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Report: The Mets finally have a minority owner. And Fred Wilpon’s days could be numbered

May 26, 2011, 9:12 AM EST

File photo of David Einhorn speaking at 6th Annual New York Value Investing Congress in New York City

Multiple outlets are reporting this morning that the Mets have an agreement to sell 49% of the team to one David Einhorn of the hedge fund Greenlight Capital, Inc. for $200 million. The sale would not include a stake in SNY, it’s being reported. No word on what kind of managerial control, if any, Einhorn would have.

For those who care about such things, Einhorn is really young — he turns 43 this year — and is a serious poker player too. Colorful guy.

It’s also probably worth noting that Einhorn is in the news this week for much more significant business reasons:  he, as one of the bigger shareholders in Microsoft, is calling for the company to fire its CEO Steve Ballmer.  He’s also famous for being the guy who called B.S. on Lehman Brothers’ valuation and business practices well before anyone else did, and has made oodles shorting the stock of companies he feels are mismanaged. And he’s been pretty much vindicated in all of these assessments.

So: Einhorn is a guy who is not afraid to call for the head of management and he’s a guy who knows how to make a killing on a distressed asset.  Yeah, I can totally see Einhorn agreeing to a deal in which he’s willing to sit back and let Fred Wilpon do everything he wants to do without any power to question, control or take over the course of the New York Mets. No question about it. It’s like, totally his M.O.

It may not be today and it may not be tomorrow, but I have this feeling that Fred Wilpon’s days as majority owner of the Mets are numbered.

  1. jasoncollette - May 26, 2011 at 9:17 AM

    This is pretty much how Sternberg ended up with control of the Rays. Buy in a share and then come around later and get control to get a meddling owner out of the way so the team can succeed.

    The rumor of Sternberg buying into the Mets never materialized, but they seem to have done a nice job in finding his stunt double.

    • Ick McWang - May 26, 2011 at 5:45 PM

      Thats funny, this is exactly what I was thinking when I was reading this article.

  2. halladaysbicepts - May 26, 2011 at 9:23 AM

    Someone please explain the math to me. 49% of the team for $200 million. So, the Mets are only worth a little over $400 million (minus the value of SNY, of course).

    I find this hard to believe. The Mets are in the #1 market in the country.

    • uberfatty - May 26, 2011 at 9:38 AM

      Agree 100%. That’s the first thing that caught my eye too. Weird stuff.

    • dohpey28 - May 26, 2011 at 9:44 AM

      That is their value, not including debt. The Mets total franchise valus is around 900 million, however they have 500 million in debt with things like the new stadium. So that is where the 400 million comes in.

      Usually with a purchase like this, he buys 49% of the equity (the 200 million) plus agrees to take over the same percentage or close to it in the debt.

      • halladaysbicepts - May 26, 2011 at 9:47 AM

        I forgot the debt issues affecting the value of the stake. Thanks for the explanation.

      • dparker713 - May 26, 2011 at 9:48 AM

        He takes on none of the debt. The debt is team debt and remains with the team. The numbers I’ve seen are $1 billion in total valuation, but $600 million in debt.

      • Dan in Katonah - May 26, 2011 at 9:50 AM

        Minority does not mean 49%.

        I’ve known Dave for over 20 years and this should be a very, very good thing for the Mets. He is one of the smartest people I know and a ridiculous baseball fan. Very, very excited but I am sure there will be doubters and wet blankets.

      • dohpey28 - May 26, 2011 at 9:55 AM

        Well if he is part owner of the team then he is now responsible for the debt as well. I didn’t mean it to sound like he was also ‘buying’ debt. Just by buying a percentage of the team he becomes a responsible party debt wise.

        I agree about Einhorn, I am very excited about him as a Met fan being involved, and really hope sooner then later he becomes managing partner.

    • bennyblanco1 - May 26, 2011 at 9:44 AM

      The real value of the team and the percentage of ownership sold dont have to match. The buyers are getting a discount due to the Wilpons financial issues.

      • halladaysbicepts - May 26, 2011 at 9:48 AM

        Thanks for the explanation.

    • simon94022 - May 26, 2011 at 10:00 AM

      There is a control premium, so the 51 pct retained by the Wilpons is worth much more than 51 pct of the total valuation of the Mets. If the Mets were a widget factory making massive profits, then the numbers would line up more closely. A 49 pct minority investor might be happy to pay for 49pct of the revenues. But the real value of buying into a baseball team is that you get to control the team. Einhorn is not getting any control — yet.

      Put another way: If and when Einhorn’s stake goes from 49 to 51 pct, he will pay a substantial “control premium”. That payment will be a lot more than 2 pct of the total value of the team.

    • henryd3rd - May 26, 2011 at 11:43 AM

      Please remember that he’s not buying into the Mets’ baseball network; just the team. His plan seems to wait till the Wilpons are force to seal at a distressed price and then purchase the other 51% on the cheap. I’m sure in the end he’ll own it all, that is the team, stadium and the TV network. He’s made a living buy stocks short and who’s stock is shorter then the Mets right now?

