New York Mets owner Fred Wilpon announced yesterday that he is considering selling a 20 to 25 percent share of the team. The announcement comes in the wake of the Bernie Madoff ponzi scheme. Enveloped in the ponzi scheme was several million dollars from Sterling Enterprises, Wilpon's real estate enterprise (the Mets are under the Sterling umbrella), and several million dollars of Wilpon's personal income. Initial estimates suggested that - all told - Wilpon lost somewhere between $200 million and $400 million.
The Mets have recently employed a moneyball formula and are undergoing a transformation similar to the one undergone by the Oakland Athletics in 1995, suggesting that the team is financially crippled, at least to some degree. Since the hiring of GM Sandy Alderson rumors have been swirling that Wilpon lost substantially more than what was originally estimated. The figures are nowhere near precise, but the rumor is that he lost well over $1 billion.
Underneath all of these rumors of loss is a lawsuit brought by former Sterling Trustee Irving Picard. Picard was financially ruined due to mismanagement by Sterling in the ponzi scheme and is seeking $1 billion in the suit. His assertion is that Wilpon and Sterling profited a combined $48 million as a result of the scheme by withdrawing their money before the shit hit the fan. The lawsuit was largely ignored for a long time as the assumption was that Wilpon was suffering financially. But the lawsuit is starting to gain steam now. It appears that Picard's assertion may be the correct one.
There is wide speculation that Wilpon is now selling shares because he plans to lose a large sum of money in the Picard suit. Picard probably won't get anywhere near the billion he's asking for, but he may very well get hundreds of millions if the courts rule in his favor. The Mets are worth over $800 million, so a one-quarter share would probably yield the amount of money likely to be awarded Picard.
Taking on a partner is not unprecedented for Wilpon as far as his baseball career is concerned. He co-owned the team with publishing magnate Nelson Doubleday Jr. for 25 years.
Named in the suit are Wilpon, the real estate media mogul and billionaire who owns Sterling Enterprises and the New York Mets. Wilpon is believed to have invested large sums of his personal income into the Madoff scheme. Also named is Saul Katz, who oversees Sterling Enterprises (Katz is also Wilpon's brother-in-law). Katz is believed to have invested large sums of money which belonged to Sterling into the scheme. Not named in the suit is Mets COO Jeff Wilpon (Fred's son). Jeff's only responsibility is overseeing the Mets and he has no further obligations in the Sterling umbrella.
If Picard is incorrect but still manages to win his suit then Fred would be $2 million in the hole. If that is true, he may be forced to sell the entire team.
In 2010 Jeff Wilpon announced a plan to purchase the New York Islanders and move them to Queens. With the questions regarding the Wilpon family finances those plans are probably now on hold. Sorry Solly.
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