What if David Einhorn had purchased the Mets?

Cash strapped, embroiled in a lawsuit because of their involvement with Bernard Madoff, losing tens of millions of dollars every year and overseeing a disapointing on-field product, Mets ownership needed help.  They looked to sell a $200 million stake in the team to raise money.

In May 2011, Mets ownership announced that after vetting out all interested candidates, they had agreed to sell a minority stake in the team to David Einhorn.

Einhorn spent the first seven years of his life living in New Jersey rooting for the Mets.

He eventually moved with his family to Wisconsin, but Mets baseball stayed in his blood.

In 1991, Einhorn graduated summa cum laude from Cornell University with a Bachelor of Arts in Government.

Over the next decade, he worked his way up the ladder in the financial industry, and in 2002, he gained his first big exposure when he recommended shorting Allied Capital.  The next morning the stock opened up down 20 percent.

In July 2007 Einhorn shorted Lehman brothers.  By September of 2008, the company had collapsed.

He short sold Green Mountain Coffee Roasters on October 17, 2011 at around $90 per share.  By November 9, 2011, the stock had plunged to $43.71 per share.  Those who follow business news know that Green Mountain Coffee is being investigated by the Securities and Exchange Commission for Crazy Eddie-style accounting practices (e.g.- making up the numbers).

Einhorn is the Chairman of Greenlight Capital, Ltd, a Cayman Islands-based reinsurance company.  His net worth as of March 2013 was $1.25 billion.

Investors know that when Einhorn moves in, it’s time to move out.

As the summer of 2011 dragged on – through the Francisco Rodriguez and Carlos Beltran trades, through the Ike Davis and David Wright injuries, through the Jose Reyes rumors – so did the negotiations between Mets ownership and Einhorn.

The first sign of trouble was in July, when it was announced that the Mets were briefly engaged in talks with other bidders, but it was likely that the Einhorn deal would go through.

By September 1, 2011, the deal was dead.

Depending on whom you want to believe, Mets ownership backed out because they had cold feet, or Einhorn was making unreasonable demands, so the Wilpons quashed the deal.

In reality, it was likely some combination of the two that resulted in the falling apart of the deal.  As the terms of the negotiations became public, it became understandable as to why the Wilpons would be apprehensive about it.

For $200 million, Einhorn would purchase a one-third stake in the team, with an option in three to five years to buy a controlling 60 percent stake for the whopping sum of $1.  The only way the Wilpons could block that from happening would be to repay him his original $200 million investment, and Einhorn would be able to retain a one-sixth share in the club.

The deal was said to have fallen apart over Einhorn wanting to expedite that process by calling for a vote of Major League Baseball owners to approve him as a majority owner.

Around that time, the Wilpons received news that trustee in charge of the lawsuit against them, Irving Picard, would only be able to go after their $386 million gains from Madoff’s Ponzi Scheme, and not their $700 million principle investments.

This positive development gave them a little more leverage in the negotiations with Einhorn, but Einhorn wasn’t interested in changing the terms of the deal unless he was the one to do it.

There is also evidence that JP Morgan Chase objected to the deal because it would place repaying Einhorn as a higher priority than repaying team creditors.

So they parted ways, and the Wilpons had to find another way to raise the money.

They settled on selling 12 four percent shares in the team for $20 million each.  The investors included two shares to Mets parent company Sterling Equities (owned by the Wilpons and Saul Katz), four to team-owned cable network SNY, one to comedian Bill Maher, one to hedge-fund manager Steve Cohen.

All investors were promised to get their money back in six years at a three percent annual return – a sum of $23.8 million per share, or $286.6 million on the $240 million that was raised.

On January 30, 2014, the Wilpons reached an agreement to refinance a $250 million loan that was set to come due early this year.

The refinance makes the Wilpons still make interest payments as they were before, but they don’t have to make a payment on the principle for another seven years, or roughly until they pay Bobby Bonilla $8.3 million more to sit on his couch.

The other hidden detail is that the refinance does not include payroll restrictions as the original loan apparently did.

Their financial problems are not over completely, but the can has been kicked down the road a ways – to 2021 to be exact.

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“Any fraud that has been committed against Fred is something of deep distress to all of us and we feel very badly about the entire matter, but we all believe that this will not affect the team.” – Bob DuPuy, President and COO of Major League Baseball, December 13, 2008.

“[Fred] Wilpon also denied the team had any financial constraints limiting its ability to spend like a big-market team.” – David Waldstein, The New York Times, February 20, 2010.

“[Jeff] Wilpon also said the lawsuit would not affect the Mets’ day-to-day operations and pointed to the team’s payroll, which is projected to be the fifth or sixth highest in baseball in 2011. He said players should not be concerned.” – David Waldstein, The New York Times, February 16, 2011.

“The Mets’ business is excellent.” – Fred Wilpon, July 15, 2013.

Year after year, the Wilpons have made a nasty habit of being less than honest with the public about the condition of their finances.

From Jeff Wilpon’s original “Madoff won’t affect the Mets operation at all” quote, right down to the constant public denials of any kind of payroll restraints, the constant downplaying of the dire straits of their finances has worn thin.

But now there is no more denying that the team hasn’t been operating under financial restraints – and apparently legally-binding ones – for the past several seasons.  It’s a matter of public record.

All of the excuses that have been given for the reduction in payroll, long suspected to be false, have been exposed as such.

The fans were point-blank lied to.  Lied to by Fred Wilpon, lied to by Jeff Wilpon, lied to by Sandy Alderson, who, as much as I like him as general manager, has been an accomplice to the Wilpon’s dishonesty.  It’s obviously a tough situation to be in, but he doesn’t deserve immunity.

The Mets payroll is expected to be approximately $90 million come opening day – close to the $93 million of 2013 – but more interestingly, that includes $29.25 million added in the form of Curtis Granderson, Bartolo Colon and Chris Young.  The interesting part is that like every other team in baseball, the Mets got $25-$30 million from the new national television deal.

Assuming that they received the lower amount of money, the Wilpons at most have spent $4.25 million this offseason of their own money.  Not to say that they wouldn’t have spent the money without the TV deal, but considering the wealth of evidence that says the financial troubles are not in the past, there’s no reason to believe that would’ve been the case.

The free-spending Mets narrative seems to have no grounding in reality.

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One has to wonder what would’ve happened if the Einhorn deal did go through.

It’s plausible that with the investment from Einhorn, the team could’ve made a play for Jose Reyes in free agency instead of allowing him to walk without an offer.

With Reyes at shortstop, the 2014 Mets lineup looks a whole lot better, and the team is realistically competing for the playoffs.

More importantly, if the deal had gone through, we could be looking at the final months of the Wilpon ownership.  Considering the still poor condition of their finances, it’s hard to imagine them raising the $200 million to prevent Einhorn from taking a controlling stake in the team.

With a nucleus of young players, the extra money that Einhorn could afford to spend might push up the timetable for playoff contention.  There would be no worrying about the ability to sign Stephen Drew, or Jhonny Peralta when he was still available.

If the team had a hole to plug, they could afford to spend the money to fix it.

The Mets could actually act like a big market team.

Joe Vasile is the voice of the Fayetteville (NC) SwampDogs.  Follow him on Twitter at @JoeVasilePBP.