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Wednesday, December 04, 2019

Mets in Talks to Sell 80% of Team to Investor Steve Cohen

The owners of the New York Mets are in talks to sell up to 80% of the Major League Baseball team to billionaire Steve Cohen, who is already an investor in the club, according to person familiar with the matter.

The transaction would value the team at $2.6 billion, said the person, who asked not to be identified because the talks are private. The Mets confirmed the talks in a statement

Fred Wilpon, the team’s principal owner, will remain in his current role for at least five years, at which time Cohen will have a path to controlling the franchise, said the person. Jeff Wilpon, his son, will remain as the team’s chief operating officer for the five-year period, the person said.

RoyalsRetro (AG#1F) Posted: December 04, 2019 at 08:07 PM | 24 comment(s) Login to Bookmark
  Tags: mets, wilpons

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   1. Adam Starblind Posted: December 04, 2019 at 08:59 PM (#5905751)
I'm so turned on right now. Cohen would be the richest owner in baseball. If they get this done soon, the Wilpons could have an infusion of cash that it would be in their interests to spend -- the reason they'd want to stay on for 5 years has to be to preside over a run of great baseball. Rendon + Cole would do the trick.
   2. billyshears Posted: December 04, 2019 at 09:12 PM (#5905754)
This doesn't make a ton of sense. It's not clear to me if Cohen would take majority ownership now but only assume control in 5 years or would take both majority ownership and control in 5 years. Either way, bifurcating current ownership/management from future ownership/management for 5 years creates massive incentives problems. In any acquisition there are significant covenants relating to management of the business for the period between the time the sale is agreed upon (signing) and the time when the sale occurs (closing) to deal with this risk, and buyers still generally want that time frame to be as short as possible. Five years is an incredibly long time.

Now, Cohen is obviously sophisticated, and I'm sure he has sophisticated counsel, so there are likely lots of different controls in the agreement to protect the buyer from current ownership managing the business for present returns at the expense of the future. On the other hand, it's really hard to get a baseball team, so Cohen may just take the risk and figure that he will clean up the mess when he gets his hands on the steering wheel. That's probably the same calculation I would make were I so fortunate to be in his position. And MLB baseball teams have a lot more stability of value through mismanagement than a standalone business. Still, I'm somewhat concerned that a deal structured in this manner won't get approved by MLB.
   3. Adam Starblind Posted: December 04, 2019 at 09:15 PM (#5905755)
I think they'd make allowances to get a gazillionaire into the owner's suite of the other NY baseball team.
   4. McCoy Posted: December 04, 2019 at 09:23 PM (#5905756)
This looks like a make me move type deal. The wilpons don't really want to sell but if you're going to throw tons of money at us we'll make you jump through hoops.
   5. . . . . . . Posted: December 04, 2019 at 09:38 PM (#5905759)
billyshears, they structure these deals like a JV or other co-invest type structure with an option to buy out the partner at the end. You solve for the risk with governance rights in the shareholders agreement. Very common structure. Not that different from how Tsai bought the Nets from Prok.
   6. The Yankee Clapper Posted: December 04, 2019 at 09:50 PM (#5905762)
I'm so turned on right now. Cohen would be the richest owner in baseball. If they get this done soon, the Wilpons could have an infusion of cash that it would be in their interests to spend -- the reason they'd want to stay on for 5 years has to be to preside over a run of great baseball. Rendon + Cole would do the trick.
As others have noted, it’s unlikely Cohen is putting in much money until he actually takes control. It’d be foolish for Cohen to fork over $2B and then give the Wilsons 5 years to piss it away or loot the franchise while he waits in the wings. Who knows how it will work out, but the Wilpon Lame Duck Era could be painful for Mets fans.
   7. Adam Starblind Posted: December 04, 2019 at 10:09 PM (#5905768)
As others have noted, it’s unlikely Cohen is putting in much money until he actually takes control. It’d be foolish for Cohen to fork over $2B and then give the Wilsons 5 years to piss it away or loot the franchise while he waits in the wings.


This doesn't make much sense. He will have committed the $2B regardless. All things being equal, the Wilpons will stick it in their pocket. Why would he sit there for 5 years while the Wilpons strip the franchise down to the studs and lose 110 games a year? It would make much more sense for him to kick in money here and there for transactions that he personally approves.

   8. Howie Menckel Posted: December 04, 2019 at 10:22 PM (#5905773)
supposedly Wilpon and Cohen are longtime buddies, meaning this is no hostile takeover.

meanwhile, will the Yankees have to worry about "Back to the Future?"

annual attendance, Mets vs Yankees, in millions

1985 - 2.76 vs 2.21
1986 - 2.77 vs 2.27
1987 - 3.03 vs 2.43
1988 - 3.05 vs 2.63
1989 - 2.92 vs 2.17
1990 - 2.73 vs 2.01
1991 - 2.28 vs 1.86
1992 - 1.78 vs 1.75
   9. Ziggy is done with Dominican discotheques Posted: December 04, 2019 at 10:26 PM (#5905776)
I think they'd make allowances to get a gazillionaire into the owner's suite of the other NY baseball team.