  3. yankeesfanlen - May 26, 2011 at 9:30 AM

    I’m sure it will help having a new sheriff in town, but what are the Metropolitans really worth in the short term without SNY? Additional revenues to clean up the Mets won’t come from Citifield revenues until the team gets better draw, and that means player investment when they want to go the other way and reduce payroll.
    Einhorn (who looks somewhat like AJ) better come in with both barrels blasting.

    • xnumberoneson - May 26, 2011 at 10:03 AM

      In the short term? Nothing. The team is going to have to trudge along with a reduced payroll for a couple of years while Alderson, DePo and Ricciardi work on rebuilding the talent base on the farm. The payer investment will come in the form of overslot draft bonuses and international scouting.

  4. takemytalentstosoutheuclid - May 26, 2011 at 9:46 AM

    So, 49% of the Mets is worth less than A-Rod’s contract? Hilarious!

    • xnumberoneson - May 26, 2011 at 9:58 AM

      The A-Rod contract would have been worth a lot less if he had to play 60% of his games for another team.

  5. sdelmonte - May 26, 2011 at 10:08 AM

    I think I like this guy from what little I’ve read so far. Assuming that the Wikipedia entry is accurate and fair (a BIG assumption).

    And yes, it’s clear that he is very much looking to buy the whole team, and probably a big lump of SNY, and it would not surprise me if Selig is pondering ways to ease the transition. Which might ultimately be why there will not be a league takeover here.

    I’m just annoyed that he’s a few months older than me and he can afford to buy the Mets and I can afford to buy tickets on StubHub.

  6. phukyouk - May 26, 2011 at 10:11 AM

    hes a former client of mine.. SUPER NICE. when he placed 18th in the WSOP he donated every penny of his winnings to the Michael J Fox foundation.

  7. Old Gator - May 26, 2011 at 10:16 AM

    Dan in Katonah: best thing in the responses this AM is your assertion that Einhorn is a big baseball fan. The last thing Mutts fans want is some soulless suit grabbing an undervalued asset on the cheap and then milking it like a Guernsey.

    And perhaps Einhorn also has the smarts and sinews to help Wilpon go head to head with Picard and forge a settlement that won’t cripple the team for the long haul.

  8. Jonny 5 - May 26, 2011 at 10:25 AM

    So the Wilpons are getting bailed out now so they can eventually be forced to minority owner one day when they have to attain more money they no longer have to pay claw back money? Maybe even selling all rights once the judgement comes down?

  9. cur68 - May 26, 2011 at 11:20 AM

    Laces out Dan, Laces out…

  10. PanchoHerreraFanClub - May 26, 2011 at 11:44 AM

    Just what the Mets need, a guy with a serious gambling problem running them. Will he hire Pete Rose to head up the Mets’ PR department?

    • roycethebaseballhack - May 26, 2011 at 1:05 PM

      No….its only a problem if he’s losing. Otherwise, that’s like saying Def Leppard has an awesomeness problem.

  11. APBA Guy - May 26, 2011 at 1:16 PM

    I was interested in Einhorn’s comment about Steve Ballmer needing to resign from Microsoft. That needed to be said 10 years ago.

    • Reflex - May 26, 2011 at 6:31 PM

      Depends on what you consider good management. Ballmer has massively increased Microsoft’s profits over the past ten years, far beyond what the stock price has done. The problem with looking at the stock now is that ten years ago it was riding the bubble and then had a massive drop. Lots of companies from that era have this problem as thier profits catch up to thier valuation.

      Ballmer should be commended for owning catagory after catagory. Xbox, their server marketshare and the Embedded computing space are all areas they were non-players till he came along. Windows Phone is next, and I expect a strong entrant into the tablet space with Windows 8.

      Yes, I’m in tech and I’ve worked for MS. MS has gone from an immature company in the 90’s to a much more mature and forward looking approach. They enter markets for the long haul, and ignore the appeal of making an immediate splash. Watch the cloud services space, MS is already growing there and will continue to do so, as a lot of devs are saying, MS is doing the cloud ‘right’ with Azure.

      I’m not a fan of Ballmer personally. He is grating, loud and abusive. Every bit as obnoxious as he seems in the press. But at the end of the day he’s ruthlessly efficient with the product portfolio, and has done nothing but massively increase profits over the past decade. At some point the stock price will reflect that.

  12. uyf1950 - May 26, 2011 at 4:07 PM

    $200M someone help me to understand. That doesn’t seem like a lot of money for a 49% interest in the Mets (even excluding SNY). Also, I’m not sure how much that help’s the the Wilpon’s. If indeed they are being sued for something between $300M and $1Billion and this sounds crazy but how does a $200M influx of money help them?

  13. martywinn - May 26, 2011 at 5:26 PM

    Was Einhorn in Michael Lewis’ book the Big Short?

  14. seeingwhatsticks - May 26, 2011 at 5:50 PM

    Where’s Chris when you actually need him? I remember saying that any minority owner would be unlikely to take only 20% and no path to majority ownership, and would be unlikely to pay “market” price, and I pretty distinctly remember being called an idiot who had no idea what he was talking about because I didn’t believe everything that Greenberg and the Wilpon camp had to say. I don’t want to say I told you so… well actually I kinda do. I’m petty like that.

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