The cliché that we learned growing up is that sports build character. The line they try to feed us now is that sports don’t build character so much as they reveal it. Like most things, I imagine the truth is somewhere in the middle.
In player-management disputes, I am unapologetically pro-player. After all, the players are the ones out there laying it on the line day after day. If David Wright strikes out with the bases loaded to end the game, he’s the one who has to look at his teammates, take heat from the press right after the game and hear from the fans at the park the next day. There’s nowhere for him to hide after we witnessed it first hand and see the numbers that are published in the newspapers and online.
I saw Jason Bay bust his tail and do everything within his power to succeed. I also saw him fail on a seemingly daily basis for three years. I wrote an article during the 2011 season asking for the club to release him. It was nothing personal against Bay, it was just business in wanting to see the club do better. Bay was paid an obscene amount of money by the Mets, especially compared to the production he delivered. My opinion is that he would give it back in a heartbeat to return to being the player he was in 2009.
Speaking of business, the Mets have made headlines recently with financial news, as information about ownership’s refinancing has started to come to light. I think this situation helps illustrate one reason why I favor the players over the owners.
Let’s compare David Wright’s financial situation with that of the Wilpons. Here’s what I know about Wright’s recently-signed contract, which is publically available at Cot’s:
• signed extension with NY Mets 12/12, replacing option in previous contract
• 13:$11M, 14:$20M, 15:$20M, 16:$20M, 17:$20M, 18:$20M, 19:$15M, 20:$12M
• Wright to defer $15.5M ($3M in 2013 and $2.5M annually in 2014-18), reducing present-day value at signing to $134,015,678
• award bonuses: $0.5M for MVP ($1M for second MVP, $1.5M for third MVP). $0.2M for finishing 2nd-5th finish in MVP vote. $0.1M each for Gold Glove, Silver Slugger, Hank Aaron Award, All-Star, most All-Star votes in league, Player of Year from Baseball America, AP or The Sporting News.
• Wright to donate $1.38M to Mets charity over life of contract
And here’s what I know about the Wilpons’ financial issues:
• They have a loan against the team due in 2014, which Howard Megdal reports as being $320 million
• They have a loan against SNY due in 2015, for $450 million
• They have debt payments on Citi Field due twice a year at some unknown number – perhaps as high as $25 million every six months (that’s the highest I’ve seen published – I’ve also seen $22 million per six months and $43 million per year).
• They have interest payments against those loans, but I don’t know the terms
• They owe revenue sharing but we don’t know how much
• They just got a new loan that Bloomberg’s Scott Soshnick terms as “for at least 700 million.” We don’t know much more than that.
We know exactly how much Wright is going to earn. We know the length of his contract, how much money is deferred, the present-day value of the deal, the award bonuses and how much he’s going to donate to charity. Contrast that with the Wilpons – we know some of their debts but mostly we don’t know how much or for how long.
One of the great things about sports is how definite things are. You always know where you stand at the end of the day. I don’t have any idea where we stand with the Mets’ finances. Is the latest “at least $700 million” good or bad? I’m sure one could spin that in any direction one pleased. I think it’s beyond bogus that we know every detail about Wright’s contract yet we have to play detective to piece together what little we know about the Wilpons’ situation.
You can say it’s different because we’re comparing Wright’s income with the Wilpons’ debts. Well, how much do we know about their income? How much do they take in from ticket sales or concessions or parking or naming rights or from local and national broadcast deals? We know some of this information but we don’t know it all – certainly nowhere to the degree that we know about Wright.
It’s incredibly easy to find stuff about Wright because we have a site – Cot’s baseball contracts – devoted exclusively to providing this information. No such creature exists for the owners. The closest we have are the “Business of Baseball” numbers from Forbes, a business magazine. And even though these numbers come from a conservative business publication, we are told over and over again by the owners and the commissioner how these numbers are not accurate and do not portray reality.