Why? Gazillionaire owners might spend money on free agents. And probably more than anything, that's what MLB wants to prevent.
   10. The Yankee Clapper Posted: December 04, 2019 at 10:28 PM (#5905777)
This doesn't make much sense. He will have committed the $2B regardless.
If Cohen gives all the money to Wilpon up front, there’s no guarantee that the franchise would still be valued at $2.6B after 5 years of Wilpon lame duck management. Smart people don’t structure deals that way, so I assume Cohen won’t.
   11. Walt Davis Posted: December 04, 2019 at 10:53 PM (#5905782)
I can confirm that I am in talks to sell 77.6% of my internet baseball forum influencer franchise for an undisclosed amount rumored to be in the 11 figures.
   12. billyshears Posted: December 04, 2019 at 11:23 PM (#5905786)
#5 -

Yes, but:

1) The management structures for those types of co-invests or JVs are highly negotiated in terms of seats on boards/ board committees and executive officers. It's not clear at this point what kind of management rights Cohen will have presently (though I'm sure he will have some). And generally the majority investor in those deals exercises the most control. In this case, it looks like the minority investor will have control for a long time.

2) This is different from a call option (or so it appears). With a call option, the current owner still has downside risk. If Cohen is going to put in his money first (or is obligated to put in his money at some point) before taking control, current ownership has no downside risk.

For the record, Cohen's obviously a smart guy, so I assume he's well protected. But the opportunity to buy the NY baseball team that you grew up rooting for doesn't come around often, so I could see him giving in on items that he wouldn't necessary do just to get the deal done. Which would be bad for both him and Mets fans.
   13. . . . . . . Posted: December 04, 2019 at 11:50 PM (#5905793)
1) yep, same sorts of rights here
2) purchase price adjustment, or you do one of those FMV things with baseball arbitration if disputed

Some of these sports deals are public - they are worth checking out because they’re all sort of cool and bespoke.
   14. bobm Posted: December 05, 2019 at 01:35 AM (#5905806)
This would be the move of the offseason if it comes to pass.

Joel Sherman in the NY Post:

While denying it publicly, the Mets have spent at least the past year looking behind the scenes for a whale seeking to buy a majority stake. Saul Katz — Fred Wilpon’s brother-in-law, real estate partner and part owner of the Mets — has been wanting to divest, sources say. His children are said not to be gung-ho about having Jeff Wilpon lead the franchise into the future. It led to recognition that a messy succession was coming in which the family might splinter enough to lose control of the team.

So the Wilpons have quietly been shopping for a financial windfall and a window to keep running the team, a combination that scared off most who contemplated a purchase. But Cohen apparently wants the Mets way more than, say, the Yankees even want Gerrit Cole. And so he overpaid and agreed to have the Wilpons for five more years.

But one AL executive said to see five years as the maximum and that it could be less — that if Cohen were going to spend this much he was going to want to want to run the team sooner than later. And another executive said because it will be Cohen’s money now that is most in play, he will have, at minimum, veto power and more likely control over the direction the Mets take, maybe at some point in the coming season or next offseason at the latest.


See also: NY Post: "Mets’ likely savior Steve Cohen is controversial free spender who ‘f—ing hates to lose’"

NY Post: "Steve Cohen’s Mets deal: How SNY, Van Wagenen are affected"

Q: So what’s going to happen to SNY? Will Cohen own that as well?

A: He will not. The network is not part of the purchase, so the Wilpons will retain control of SNY. That’s surprising, because it’s a huge revenue generator Cohen won’t have as part of his takeover.

Q: Will the Wilpons really be running the Mets until 2025?

A: Yes and no. In terms of technically remaining owners, the Wilpons will still run the organization, perhaps even for the five years stated in the press release. But Cohen must now approve, at minimum, all major allocations and, more importantly, can control the budget and decide to spend considerably more on payroll.

Q: By the way, where is Saul Katz in all of this? Why doesn’t he just take over ownership from the Wilpons?

A: It wasn’t going to happen. Katz and his family had no interest in owning the team and wanted out of the business.

Q: Cohen seems to have some questionable business history. Does MLB have any concerns about him taking over as the Mets’ controlling owner?

A: Cohen was already approved by MLB as a minority owner. MLB will still need to approve him as majority owner — he requires 75 percent of the league’s owners to vote yes. It’s not a guarantee he’ll be approved, though it’s likely.


