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The Wilpons have more than just the bankruptcy trustee to worry about

Feb 9, 2011, 8:25 AM EDT

Feeding Frenzy

For those of you following the Wilpon/Mets/Madoff train wreck, there’s a fascinating story in today’s New York Times which suggests that the Wilpons’ legal problems may just be getting started.

The upshot: when Madoff got arrested, the Wilpons and Saul Katz were strapped. Coming to their rescue: as many as eight banks who provided them with financing on which Sterling Equities continues to rely.  The Times talks to multiple banking and legal experts who suggest that, in light of the current lawsuit — and all of the ugliness it’s dredging up — the banks could do any number of things, none of which are good for the Wilpons and Katz.

Things like calling in their loans now, which would put even more financial pressure on them to sell the Mets. Another possibility: they could comb through all of their own financial records relating to the Wilpons searching for something — anything — which, in light of the new information we’re all learning, could be used to cast the Wilpons in a bad light.

I don’t pretend to understand the complexity of the financial stuff.  But I certainly do understand the overall when-it-rains-it-pours dynamic of these things. We’d all like to believe that people will stand strong with us when things get bad, but when a scandal erupts or a suit gets filed people either run for cover, look for someone else to throw under the bus or both.  These banks are no innocents themselves. J.P. Morgan, for example, has its own Madoff-related problems.  You can bet that if there’s a way to shift blame to or share blame with someone else, they’ll take it.  The first big conversation with the lawyers in any mess like this involves the question of “who else can be invited to this party?”

Every day the Wilpons don’t settle with the trustee is another day when someone, somewhere, will consider jumping on the pile.

  1. Panda Claus - Feb 9, 2011 at 8:27 AM

    Awesomely appropriate picture. The blood is indeed in the water and the sharks are starting to circle.

  2. paperlions - Feb 9, 2011 at 8:37 AM

    This is what happens when you use credit to live beyond your means, no matter how “rich” you are….it’s a house of cards bound to collapse as soon as one card slips, and that card was jerked out of the foundation over two years ago.

  3. Joe - Feb 9, 2011 at 8:56 AM

    Some peon loan underwriter’s head is going to roll for this. Bank upper management is happy to ignore any risk factors identified with wealthy/high profile customers and approve financing deals. When repayment starts to look dicey, everybody – the peons, the customer, the American taxpayer – everyone but bank upper management gets blamed and/or screwed.

  4. bigxrob - Feb 9, 2011 at 9:10 AM

    This is the part the got me…
    “and that they used loans from banks to open up additional accounts with Madoff, confident that the steady money earned with Madoff would outperform the interest rates on their loans.”
    So, money that they had invested with Madoff that disappeared when he was arrested was loans? Yikes.

  5. mrznyc - Feb 9, 2011 at 9:22 AM

    If you’ve got a lot of money and a brain the size of a pea – Now’s your moment to jump into big time sport in the media capitol of the world – Even though we’ll soon be losing two Mega-Morons, the jackass level of sports ownership in this town is still very high, so come prepared.

  6. trevorb06 - Feb 9, 2011 at 11:37 AM

    Alderson is probably wondering wtf he got himself into.

  7. bigharold - Feb 9, 2011 at 1:16 PM

    It would seem that at issue is just how culpable the Wilpon’s are with regard to their knowledge of Madoff’s business dealings.

    Picard is asserting that the Wilpon’s had to know. Frankly, considering that Madoff’s reputation prior to his arrest was so good that it was beyond reproach he’s going to have a hard time proving that notion. Industry insiders thought he was up to no good, turned him in to the SEC and nothing came of it, yet the Wilpon’s were suppose to know better. Good luck with that. And, if he can prove the Wilpon’s knew as much as he asserts the question that demands answer is; why aren’t the Wilpon’s more concerned about ending up in handcuffs doing a “perp walk” rather than saving the Mets?

    As a Yankee fan I’m not at all interested in defending the Mets owners for anything. But, this appears to be an ambitious lawyer going after deep pockets and using the media as his venue to try his case. At a minimum he appears to be attempting to garner enough public support in the hopes that the Wilpon’s will grow weary and throw in the towel. This is hardly an object lesson in integrity or ethics. In fact if he’s wrong he’ll end up looking like a low grade ambulance chasing shyster lawyer.

  8. chrisny3 - Feb 9, 2011 at 7:01 PM

    “The Times talks to multiple banking and legal experts who suggest that, in light of the current lawsuit — and all of the ugliness it’s dredging up — the banks could do any number of things, none of which are good for the Wilpons and Katz.”

    LOL, Craig, you’re nothing if not consistent. Once again, you’ve managed to misrepresent a story around this issue and put the worst possible spin on things for the Mets!

    In actuality, this is what the NYT’s story said and I quote: “…they could call in their loans, perhaps forcing Wilpon to sell all or parts of his empire; or they could choose to assist him, helping him find a way to survive even a giant settlement.”

    ““Generally speaking, banks don’t act rashly in these sorts of situations,” said Anthony W. Clark, a partner at Skadden, Arps, Slate, Meagher & Flom who specializes in corporate restructurings. “They’re usually cautious and will watch to see what happens. They don’t want to precipitate the thing they are most concerned about, which is diminishing the value of the assets that serve as their collateral.”

    Craig, tell me how the banks choosing to assist Wilpon/Katz fulfill a judgment with further loans would not be a good thing? You have topsy-turvy logic. I guess that’s your world.

    I know you’re taking great joy at the Wilpons’ woes. But let me say you’re too invested in their downfall. Will they survive this? Doesn’t look great at this point only because just half of the story has come out so far. The Wilpons and Katz have yet to file their response to the suit and have yet to even fight this on on the appellate level. But if you really tried to look at both sides of the story instead of instantly siding with the trustee, you’d see major parts of his lawsuit are weak.

    So, even though I don’t pretend to know how this will end up, I will go out on a limb and say the Wilpons will still be the **controlling owners** of both SNY and the Mets after this entire things is settled and done with.

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