle Posted: December 14, 2012 at 03:14 PM (#4324926)
@20--agreed, but if Selig was going to force the Wilpons out, he would have done it before this. They're in it for the long haul, even if it does mean putting a 50m team out there for a while.

Certainly shame has no effect on them.
   22. RoyalsRetro (AG#1F) Posted: December 14, 2012 at 03:22 PM (#4324931)
Also $50,000 for a Teen Choice Award.
   23. depletion Posted: December 14, 2012 at 03:32 PM (#4324945)
Dickey on a 2/26 deal even a year from now would still be very tradeable if the Mets couldn't meet payroll.

They've already borrowed from MLB. Maybe a 2/26M contract wouldn't get past Bud Selig because they know the Mets finances. I think the Mets are going to do nothing with Dickey this off season. After the season starts if Dickey is pitching well (probable) and the Mets are not clearly in the pennant race (also probable), Dickey will be traded near the trade deadline. If Dickey is pitching at a mediocre or poor level, they will wait until the off season to not make him a qualifying offer but may try to keep him for lower figure. If Dickey is pitching well and the Mets are contending at the trade deadline, they will keep him and make him a qualifying offer at the end of the year, which he will probably reject.
   24. bobm Posted: December 14, 2012 at 04:30 PM (#4325022)
[15] The Mets gate receipts and media contracts and such should more than pay for the contracts they pay out

The New York Times
SPORTS
Mets and SNY Seek Banks' Help With Debt
By RICHARD SANDOMIR
Published: October 06, 2012

The Mets, whose financial woes have included steep losses, burdensome debt and an expensive showdown with the trustee for the victims of Bernard L. Madoff, are talking to banks to find a way to raise cash, according to two people with knowledge of their plans.

Under one option, SNY, the team's lucrative cable network, would refinance its existing $450 million loan and borrow still more toward paying off some of the team's heavy bank debt and toward other possible purposes, like day-to-day operating expenses or the twice-a-year payments on Citi Field's bonds. The team's owners, and their SNY partners, could also get cash dividends from the proceeds.

The owners, Fred Wilpon and Saul Katz, declined to comment publicly on their plans or how much they hope to borrow.

The cable network, which carries Mets games, is a growing media asset potentially worth at least $1 billion, with revenue generated largely through cable, satellite and telephone company subscribers. Its cash flow is backed by multiyear contracts that typically lock in annual fee increases for a fixed length of time, making it largely immune from the team's longstanding revenue challenges, which are tied to attendance drops and ticket discounts at Citi Field.

Sterling Equities - Wilpon and Katz's sports, real estate and investment company - owns about 65 percent of SNY. Its partners, Time Warner and Comcast, must still agree to the borrowing plan. They would also receive dividends if the plan goes through.

"SNY is a better credit risk than the team," Marc Ganis, a sports industry consultant, said. "It's not subject to Major League Baseball's debt restrictions, and unlike a team's expenses that go up and down, SNY's are easily quantifiable."

Rob Tilliss, chief executive of Inner Circle Sports, a sports investment bank, said, "They're moving the debt from one side of the ledger to the other."

When SNY borrowed $450 million two years ago, $200 million was used to repay SNY's partners for the network's start-up costs, and nearly all the rest went to SNY's partners as cash dividends, The SportsBusiness Journal reported.

Depending on the size of the refinancing and the interest rates, SNY's debt payments could rise, which could mean that fewer profits are shuttled to the Mets' bottom line, Ganis said. One of the advantages of team-owned regional sports networks is the ability to move profits from the channels to the team. [Emphasis added]


Or vice versa.
   25. NattyBoh Posted: December 14, 2012 at 04:44 PM (#4325039)
I am on pins and needles waiting for Howard Megdal's comments.
   26. thetailor Posted: December 14, 2012 at 07:52 PM (#4325213)
The Mets incurred massive debt to finance the stadium and SNY. The interest payments on that debt are out of the ordinary expenses that cause the Mets to not be profitable until the debt is paid off (at least at normal payroll levels).

This is BS on so many levels (not your comments, but that this could be true). Nobody should loan money to an insolvent business in the first place. Even if they were solvent at the time thanks to fictional Madoff profits, they should be profitable as a going concern regardless of their debt load.

If they don't have enough money to run the team like a regular team, and need to gut and destroy it for 2-3-4 or ten years until the finances are up and running, then MLB should kick the Wilpons out or force them into an involuntary bankruptcy. Its a joke. If they can finance their debt by leveraging SNY, then they should do it. That they'd consider taking a dividend on that and still plead poverty is a joke.

I truly hate the Wilpons.

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