Wilpon and family since have sought to secure roughly 10 minority investors at $20 million apiece. A source familiar with that pursuit recently told ESPNNewYork.com the Mets had commitments from seven investors, but that none of the money had yet to be collected.

You can still go ahead and spend $140 million that someone said they might give you, right? That shouldn't be a problem, should it?

Good lord, these people.

So they're bankrupt, basically, right? Why on earth would anyone give these clowns $20 million? Why do they think they'd be good for it in 6 years (or even next year).

I genuinely feel bad for Mets fans; the owners should really be forced to sell the team.

A source familiar with that pursuit recently told ESPNNewYork.com the Mets had commitments from seven investors, but that none of the money had yet to be collected.

Shouldn't that say that 'all' the money had yet to be collected?

The financially strapped owners of the New York Mets obtained a $40 million “bridge loan” from Bank of America in recent weeks to continue operations until minority shares of the team can be sold,

IOW, the Wilpons are completely bankrupt -- just without the muss and fuss of dragging creditors into court and all that nonsense. They cannot afford to even fund operations without either opening the door to their Mystery Dates, or getting the banks to keep floating them more credit on top of the $500M+ they already owe on CitiField, the team, and SNY.

What a farce. Selig won't crack down because Fred is an official Best Bud of Bud™, unlike that scoundrel McCourt. The banks won't crack down (not yet, at least) because they have broader business interests with MLB and want to tread lightly. Eventually, it will all come crashing down, but probably not until they have payments they simply can't meet, and investors they can't pretend are just about to sign on the dotted line, and bankers who won't be patient with Selig any more. In the meantime, the team can't even afford to spend $50,000 to draft a Rule 5 player.

Geez.

The financially strapped owners of the New York Mets obtained a $40 million “bridge loan” from Bank of America

Hard to believe that banks are in trouble.

Those $20 million blocks can be viewed as investments or loans.

I prefer to think of them as "grants" since the money essentially is gone forever.

The banks won't crack down (not yet, at least) because they have broader business interests with MLB and want to tread lightly.

Then the banks are ####### stupid. Everyone knows what the Wilpons' current financial situation is. Only a moron would throw good money after bad.

If I'm a bank exec, I have to wonder how pissing off Bud could cost me as much as making a loan that I know will never be repaid.

I prefer to think of them as "grants" since the money essentially is gone forever.

Oh, not really. The banks can force a sale of the team and the Wilpons' share of SNY pretty much any time they decide it maximizes their interests to do so, and when they do, they'll be able to get everything Wilpon owes back. If I'm BoA, my perspective is that if Wilpon wants to keep piling on the debt before he accepts the reality of the situation, instead of cutting his losses, then who am I to tell him he's being foolish? It's just less money he'll have coming to him when the smoke clears, his assets are sold, and the creditors are paid off. When the banks believe that the assets don't cover the debts, they'll cut Wilpon off.

Sam: aren't we getting close to that point, though?

So they can't find the cash to fund operations now? And they still have a live suit ongoing with the Madoff Trustee?

Sam: aren't we getting close to that point, though?

I doubt it. SNY is still a very, very valuable asset. As long as that is still there, I am guessing the banks will be more than happy to keep piling up Wilpon's debt and reducing his ultimate cash-out. It's sad, and it's self-defeating for the Wilpons in the long run, and it's awful for the fans, but it's not bad for the banks. Which is all they care about.

From the NY Times (sans Blacklisted link):

The implications of the team’s latest outside financing are not easy to forecast. But two people with knowledge of the team’s finances said that if a full lineup of minority stake investors was not in place by next spring, and cash not in hand, Wilpon and Katz might have to confront the prospect of selling the team entirely.

Who else thinks that some or all of this loan was guarenteed by MLB?

If I'm a bank exec, I have to wonder how pissing off Bud could cost me as much as making a loan that I know will never be repaid.

It's 40mil. That's not even ash tray money.

