12/23/15

The Morning Report 12.23.2015 | More Information on Wilpon's Finances, Mets Still Playing Small Ball with Payroll, Posting Date Set for Kenta Maeda

30 comments

Howard Megdal | Vocativ- It’s hard to overstate the opportunity the New York Mets currently enjoy. It’s no less hard to overstate the absurdity of how little they are doing to capitalize on it. But that’s not how this is going down. Because the New York Mets’ owners, Fred Wilpon and Saul Katz, are drowning in debt. Back in 2008, the team’s investments with Ponzi schemer Bernie Madoff were discovered to be a fraud. Accordingly, just to stay afloat, they needed to take out a $430 million loan against the team and $450 million against their majority ownership stake in SNY. Ever since, the Mets have managed to get by annually by diverting revenue from their baseball and television operation into the financing of debt. Prior to the refinancing of the past two years, the annual interest on these two loans plus debt balloon payments of more than $43 million have exceeded team payroll itself.

(Chris Soto: We all knew that the Wilpons had fallen on hard times after the Madoff fiasco...but the sheer size of the loans that were needed in order to keep their businesses afloat is just maddening. No wonder the Mets have no money to spend on the team.....because it's all tied up in interest expenses. The scary thing is, the whole diverting profits from baseball to personal businesses is exactly what got former Dodgers owner Frank McCourt booted from the league. Yet Bud Selig found it appropriate in the Wilpons case? Strange indeed.)



Matt Vaccaro New York Post- The men who own the Mets would like to believe 3 ½ good months has earned them not only your blind faith, but also your amnesia. They would like you to trust them, and also to forget that once upon a time, they promised all it would take for them to dust off their wallets and act like a varsity club again would be the kind of success that would bring you back to the ballpark. Look: It is possible there is a plan here. If there is one member of the Mets’ brain trust who has earned the benefit of the doubt, it is general manager Sandy Alderson. The men he works for … well, that’s another issue. The Mets are likely headed for another season in the lower third of payroll

(Chris Soto: While I certainly question some transactions that the Alderson/Ricco/dePodesta troika has made, overall I continue to support their regime's path and strategy towards building a multi year contender. One thing is very clear about this off-season, they do not want to commit to anyone past a 2 year guarantee. This lines up nicely with when all of the Big 5 SPs [sans Steven Matz] will be receiving arbitration raises. Perhaps there is future plans to sign these guys to guaranteed extensions. If that's the case then I can see why the club doesn't want to bog down future payroll commitments yet as shown in the graph below.)




HOT STOVE REPORT (courtesy of mlbtraderumor.com)
  • The reason 2B Daniel Murphy's market has been so quiet is because he himself was not aggressively pursuing a contract. Until the Mets traded for Neil Walker, Murphy was still holding out hope that the only team he has ever played for would make him a better offer than a 2 year contract.
  • The deadline to submit offers for Japanese RHP Kenta Maeda has been set for January 8th. Maeda is the best SP to come from Japan since Masahiro Tanaka and is expected to fetch a similar contract to the 7 yr/$155M Tanaka received.

30 comments:

bob gregory said...

Really?

What difference does it really make?

Saving money and refraining from commitment to more than 2 yr contracts in order to save money to pay the pitchers???

What good will saving money to pay the pitcher's be in 2 years when there will be no money to pay for offense to score runs???

Seriously. All of these excuses and attempts at understanding or trusting of this organization's intentions make no sense.

How many times do Met fans have to be burnt before learning not to touch (trust)??

Now I am completely angry that MLB did not treat the Wilpons like it did McCourt with the Dodger situation.

Thomas Brennan said...

Screwing Met fans while swimming in their debt swamp? Call for a lifeline...sell the team.

Ernest Dove said...

Im not 'buying' the theory of Mets saving up to extend the stud pitchers later.
Wouldnt their financial woes currently instead be more incentive to extend their studs NOW and give them Stanton type deals where yearly salary is higher in later years when they would supposedly have less debt?
My pessimist opinion is that our Mets will maybe resign 1 or 2 of the 5 studs at most to extensions.
They will then pray for kiddies like marcos molina to be good to take their places.

Dallas said...

Is the Dodgers/Yankees/etc market that much bigger than the Mets? If they are all spending 100-200 million more than the Mets I'm baffled about how the money the Mets havent spent over the last 5+ years hasn't paid it off.

