Comments on: Are the Mets in bigger financial trouble than we assumed?

By: The Rabbit

The Rabbit — Thu, 17 Feb 2011 22:06:57 +0000

Gator, you’ve summed it up beautifully.
The problem is that the firm of Bialystock and Bloom has been the esteemed consultant to CEO’s and major corps everywhere. Enron, Worldcom, and Trump (when he had Janney Montgomery’s stock analyst, Marvin Roffman fired for reporting that the Donald wouldn’t earn enough to cover his casino debt. Trump did declare bankruptcy on that debt.) immediately come to mind.

By: corporatescum

corporatescum — Thu, 17 Feb 2011 19:34:15 +0000

Ah, yeah, sorry, wasn’t sure. Soooo…… does anyone know if Barbara Corcoran likes baseball?

By: okobojicat

okobojicat — Thu, 17 Feb 2011 19:09:54 +0000

I was not at all talking about Trump. I meant “someone else I’ve never heard of” who’s rich. Trump doesn’t have enough money. The casinos are easy to divest.

By: Old Gator

Old Gator — Thu, 17 Feb 2011 18:03:17 +0000

The way I look at it, if you make a dollar and spend $1.01, you’re broke. Paying Leo Bloom to make it look like something else will only make you broke-er. Ergo, for every dollar I make I spend .99. Those extra pennies eventually financed my retirement. Why complicate everything?

By: spudchukar

spudchukar — Thu, 17 Feb 2011 18:01:36 +0000

He also does not have enough money.

By: corporatescum

corporatescum — Thu, 17 Feb 2011 17:51:53 +0000

I was with you all the way up to the last two sentences, assuming you are talking about Trump.

Three reasons that ain’t gonna happen:

1) Trump, I believe, still has some casino investments (although he had a nasty split with the Trump itself.) Unless he’s gotten rid of these, that automatically disqualifies him from owning a team.

2) If MLB finds the idea of outsized personality and extremely wealthy loudmouth Mark Cuban owning a team anathema, why would they even consider outsized personality and occasionally wealthy loudmouth Donald Trump for ownership? Remember, the only reason Cuban was even able to bid on the Rangers was because of the involvement of the Bankruptcy court, which eliminated MLB’s ability to pick and choose bidders as they normally do.

3) Mr. Trump has a history of saying absolutely anything to get attention in the media. Not only is he “very interested in persuing a controlling stake in the Mets”, but he also happens to be “weighing a bid for the Republican nomination for the Presidency in 2012″. Is it most likely that he is seriously persuing A) the presidency, B) the Mets, or C) publicity for season 48 of the Apprentice, and whatever the latest Trump brand product is?

By: okobojicat

okobojicat — Thu, 17 Feb 2011 17:12:25 +0000

This is spot on.

The Mets aren’t in terrible trouble, but their life is slightly more difficult. If this is true, then they are much more likely to have to sell the team I also believe that if the debt was selling at say, .75 on the dollar, or .50 on the dollar, MLB would’ve stepped in, provided the necessary cash (as they did with Tom Hicks, who couldn’t get any more loans) in order to run a selling process.

They have access to capital to sustain day-to-day operations. They might even get away with not having to sell the Mets. But I think they will have to eventually simply because the other MLB teams won’t support them for that much cash. Also, other MLB teams (such as the Yankees) won’t be cool with the Mets in the future taking cash out of operations being used to pay back debts incurred by the Wilpons mismanagement.

The Mets will be sold, the Wilpons will use the sale to pay off their debts and they’ll maintain minority ownership stakes. Who’s the biggest NY Real Estate Magnet right now who seems bored? There’s your future Mets owner.

By: bigxrob

bigxrob — Thu, 17 Feb 2011 16:49:00 +0000

You also don’t have to have either degree to read the posts and learn something new about a topic you aren’t that familiar with.
Plus, economic implications for the owners is a “baseball” story, just ask Pujols.

By: corporatescum

corporatescum — Thu, 17 Feb 2011 16:10:13 +0000

It’s not as bad as it sounds, though certainly not great. This is really just the credit market pricing in what we already know about the Mets risk.

It will certainly hurt them in the form of increased borrowing costs. How much it hurts depends on how much more they need to borrow in the short term.

That said, a price of 90 implies heightened risk, it’s far from distressed or expected default. Generally speaking, really bad would be 75 or less, which would signal the market knows something worse than what’s public, is anticipating bankruptcy, and would not lend any further.

In some sense it’s actually slightly positive under the circumstances, in so far as it indicates that the Mets still have access to new credit if they need it, albeit at higher interest rates. (Selling at 90 means someone bought at 90, which means someone at least, is still willing to lend money to the Mets).

By: paperlions

paperlions — Thu, 17 Feb 2011 15:59:35 +0000

You don’t have to have either degree to skip topics about which you have no interest, another topic will be along shortly.

By: sknut

sknut — Thu, 17 Feb 2011 15:57:20 +0000

I went to a baseball site and economics broke out. Who knew you had to have a law and economics degree to read the sports pages these days.

By: JD

JD — Thu, 17 Feb 2011 15:34:19 +0000

It’s not that surprising that the debt is now selling at a discount because Moody’s recently lowered their rating to Ba+, the highest junk rating that they have. Not a good sign, but not unexpected.

By: Jeremiah Graves

Jeremiah Graves — Thu, 17 Feb 2011 15:29:47 +0000

Also, they’ll finish in fourth place…

By: PanchoHerreraFanClub

PanchoHerreraFanClub — Thu, 17 Feb 2011 15:27:34 +0000

It is not a good sign. By selling the loans at a discount, the banks are basically giving the purchasers a higher return on their money. HIgher interest rate = riskier loan. So, the financial markets are signaling that holding the Mets debt is riskier. The real impact (the Mets don’t pay any more interest, the banks just lose the money) is that Mets will have to pay more to borrow money in the future and probably on their continuing lines of credit.

By: yankeesfanlen

yankeesfanlen — Thu, 17 Feb 2011 15:23:55 +0000

Economic situations are different today than when the Wilpons came into power. They got themselves into what looks like a highly leveraged position with the Metropolitans and then have this Madoff mess to contend with. They may escape unscathed from massive penalities, but I doubt that the bankers are re-assured by such conjecture.
Plus, the quality of the product has gone down considerably due to executive mis-management, reflected by a 17% decrease in attendance in a new ballpark. Roughly the equivalent of a blockbuster movie opening at $50M first week, $7M the next week because of poor word-of-mouth.
Conclusion: Bankers will take what they can get while they can get it. Risk assessment, not a science or an art but a reaction, could bring the house of cards down quicker than Tom Hicks, particularly in the financial capital of the world.