By the way, I fully expect the Daily News headline on this to be:

"Bank's $40M Investment Brightens Mets' Financial Picture, Casts Doubt on Picard Claims."

While I wish it wasn't the case, it's possible too much is being made of this. Even healthy businesses might prefer a bridge loan to other means of financing while lining up minority investors interested in shares worth up to a total of 25% of the business's net worth.

I've thought the Wilpons dead before. Guess I just don't want to get my hopes up. Too bad they couldn't apply this tenacity to learning how to build an excellent, perennial contender.

Shouldn't that say that 'all' the money had yet to be collected?

It would certainly make a lot more sense that way.

he banks won't crack down (not yet, at least) because they have broader business interests with MLB and want to tread lightly.

I doubt it. SNY is still a very, very valuable asset. As long as that is still there, I am guessing the banks will be more than happy to keep piling up Wilpon's debt and reducing his ultimate cash-out. It's sad, and it's self-defeating for the Wilpons in the long run, and it's awful for the fans, but it's not bad for the banks. Which is all they care about.

Sam, I think you partially contradict yourself here. The banks don't need to crack down because they have the security of some very valuable assets. In the case where banks crack down, it's because the borrower lies, misleads, misrepresents collateral, or is pursuing actions that devalue the collateral. I think in this case the Wilpons get a smidge more leeway because of other considerations like the MLB, but there isn't much need yet to force a sale by the banks. The banks also need to demonstrate to other clients that they aren't going to take a client's business away the first time they get into tight spot, and frankly, banks are terrible at managing/selling seized assets and don't want to be put in that spot.

I'd rather Bank of America was running the Mets.

I'd rather Bank of America was running the Mets.

I don't know that the bankruptcy risk would be lessened.

VA -- I don't think I'm contradicting myself. I think there are simply multiple reasons why it isn't either in the bank's interest to crack down, nor do they have any need to do so, as we both agree. It's not in their interest because of their dealings with MLB -- and for the additional reasons you note (the message it sends to other clients). I don't really think their problems managing assets is a big issue in this case, though, because all that would really happen would be that they would be forcing the Wilpons into a sale. They would never actually have to manage the Mets or SNY or any of it.

It all adds up to the same conclusion: the banks can keep doing what they're doing, and the Wilpons can keep pursuing their fantasy that they can hold on to the team even though they are broke, until it all comes crashing down. At least for now, the banks have little or no reason to hasten the crash. The fans' best hope right now is that the Wilpons fail to turn their imaginary investors into real ones, they simply run out of hope, and give up the ghost.

I'm so glad the banks can afford to lend 40 Million to the Wilpons but can't be bothered to help me and hundreds of thousands of other students with their student loans, either through debt forgiveness, lower interest rates or payment plans.

I have no problem paying back my loans. I just find some things about 21st century capitalism farcical.

And yet the Human Torch was denied a bank loan. Sad.

Wait a sec: the Wilpons went to Bank of America for a few bucks even though their stadium is named CITI Field?

While I wish it wasn't the case, it's possible too much is being made of this. Even healthy businesses might prefer a bridge loan to other means of financing while lining up minority investors interested in shares worth up to a total of 25% of the business's net worth.

That would be true -- if we didn't have substantial other evidence that the Mets are far from a "healthy business". That is, I certainly agree that taking out a bridge loan (even at fairly high interest) would be something a healthy business might do rather than, say, tie up other funds they have other uses for. If they really expect to have the money available from the investors quickly, for example, this would make all the sense in the world.

But we do have a lot of other evidence. The Wilpons' inability to pay back Selig. Their way they are shrouding these investors in the shadows (which strikes me as nothing so much as a desperate attempt to scare up some real ones by getting word out there: "Only THREE slots left! Get your minority share now, folks -- they're going fast! We've got seven lined up already, so you better get in while the getting's good! Don't hesitate folks, these babies won't stay on the lot long, not at the low, low price of only $20M -- these are priced to sell!"). The fact that the Picard trial is coming up and they apparently have no money to pay even a low judgment, much less if they lose the appeal and face the higher one.