When we analyze players, we constantly look for numbers that portray reality – how good is this player? We used to think batting average and wins gave us that information but we’ve continued to strive and come up with better numbers that more accurately portray reality. Now, I suppose you could dismiss this as “the Pursuit of Comprehension Through Quantification” but it’s been proven to work and I’ll believe in it until someone gives me a better model.
And if it’s fair to subject players to this rigorous analysis – it’s only fair to do the same thing with the owners. But the owners bend over backwards to obscure and hide, if not outright lie about, the necessary information to make informed decisions. Forgive me if I trust them as far as I can throw them.
I’m all for everyone making an honest buck. I don’t begrudge someone having hundreds of millions of dollars if they earned it. Fred Wilpon was the son of an undertaker who went out and made his fortune in real estate. He wasn’t born on third base – he actually hit a triple. He should be an owner that fans admire.
When the Wilpons had liquidity – they spent money. But the real estate crash combined with heavy loans to build the new park and finance a TV network and then the collapse of the Madoff cash cow all coming at the same time killed their liquidity. And now they don’t spend money. I don’t begrudge the Wilpons for cutting payroll and doing what they need to do to retain the club. I imagine that I would do the exact same thing if I were in their shoes.
Yet, don’t lie to me while you’re doing what needs to be done. Don’t tell me that payroll is going to be X amount of dollars and then have it be a number 20 percent lower. Don’t restructure contracts and then refuse to say how much, if any, is going to be sunk into payroll. Don’t refinance loans without telling us the terms and what the money is going to be used for.
Just gimme some truth.
You might recall about this time last year the Mets hired the firm CRG to analyze their financial statements and help with business projections. But when the news broke, the hysteria in the blogosphere was that the Mets were preparing for bankruptcy because CRG was the same company that assisted the Texas Rangers when their owner hit the financial skids.
It’s possible that the work done by CRG assisted the Wilpons in getting this latest round of financing. If so, and if this financing turns out to be the key to the Wilpons regaining their financial control – then we as fans should be celebrating. We should be celebrating the Wilpons’ good sense to hire CRG. We should celebrate CRG for delivering the much-needed financing. And we should applaud knowing that the light at the end of the tunnel is sunshine and not an oncoming train.
But because of the lack of transparency in their financial matters – we don’t know. We can only guess and there’s little doubt that there’s a lot of really bad guessing out there – as the initial CRG reaction illustrates. Personally, I hate not knowing. I hate not knowing if the Mets will be able to spend money this year, next year or in the next five years. But I don’t know and I just kept getting lied to on a continual basis and I have a hard time believing that’s in the team’s best interests – to lie to their fans.
Let’s go back to Wright. We know the Mets just extended him with a lucrative long-term deal, one that the vast majority of fans favor because it keeps a homegrown star with the club for the rest of his career. There’s value to that, although the value I place on it is much lower than 99 percent of the rest of the fan base.
We never know how a player is going to perform over the life of his contract. Certainly while many panned the Bay deal when it was made, no one saw him being the complete and utter failure he proved to be.
Usually what we do is give our best guess as to the value a player will produce and place his contract in the context of the team and the team’s finances/payroll to determine if we think a move is “good” or “bad.” But when we have no idea about the team’s finances/payroll – it becomes that much harder to judge the relative worth of a deal.
Isn’t the $134 million to Wright dependent a lot on how much of payroll it absorbs? It’s one thing if it’s part of a $130 million payroll. It’s a completely different beast if it’s part of a $75 million payroll. It’s not destined to happen yet we have to acknowledge the possibility that in 2015 the Mets are paying Wright 26 percent of their total payroll to put up a .750 OPS.
It was no fun to pay Bay 19 percent of the team’s payroll in 2012. But at the time that he signed we thought he would A) be much more productive and B) that the payroll would be much higher. My fear with Wright is making the Bay mistake all over again. And if that comes to pass, the fact that Wright came up with the Mets won’t cushion that blow for me one single little bit.