NY Post: Mike Puma: "Wilpons nearing Mets sale to Steve Cohen amid Katz rift"

Fred Wilpon turned 83 last month, and the majority sale is fueled by a desire to plan his estate, according to a source. Cohen, a hedge-fund investor whose firm pleaded guilty to insider trading in 2013, has an estimated net worth of $13.6 billion, according to Forbes.

Multiple sources indicated a rift between Katz — who is Fred Wilpon’s brother-in-law — and Jeff Wilpon left the family uncomfortable with the idea of the younger Wilpon assuming control of the club once Fred Wilpon is no longer involved.

Among the possibilities that were discussed, the source said, was turning over the club to Fred Wilpon’s wife, Judy, before it was decided to negotiate with the 63-year-old Cohen, a Mets fan who grew up on Long Island. Bloomberg reported Cohen’s stake in the club could be as much as 80 percent, with a club valuation at a baseball-record $2.6 billion.

A friend of Cohen’s said the billionaire’s passion for the team is augmented by his wife and father-in-law, both of whom are hardcore fans of the Mets. And the friend indicated Cohen won’t hesitate to spend money on players.

“He would play the game at the highest level, without a doubt,” Cohen’s friend said. “It would be good for the Mets fan.”
   15. Blastin Posted: December 05, 2019 at 08:33 AM (#5905817)
Rendon + Cole would do the trick.


I mean, I don't think any single team is doing both of those.
   16. The usual palaver and twaddle (Met Fan Charlie) Posted: December 05, 2019 at 10:27 AM (#5905854)
Q: Will the Wilpons really be running the Mets until 2025?

A: Yes and no. In terms of technically remaining owners, the Wilpons will still run the organization, perhaps even for the five years stated in the press release. But Cohen must now approve, at minimum, all major allocations and, more importantly, can control the budget and decide to spend considerably more on payroll.


63-year-old Cohen, a Mets fan who grew up on Long Island. Bloomberg reported Cohen’s stake in the club could be as much as 80 percent, with a club valuation at a baseball-record $2.6 billion.

A friend of Cohen’s said the billionaire’s passion for the team is augmented by his wife and father-in-law, both of whom are hardcore fans of the Mets. And the friend indicated Cohen won’t hesitate to spend money on players.

“He would play the game at the highest level, without a doubt,” Cohen’s friend said. “It would be good for the Mets fan.”



Is it me, or is the sun shining a little more brightly this morning?
   17. Adam Starblind Posted: December 05, 2019 at 10:29 AM (#5905856)
Rendon + Cole would do the trick.


I mean, I don't think any single team is doing both of those.


Please do not #### on my dreams this morning. Thanks.
   18. Panik on the streets of Flushing! (Trout! Trout!) Posted: December 05, 2019 at 11:51 AM (#5905896)
Mets traded for Jake Marisnick today.
   19. reech Posted: December 05, 2019 at 12:05 PM (#5905907)
Marisnick fills the Lagares spot, at about 1/3 of the salary-
   20. Lassus Posted: December 05, 2019 at 12:35 PM (#5905925)
I will miss prime Lagares, he was a joy to watch.
   21. . Posted: December 05, 2019 at 12:47 PM (#5905933)
It could be that the Wilpons get to keep saying they're running the team, and Jeffy gets to keep drawing his likely-bloated salary, but they're really not.

In any event, I'll believe the deal is done when the deal is done. There's no sense in which the Wilpons really want to give up control of the Mets, and they have a history of backing out very close to closing (Einhorn). The fact that this appears to be a Katz hissy fit provides further reason to be wary.
   22. Zonk didn't order a hit on an ambassador Posted: December 05, 2019 at 12:57 PM (#5905941)
Q: Cohen seems to have some questionable business history. Does MLB have any concerns about him taking over as the Mets’ controlling owner?

A: Cohen was already approved by MLB as a minority owner. MLB will still need to approve him as majority owner — he requires 75 percent of the league’s owners to vote yes. It’s not a guarantee he’ll be approved, though it’s likely.


I was wondering about this briefly... His wikipedia page has been ably sanitized to present it all the best light, but I did vaguely recall he was involved in a simultaneous civil suit and an insider trading criminal suit....

But then, I say "briefly" because I remembered that the bar for approval is pretty much "show us a bank statement"... as no limit of current and recent owners would tell you :-)
   23. billyshears Posted: December 05, 2019 at 01:27 PM (#5905958)
Marisnick should be a good placeholder for Mookie Betts.
   24. PreservedFish Posted: December 05, 2019 at 01:30 PM (#5905959)
It could be that the Wilpons get to keep saying they're running the team, and Jeffy gets to keep drawing his likely-bloated salary, but they're really not.
'

Jeff will be reduced to negotiating the cracker jacks vendor contract.

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