Sure, this could be what they are advertising it as: a simple bridge loan to tide them over until they have all the minority investors lined up, and that really is happening behind the scenes. As between that explanation -- which requires you to take the Wilpons' financial explanations at face value -- and the notion that this is yet another indication of their financial desperation, I'll take B.

While I wish it wasn't the case, it's possible too much is being made of this.... I've thought the Wilpons dead before. Guess I just don't want to get my hopes up. Too bad they couldn't apply this tenacity to learning how to build an excellent, perennial contender.

I'm optimistically keeping my supply of wooden stakes sharpened, however.

I'm so glad the banks can afford to lend 40 Million to the Wilpons but can't be bothered to help me and hundreds of thousands of other students with their student loans, either through debt forgiveness, lower interest rates or payment plans.

How does a bank loaning a business money equate to you getting free money in one form or another? As others have mentioned Wilpon isn't borrowing money the bank can't get back by selling the assets. You agreed to a loan with x terms so it is what it is. If you didn't like the terms don't agree to the loan.

Er, I believe he said, "I have no problem paying back my loans. I just find some things about 21st century capitalism farcical." I, for one, am delighted to forgive Matt's student loans.

As the thread runs out of steam... I'm still baffled by the whole, let's-give-Jon-Rauch-$3.5m-plus-incentives plan. He's got sort of a cool BB-Ref page, though. When you click "Hide Partial" seasons half the page disappears. He's tall, too!

It would certainly make a lot more sense that way.

Meh. That phrasing makes it sound like some of the money has been collected. An appropriate phrasing is "none of the money has been collected." Add a "yet" at the very end if you want.

Er, I believe he said .. . .

Where did I say he was having trouble paying his loans?

I, for one, am delighted to forgive Matt's student loans.


Then go ahead and send him some money.

As the thread runs out of steam... I'm still baffled by the whole, let's-give-Jon-Rauch-$3.5m-plus-incentives plan.

Agreed. Not that it's necessarily a terrible deal. But if I had an extremely limited payroll, that's probably not the way I'd spend $3.5 million.

By the way, I fully expect the Daily News headline on this to be:

"Bank's $40M Investment Brightens Mets' Financial Picture, Casts Doubt on Picard Claims."

The Daily News is too busy printing exposes of another overvalued institution with shallow pockets.

I prefer to think of them as "grants" since the money essentially is gone forever.

Oh, not really. The banks can force a sale of the team and the Wilpons' share of SNY pretty much any time they decide it maximizes their interests to do so, and when they do, they'll be able to get everything Wilpon owes back.

That's true of the banks, bu that's not what he was talking about. He was talking about the (purported) equity investors. If you give Wilpon $20M, there's a good chance you're just gifting him $20M.

My morbid curiousity is piqued--if you don't get your money back, what do you get to make Jeff do?

Sam, I think you partially contradict yourself here. The banks don't need to crack down because they have the security of some very valuable assets. In the case where banks crack down, it's because the borrower lies, misleads, misrepresents collateral, or is pursuing actions that devalue the collateral. I think in this case the Wilpons get a smidge more leeway because of other considerations like the MLB, but there isn't much need yet to force a sale by the banks. The banks also need to demonstrate to other clients that they aren't going to take a client's business away the first time they get into tight spot, and frankly, banks are terrible at managing/selling seized assets and don't want to be put in that spot.

I agree with this. I will also add that if the banks are getting current interest (which I imagine the are, but who knows), they can be very forgiving of technical covenant defaults. I would also keep in mind that the Mets are probably making very little money at the moment, and that cashflow will likely pick up when the season starts. Not that adding $40 mil to the debt pile signals that things are good, but this might just be a loan to alleviate a temporary liquidity crunch.

