So the Mets are Going Condo; Madoff, the Wilpons and the Rush to Judgment
At our blog, we try to shed light on the "intersection" of the law and sports. The Madoff scandal and the impact on the ownership of the NY Mets is pretty much in our sweet spot.
As this story broke over the last few days, the rumors have been swirling. Does Fred Wilpon owe the government a billion dollars from false profits obtained by Madoff? Are the Mets in financial ruin? Is this the beginning of the end of the Wilpon family ownership of the Mets?
If you look at this situation closer (and avoid the rumors) you might be able to draw some fair theories about what is really going on here.
First, the Wilpons were not Madoff "victims" in the sense that he wiped them out. On the contrary, the Wilpons are clearly Madoff "winners" as the bankruptcy trustee, Irving Picard, has them in his sights to recover money. Picard's duties are to gathering up (or claw back) every cent of improper profits (most likely collected by innocent investors) and pool that money to help those who have lost everything. Since the Wilpons are being chased for money, they were not crushed by Madoff's misdeeds until now.
Second, the Wilpons have had negotiations with Picard to settle the government's claim. While this is certainly complicated, it is likely that Picard told the Wilpons the number (maybe with a discount) that will buy their piece. Obviously, the Wilpons do not have enough personal funds to cover that settlement number so the family must sell an asset.
It is important to consider, that it may be possible that the Wilpon's financial advisers have been suggesting something like this partial sale for a long time. There are very few franchises owned by a single family in professional sports. The Steinbrenner's don't even own 40% of the Yankees. When faced with a financial crises the Wilpon are selling shares in the Mets just like a building going condo. It makes sense, it can solve the problem. The sale will raise funds and allow them to keep control of the team. All of this shows, Fred Wilpon is a victim here. He should have to sell part of the Mets but to ensure his family's financial future, he has no choice.
On the baseball side, it is impossible to know whether the Wilpon's finances will hurt the team on the field. Remember, the Wilpons don't have to explain their financial situation to anyone (and that's the way it should be). In 2010, the Mets have a huge payroll that will be poorly spent on many bad (but expiring) contracts, see Oliver Perez and Luis Castillo. By 2011, the Mets are set to shed nearly $50 million in salary. If team goes out and signs new players then all is well, if the New York Mets turn into the Florida Marlins (at least payroll-wise), then a sad financial truth will be known.
My name is Christopher Fusco. I am the managing partner of Callahan & Fusco, LLC with offices in New York, New Jersey, and Pennsylvania.