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Meanwhile, Fred Wilpon gets $700 million in loans

Jan 4, 2013, 12:30 PM EDT

File image of New York Mets chairman and CEO Fred Wilpon talking to reporters at a news conference in New York Reuters

I guess he hasn’t technically defaulted before, so sure, why not give a guy who has spent two years spinning financial plates close to a billion bucks:

The owners of the New York Mets obtained at least $700 million in loans to refinance debt, according to a person with knowledge of the matter. The financing will be used to replace existing credit lines and provide additional funds to the parents of the Major League Baseball team, said the person, who asked not to be identified because the information wasn’t public.

In other news, Standard & Poor’s cut the ratings of the debt used to finance Citi Field. They’re now BB, which is two levels below investment grade. Howard Megdal’s story on this from yesterday digs into the reasons for that. Which for Mets fans, has to be rather depressing.

  1. number42is1 - Jan 4, 2013 at 12:33 PM

    Serious question to someone out there with an understanding in finance. how does this make any sense at all? Why would someone lend money like this knowing the Mets past history?

    • newpairofsox - Jan 4, 2013 at 1:06 PM

      Apparently their future isn’t looking so bright either…

      From Megdal’s article: “And a deeper look at the supporting reasoning yields a familiar set of conclusions: the ratings agency believes attendance will drop further, on-field play will get worse, and the ownership group’s ability to cover losses is worse than it was a year ago.”

      • bigmacmantle - Jan 4, 2013 at 3:19 PM

        I wonder how Standard and Poor determines on-field play will get worse. Yeah, on one hand I know it is the Mets so one can just assume they will get worse but I seriously wonder how they go about this. Do they have a baseball evaluation department? Poll a bunch of baseball expert consultants?

    • dadawg77 - Jan 4, 2013 at 1:14 PM

      The simple answer is because greater the risk the greater the return and people love rewards.

      But it probably boils down to two things, one the price the Dodgers fetched and two the amount of new TV money entering baseball. The lenders realize in a worst case scenario the Mets will fetch a large price if sold thus they are likely to get repaid. In the meantime, with the downgrade have increased interest rate charged.

    • flosox - Jan 4, 2013 at 1:43 PM

      Most likely its Mezzanine Financing; meaning the collateral pledged is ownership interest in the Borrower as opposed to some sort of real (aka real estate) or personal property. In the event of default by the Borrower, the lender would actually obtain the ownership interest pledged as collateral.

      Whether or not a controlling interest was pledged remains to be seen. However, if we assume the Mets are worth what the Dodgers sold for, you could assume a 35% interest was pledged (also assuming the $700M loan isn’t subordinated to other debt).

      • number42is1 - Jan 4, 2013 at 2:13 PM

        thank you for the clarification. so effectively its a mortgage against the team?

      • flosox - Jan 4, 2013 at 2:38 PM

        number42is1 – In a way, yes. However, a better way to look at it is that an interest has been “pledged”; mortgages relate strictly to real estate. No real estate is pledged with Mezz debt.

        The note and loan documents would include a security agreement that would describe the “pledged” assets; in this case a certain ownership percentage in the entity that owns the Mets. The security agreement would work much like a mortgage in that a mortgage describes the property being pledged as collateral.

  2. chill1184 - Jan 4, 2013 at 12:45 PM

    Hey Selig, how about giving Wilpon the McCourt treatment you hypocritical asshole

    • skeleteeth - Jan 4, 2013 at 1:14 PM

      East. Coast. Bias.

      • Old Gator - Jan 4, 2013 at 2:31 PM

        Asshole buddy bias.

      • chill1184 - Jan 4, 2013 at 6:00 PM

        Actually its called cronyism but thanks for playing that weak excuse.

    • paperlions - Jan 4, 2013 at 3:08 PM

      At the very least because Wilpon hasn’t actually failed to pay his bills yet. He also hasn’t attempted to mortgage the future of the Mets to further line his own pockets, yet. McCourt had no money, no non-Dodger related income, and was using the team as a personal piggy bank. McCourt is just a guy that is mortgaged to his eyeballs in a bad economy because he was allowed to “purchase” anything he controls with very little money down and now his liquid assets are cut after the Ponzi scheme was busted.

      The situations have absolutely nothing to do with each other…..so far.

      • seeingwhatsticks - Jan 4, 2013 at 5:20 PM

        That’s true, but I think it’s reasonable to wonder how much of that is due to the Wilpons getting help from Bud and MLB and other owners. Is Bud helping the Wilpons secure additional financing when he was unwilling to do so for McCourt?

  3. arrooo - Jan 4, 2013 at 12:46 PM

    Same premise as why we let the government spend more money than it takes in. Makes no sense

    • 18thstreet - Jan 4, 2013 at 1:24 PM

      The government’s been running a deficit almost every year since the Republic was founded. It makes sense, because we pay it back.