I guess the thing I don't understand is why the Wilpons continue to want the team. Couldn't they sell the Mets but keep SNY? Is that just not possible?

Because, they clearly aren't good at running the Mets. They've blown some wondrous opportunities and are in a deep hole. Why fight so hard to keep a shitty team you're not good at managing?



But, yeah, they seem a fairly safe loan, to me. There is a lot of there there. Whereas a student loan is an investment in the future of some poor schmuck (no offense, I had them, too). Who knows what that student will end up producing? I've always been stunned that banks want to loan students money. I guess they have government and universities pushing it and pseudo-guaranteeing them but still.

Not that adding $40 mil to the debt pile signals that things are good, but this might just be a loan to alleviate a temporary liquidity crunch.

Might be? Sure, it might be. According to this article, they had to pay somewhere between $15-20M last month in revenue sharing to MLB, and later this week they have to make a $26M interest payment on Citi Field bonds. So I have no doubt they have a liquidity crunch that this loan is designed to get them through.

But I see no reason to think that their liquidity crunch is temporary. Even when they have cash flow from ticket sales and ad revenues and the like after the season starts, they aren't going to have a net positive cash flow. If, by some chance, they actually get their minority investors, then that will change the equation. But I continue not to believe that is going to happen, and that this point from the NYT article is spot-on:

The implications of the team’s latest outside financing are not easy to forecast. But two people with knowledge of the team’s finances said that if a full lineup of minority stake investors was not in place by next spring, and cash not in hand, Wilpon and Katz might have to confront the prospect of selling the team entirely.

Oh, and David's point in # 33 is quite right -- I didn't read boteman's reference in # 6 correctly. Unless those $20M investors (if they exist and if they ever come to fruition) are very careful, it is pretty damn likely that they will just be throwing $20M into Flushing Bay. Hell, I wouldn't be surprised if they are screening prospects the same way they screened them for Madoff -- no sophisticated investors wanted.

#8 Sam M: Oh, not really. The banks can force a sale of the team and the Wilpons' share of SNY pretty much any time they decide it maximizes their interests to do so, and when they do, they'll be able to get everything Wilpon owes back. If I'm BoA, my perspective is that if Wilpon wants to keep piling on the debt before he accepts the reality of the situation, instead of cutting his losses, then who am I to tell him he's being foolish? It's just less money he'll have coming to him when the smoke clears, his assets are sold, and the creditors are paid off. When the banks believe that the assets don't cover the debts, they'll cut Wilpon off.

What I don't get, if this is true, is why the banks would wait. Isn't the return on selling the Mets dropping by the day?

Forbes valuation of the Mets:
2009: $912m
2010: $858m
2011: $747m

That's not a pretty trend.

And it's not like all of baseball is headed down, the Cubs and Dodgers valuations both increased. You have to go all the way down to the #25 most valuable franchise, the Indians, to find another team where the 2011 valuation is below the 2009 one, and only the Mets, Indians, Blue Jays and A's were in that situation.

But, yeah, they seem a fairly safe loan, to me. There is a lot of there there. Whereas a student loan is an investment in the future of some poor schmuck (no offense, I had them, too). Who knows what that student will end up producing? I've always been stunned that banks want to loan students money. I guess they have government and universities pushing it and pseudo-guaranteeing them but still.

They're not dischargeable in bankruptcy, for one. They must be making money, even with defaults.

What I don't get, if this is true, is why the banks would wait. Isn't the return on selling the Mets dropping by the day?

But that only affects the net the Wilpons will walk away with once the creditors are paid off. The banks couldn't care less about that. If Fred Wilpon wants to let the losses mount and the debt pile up while he kids himself about the sustainability of his ownership, it makes no difference to the lenders. It's only if they make a massive miscalculation about how much the Mets/SNY will bring when (not if, when) they are sold will they actually lose anything. I don't think they are anywhere close to that right now, nor will they let it get that close.