The Mets are close to finalizing the sale of at least five $20 million shares in the team, a move that would help pay off $350 million in club debt, baseball officials familiar with the transactions told the Daily News.
Major League Baseball has vetted and approved the investors, and the team is expected to close those sales and raise more than $100 million within the month, the officials said.
With that, the team would raise enough capital to repay $25 million owned to MLB, a $40 million bridge loan to Bank of America and other club debts and operating expenses that have emerged in the wake of the Bernie Madoff Ponzi scheme scandal.
The Mets will likely look to sell at least five additional minority shares for another $100 million and could expand that total, according to sources. The process, described by one source as “rolling,” has no set conclusion or limit on how many shares will be sold.
Progress in the sale of minority shares does not solve all of ownership’s financial issues. The owners of the team, Fred Wilpon, Jeff Wilpon and Saul Katz, still face a lawsuit, set to go to trial March 19, in which a trustee representing the victims of Madoff seeks up to $386 million in alleged profits Wilpon and Katz gained from investments with the Ponzi schemer.
Some in MLB view the Madoff verdict as the determining factor in the Wilpons’ and Katz’s long-term viability as owners.
Additionally, the Mets lost approximately $70 million last year. With the team not expected to contend in 2012, attendance-related revenues will likely continue to suffer.
In a cost-cutting measure, the Mets last month shuttered their Gulf Coast League team. About six weeks ago, the club retained the firm CRG, turnaround consultants the owners insist are not providing any bankruptcy-related services.
Despite the lingering issues, MLB now expects that the Mets will be able to raise enough money through minority sales to make their first $100 million payment on their various debts, officials say.
People outside the organization familiar with the team’s situation also say the sale of the Los Angeles Dodgers, which will be finalized in April, will have a positive impact on the value of the Mets. The Dodgers are expected to command as much as $1.5 billion at auction; once they have demonstrated their value, the Mets might be more easily able to convince banks and investors of their own worth.
Sports economist Andrew Zimbalist believes that both the Mets and the Dodgers will remain valuable franchises, and sees several advantages that a New York team holds over one in Los Angeles.
“They have a brand new stadium,” Zimbalist said of the Mets, while estimating that Dodger Stadium requires $200 million to $300 million in improvements.
“The Mets are one of two Major League Baseball teams in the largest media market in the United States, and they have more corporate headquarters in New York than the Dodgers (have in Los Angeles). Both teams are worth arguably more than $1 billion.”
Zimbalist considers a minority share of the Mets “not the greatest investment in the United States, but one that could be very interesting to some.”
He also notes that an ability to sell minority shares back to the Mets after six years, requiring the team to pay 3% annual interest, makes the deal more appealing to investors.
The Mets bolstered their pitching depth Tuesday by re-signing righthander Miguel Batista, and also adding righthander Fernando Cabrera.
Both veterans agreed to minor-league deals, and were invited to major-league spring training.
Batista, 40, can work out of the bullpen or serve as an emergency starter. In nine games for the Mets late last season, he was 2-0 with a 2.64 ERA. In 623 career games, Batista is 101-112.
Cabrera, 30, was 4-3 with a 2.71 ERA last season for Triple-A Sacramento; he has a 5.24 ERA in 132 major-league games.