Of course, that’s the worst-case scenario. Wright could continue to hit like he did in 2012 and the Mets payroll could stop its downward trend. I just wish we could have some idea how likely the latter was.
I want to be in Fred Wilpons’ corner. He owns my favorite team and my gut feeling is that he really cares and wants to field a winner. But it would be a lot easier to root for him if I knew as much about him and his financial picture as I did his top player.
If sports truly do reveal character – what does it say about Wilpon?
Brian what Megdal alleges is not true. He has no access to the Mets finances or financial records. Additionally the re-fi replaced the first three items on your Megdal list and he should know that. I don’t know why he continues to allege things without evidence. He has an ax to grind and is extremely biased against the Wilpons, actually it looks more like hate at times. He is as objective as Rush Limbaugh. If anyone ever alleged the things he has against the Wilpons, Megdal’s first instinct would be a lawsuit against that person for libel and slander.
Hi Joe D. – thanks for reading and commenting!
I think Howard M. would be the first one to acknowledge that he has no access to the Mets’ finances. I know Howard a little bit — we’ve both commented on the other’s stories, we’re Facebook Friends and I had him on my podcast. I certainly know your site but I do not know you as “well” as I know Howard. Do you have access to the Mets’ finances?
The list in this piece is not a “Megdal list.” Awhile back I asked Howard if he had something like this and he did not, or if he did he failed to share it with me. This list was compiled using various sources. I linked to Howard because he showed the number as $320 million rather than the previously reported $450 million. It made sense to me, as they likely used some of the money from last year’s sale of minority shares to pay down debt.
I hope you are right – that the latest loan addresses the first three items on this list. But I have not seen a published source from the MSM that says this. If you could provide a link to one I would appreciate it. Also, if you have anything definitive on the money they owe for Citi Field – I would appreciate that, too.
The more reputable information that is out there, the better off we all are. And I’m open to information from anyone – Megdal, Soshnick, Sandomir, Ozanian, and Lewis are the ones I remember referencing previously. If there’s someone else out there reporting on this that I should check out – please let me know.
Hi Brian – Great article. Challenges Tolstoy in length. 😀
I think you aptly depict the confluence of factors that led to the Wilpons’ financial pinch. It wasn’t just Madoff or a declining real estate market, or Omar’s unrestrained run at free agents and College draft picks that left the farm bereft of talent. Many factors led to the organization’s decline.
I do not question for half a second that Fred, Jeff & Co. want what’s best for the Mets. From starting their own network, to hiring a GM like Omar and giving him full reign, to building Citi Field – all of those actions combine to support the notion that they really, really try.
Further, I don’t so much fault the Wilpons to be reticent about their finances. In a sense, I allowed them time to heal much they way a wounded dog goes into a corner to lick his wounds. Financially, they’re simply punch-drunk into a dull adult stupor.
I wish that Sandy Alderson was more transparent. He needs to rip a page out of Donnie Walsh’s book on how to relate to a fan base. I realize that Sandy is not Donnie, as both men have entirely different backgrounds. Both men are quite cerebral and their methods are similar, but Donnie is more forthright and to the point with the fanbase. He trusts the fans, and you get the sense that he talks to the media no different than he would talk to a strap hanger over the din and rattle of the subway.
By contrast, Sandy was brought into an almost impossible situation, which happened to coincide with the personal loss of his father. I wonder how he must have felt then. Since then, his decisions have been calculated and precise, but also quite unpredictable, which drives us Met fans crazy. It drives us crazy because at a time when we need clarity, we get double-talked to death and, at times, mislead – sometimes by design and sometimes by happenstance.
The big picture is that we are emerging from one of the darkest periods in Met history with a vision of hope buoyed by a stable of young pitchers. As our team improves, Sandy’s smoke screens will likely dissipate and we, as Met fans, will have our expectations restored to a greater comfort level.