      • historiophiliac - Jan 4, 2013 at 3:09 PM

        Actually…

      • 18thstreet - Jan 4, 2013 at 4:45 PM

        We’ve never not paid it back. Never. That’s why people loan us money.

        I don’t know what anyone is implying with thumbs up and thumbs down here. We’re a rich country. We borrow lots of money. We pay it back.

      • historiophiliac - Jan 4, 2013 at 7:20 PM

        That isn’t actually how it works, and people don’t loan us money because we pay them back — they loan it to us so they can get interest. It benefits them if we just keep paying them interest and never pay off the debt. That is what A-hole Hamilton had in mind.

  4. thebadguyswon - Jan 4, 2013 at 1:08 PM

    I still think these clowns are preparing to sell at the end of 2013.

    • cackalackyank - Jan 4, 2013 at 1:25 PM

      …you HOPE these clowns are preparing to sell at the end of 2013

    • Old Gator - Jan 4, 2013 at 2:32 PM

      …you PRAY these clowns are preparing to sell at the end of 2013.

      • Old Gator - Jan 4, 2013 at 2:33 PM

        …you SACRIFICE GOATS and pray these clowns are preparing to sell at the end of 2013.

      • Old Gator - Jan 4, 2013 at 2:36 PM

        Clarification: down here in Macondo we sacrifice goats all the time. Chickens, too. Occasionally – and with the indulgence of SCOTUS, no less – a bull as well. Perhaps you can dislodge the Wilpoons with a mere goat.

        We, however, are trying to figure out how to sacrifice a baleen whale in an effort to rid ourselves of Scrooge McLoria. Anyone got enough transparent aluminum handy to build a tank?

      • mazblast - Jan 4, 2013 at 11:54 PM

        Props for the “Star Trek IV” reference.

  5. sdelmonte - Jan 4, 2013 at 1:09 PM

    I suppose I am alone in thinking that as fans we owe it to the team to go to more games to help them stabilize things. Because I am think I am alone in not hating the Wilpons. I really don’t want to see them forced out.

    That said, they should have never been allowed to finance the new park on their own. The banks did what they always seem to do, and put the potential payoff ahead of the risk. But it’s better than having lobbed the whole cost of the park to the taxpayers.

    • chill1184 - Jan 4, 2013 at 6:02 PM

      The Mets aren’t the only MLB team to benefit from sports welfare, in fact only the Red Sox and Cubs have stadiums that were built with their own money.

      • mazblast - Jan 4, 2013 at 11:56 PM

        IIRC neither Dodger Stadium nor whatever name the SF stadium has this year were financed with public money.

  6. cackalackyank - Jan 4, 2013 at 1:09 PM

    “Which for Mets fans, has to be rather depressing”

    Isn’t being depressed part of the mystique of being a Met’s fan?

  7. cur68 - Jan 4, 2013 at 1:17 PM

    Wilpon·i·an
    /ˈWilponēən/
    Adjective
    Relating to or influenced by Fred Wilpon and his methods of fucking up, esp. with reference to big market, high profile, can’t-lose-money Baseball Teams in New York.
    Susceptible to massive losses and direct evidence of unconscionable cronyism by Selig.

    See also “McCourting” & “Loria-ising”.

    eg: “In spite of massive, Wilponian financial losses, the McCourting of The Mets was allowed to continue by Selig. It would only be a matter of time before the team was Loria-ised”.

    • cackalackyank - Jan 4, 2013 at 4:17 PM

      In this equation assume David Wright=Giancarlo Stanton. ie 1 good player=1 good player

  8. washburn1000 - Jan 4, 2013 at 1:45 PM

    sdelmonte- how can you be a Mets fan and not want them gone? Do you realize how bad they’re going to be this year? They literally don’t have one proven outfielder and have done nothing to improve the team. Crazy Freddy is a scumbag and needs to be forced out of MLB

  9. mianfr - Jan 4, 2013 at 2:31 PM

    BB is still investment grade.

  10. albertmn - Jan 4, 2013 at 3:30 PM

    Too big to fail?

    • chill1184 - Jan 4, 2013 at 6:05 PM

      Pretty much but this also subscribes that the free market can actually affect sports ownership which it doesn’t. The days of forcing out bad owners via attendance and it’s related factors is long gone. I would point to this article highlighting the Buffalo Bills and the NFL subsidizing bad ownership

      http://freemarketsports.com/2013/01/02/ralph-wilson-incompetency-defined/

  11. sidelineshot - Jan 5, 2013 at 9:51 AM

    A good example of a dumb sh*t, which happens to own a team that dissapoints fans every single year.

  12. speedyloansearch - Jan 27, 2013 at 5:08 AM

    If this new loan comes with additional time built into it, that does give them some more leeway to figure out some other way to raise well over a billion dollars. Perhaps SNY’s value will continue to skyrocket, and they can borrow against that new collateral.

    Otherwise, whatever the term of the new loan is will be the next realistic date the Mets’ owners might be able to increase spending on the team in a significant way.

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