I think when Howard accused the Wilpon’s of being complicit in the Madoff Scam, he lost credibility when it comes to writing about the Mets finances.
At no point was this article supposed to be a referendum on Howard Megdal’s reporting. The only reason his name appeared in the article was because he reported a debt amount *lower* than what I had seen previously reported.
There is a time and a place for everything and I assert that this is not the place to pass judgment on Megdal’s work. If you want to comment on something that I wrote – by all means please do so.
Thanks – Brian
I completely agree, Joe. I’m not impressed with Megdal’s financial analysis.
Anyway, the Mets are a privately-owned team, compared to one owned by a corporation, therefore the Wilpons are not legally bound to disclose their private finances. Just like I don’t have to tell you how much I earned last year. That’s the law. So we’re largely in the dark. That some guys like to speculate does not make it reporting or information; it’s guesswork.
I personally think the Wilpons have weathered the storm. They cut costs, hunkered down, and have been riding it out. They were found, btw, “not guilty,” effectively dodging the worrisome bullet. There’s nothing to look at folks, nothing at all. They own SNY and it is a cash cow, TV rights are a gold mine, appreciating wildly. They could have sold SNY, but they didn’t. Because they aren’t complete dummies and saw what was coming. Just look at the insane TV contracts teams are signing.
Look: I hate the Wilpons just any decent citizen would. But I don’t think they are going anywhere soon.
Morning Brian. Hope you and yours had a wonderful holiday season.
Refinancing is done every day at this level.
The important thing to know here is the Wilpons’ vale for their ownership of the Mets, plus their percentage of SNY, minus ALL the monies owed to everyone, including debt on the stadium construction and any projected Madoff settlement, would still leave a net profit of well over $1bil for the Wipons and Saul Katz to split up, if they ever chose to sell the team.
This is a non-story.
Mack
Hey Mack – had a very nice Christmas — hope you had a good holiday, too!
I agree that the important thing is net profit but I’m very skeptical that the number is over a billion due to the 1-2 punch of heavy debt and the long-term, below-market local TV deal. One of the reasons the Dodgers went for so much money was the chance to negotiate a huge new TV deal. If the Wilpons sold the team today new owners would not have that type of revenue stream.
According to the LA Times, a new TV deal “could be worth at least 6 billion.”
http://www.latimes.com/sports/dodgersnow/la-sp-dn-dodgers-mlb-tv-fox-20121217,0,5194664.story
Meanwhile, the Mets get, I believe, $60 million per year from SNY for their rights.
Brian,
Here’s link to something I posted on Friday with included links to other reports.
http://metsmerizedonline.com/2013/01/mets-refinance-700m-in-debt-gain-160m-in-spending-money.html
The danger is that too many people are speculating as if they have Masters degrees in finance. Even worse is that they have large soapboxes and the ears of those who are easily swayed.
Reporting is one thing, speculating is another thing, passing it off as fact is troubling at best and irresponsible and reprehensible at worst.
The fact that one profits by capitalizing on the team’s misfortunes makes it even worse. How do you go to print and set dates for bankruptcy, insolvency, and more importantly why are people still listening when none of it came to pass?
Where’s the slam dunk lawsuit? Where’s the whistle blower who had all the goods on the Wilpons? It’s 2013, where is the bankruptcy? Why did he dispute me when we argued on twitter that the loans were not negotiable when in fact they were?
It’s one thing to want the Wilpons out. It’s another thing when you hurl daily slanderous allegations in some lame attempt to get them out. Are we no longer a country of laws?
My motivations are pure and without an agenda other than truth in reporting. His on the other hand are purely for financial gain. His gain.
Thanks for the link.
Respectfully, I conclude that there’s nothing new in your report about firm details for how much money has been borrowed and when it needs to be paid back. The Sandomir piece you linked to mentioned “the still-substantial bank debt on the team,” which makes me think that the $160 million they allegedly have at their disposal (and more importantly the “at least $700 million loan”) did not cover the third bullet point in my list of their debts.
I want to believe that the Wilpons are now on solid financial footing. But unless they are more forthright in the details, there’s no way to know for sure. We still have no idea how much they borrowed, when they have to pay it back or what the interest rate is. And we need to know all of those things to make an intelligent decision.
I’ll believe the Wilpons are on a solid financial footing when the payroll goes up again. According to the numbers from Cot’s, the average payroll between 2008-2011 was over $139 million. I understand they don’t want to be at the point they were previously, but I don’t think it’s unreasonable to expect a payroll for a team in NYC without financial problems to have a $125 million payroll.
My guess/fear is that we will not see that type of payroll anytime soon. Because my opinion is that even with the much-needed refinance, the Wilpons are still years and years away from being on solid financial footing. It’s better now than it was last year, and the Madoff settlement made their financial picture better in 2012 than it was in 2011.
They are moving in the right direction but their finances are still in sorry shape.
If the Wilpons didn’t care they would of sold the team when it was at its peak value for almost a billion dollars. It’s unfortunate that we see men who we consider to be shrewd businessmen get robbed by Bernie Madoff. Because of their poor judgement their finances are in shambles, Their primary assets are Citifield, the Mets and SNY. If the team was on solid financial footing then you would of seen the Mets in the free agent market this year. The lack of action speaks volumes even if we don’t know where they stand money wise. The Wilpons are very fortunate to have the commissioner on their side. In my heart of hearts I hope they have solved their finances and can start to spend the level of money we here in New York expect them to.
The Fans are praying for the Wilpons to lose the team. The connection to Madoff was corrupt. They printed money to buy out Doubleday, a true owner who doesn’t meddle in baseball decisions, medical decisions. We’re in the largest market with a payroll the size of Oakland.
Brian I have several questions for you. First up is the revenue generated from tickets sold for Mets home games was? I like to hear your best guess. ESPN MLB attendance states the Mets sold 2.2 million tivkets. To me that revenue alone should cover payroll. As for SNY and all the revenue it generates,I would imagine it to be a substantial number. Does all Citifield revenue from concessions go to the Wilpons? I understand operating costs but the team generates quite a large sum of money(to which we are not privy) so we can only speculate. Isn’t it obvious that the Wilpons do not have the financial resources to sign any major free agents? And towards that end are they trying to show their creditors their fiscal restraint by having a better bottom line?
These are all good questions – unfortunately the answers are not all immediately available.
Last month, Newsday got some answers thanks to invoking the Freedom of Information Act. The article states:
“The numbers come from quarterly reports that highlight a designated portion of the team’s ballpark finances. A Mets subsidiary must provide the information to New York City to show the team’s ability to pay back its annual bond payments related to the building of Citi Field, but represents only a slice of the team’s full financials.”
Here’s what Newsday listed:
REVENUE, 2012 (as of Sept. 30)
Retained seats: $44,111,395*
Advertising: $44,170,209
Concessions: $11,986,369
Lux suite: $8,583,116
Parking: $7,167,770
Other: $2,642,348
Revenue total: $118,661,207
They list 2011 Revenue as $126,915,408 and 2009 Revenue as $180,396,221
Well worth checking out the entire story
http://www.newsday.com/sports/baseball/mets/mets-citi-field-revenue-still-falling-records-show-1.4345857
Thanks Brian. Excellent article from Newsday. I find it interesting that they had to file a Freedom of Information Act in order for the Met subsidiary to release these records. Why not just release the information? The media will eventually find out. It creates a suspicious atmosphere over the Mets and their lack of willingness to divulge what should be public information. If the Mets truly had the resources for signing free agents they would have done so already. I would not be surprised if the Mets continue to roll back their payroll. Such is the life of a die hard Met fan.