Yaakov Richman said...

http://www.nydailynews.com/sports/baseball/mets/wilpon-explains-amazin-drop-payroll-article-1.1263103

Mack Ade said...

It still amazes me how quickly the fan base can urn on a National League championship team

Stephen Guilbert said...

No one is turning on the team, Mack. You see zero people turning on the players, coaching staff, training staff, PR guys, minor leaguers, scouts, minor league instructors. No, who are the fans turning on? And is that justified?

Mack Ade said...

Stephen -

I agree with you that it's a bad signing, but the Wilpon finances in an old story and the money owned and interest due will not go away. Anyone that has been under the water this much understands this.

Herb G said...

All this furor, and why? Simply because Sandy does not see fit to resign Cespedes by giving him 6 or more years and $20+ million AAV. There is absolutely no question in my mind that all would be just peachy with all these cry babies if SA brought Cespedes back, even though that may not be the most prudent way to allocate their resources.

Hey guys, is the team Alderson has assembled so far (with 1 or 2 more signings yet to come) much stronger offensively that last year's opening day roster? Walker, Cabrera, Flores, Tejada vs. Murpphy, Flores, Tejada, Muno up the middle? Conforto, Lagares/De Aza, Granderson vs Cuddyer, Lagares, Granderson, Mayberry in the outfield? Plawecki vs. Recker behind the plate? And the rotation . . how much better are we with Thor and Matz, than with Niese and Gee? AND, Sandy has retained significant payroll flexibility to make a major move at the deadline, if warranted, rather than tieing everything up now. So, quit yer bellyachin' and start rooting.

LETS GO METS! LETS GO METS! LETS GO METS!

IBfromWhitePlains said...

@Herb G

Yeah.

This is a 10X better team right now than the team they fielded in April 2014. I expect some pieces to change at some point and I bet anything the 2016 Mets are back in the playoffs. Not sure why Span or Fowler would be so much more preferable than de Aza and de Aza couldn’t by any shittier in center than Cespedes.
As far as being cheap, how much are they paying the center field platoon? $13 million a year?

I’ll take Bob’s “fool’s choice” and have some faith.

Anonymous said...

Well put, Herb.....it sickens me to see how bi-polar the majority of the fan base can be.

We are just a couple of months from a wonderful season, to include a deep post-season run. Yet, you would think that it was another failed offseason with a last place finish.

Screw comparing payrolls and look at our roster. This team should be the favorites in the NL East and a factor in the playoffs again in 2016.....that's a good thing and a reason to be happy!

Maybe it is just a remnant of "battered Mets fan syndrome"?

Sandy has a plan and I trust him to carry the plan out. Short term contracts this offseason are smart, because of what is coming down the pipeline on offense.

For example;

Herrera will take over for Walker in 2017.

D. Smith will take over for Duda in 2018.

Rosario and/or Chechini will take over at SS in 2018.

Nimmo and/or Becerra will join Conforto in the outfield in 2018.

Not to mention, we still have depth/talent behind the plate, a veteran presence at third base and a beast of a pitching staff going forward.

In my estimation, we are set up nicely going forward. When our pitching starts to get pricey, there will be money available due to our young players on offense not yet earning big bucks.

If the fan base cannot see that then they just aren't looking.

bob gregory said...

Mack
Just keep in mind.
This isn't a sudden turn.
It built for over 5 years.
Then it was briefly appeased and given hope.

To take that hope away, magnifies the discontent by multiple factors.

This fan reaction should not be a surprise in any way, shape, or form.
I cautioned about this before the off season even began.

Mack Ade said...

IB - Herb:

Look, I don't like the signing anymore than Stephen and most of the comment writers here (#MetsTwitter is ablaze), and I'll have my spin on this come Saturday morning in my Morning Report, but the fact still remains that the current team debt is not going to go away unless you start to pay it down.

I think, to a degree, that the team got lucky last year. They started out on fire in a division that was playing well below its projections and the Cespedes signing paid huge dividends (before the playoffs). 2015 was not supposed to be the 'year of the Mets'.

The Mets debt is not going to go away if all you do is make an interest payment. once in awhile.

bob gregory said...

Herb.
Don't trivialize this as a reaction to just the front office not signing Cespedes.

It goes well past that as the article written by Stephen Gilbert today explains so very well.

Mack Ade said...

Bob -

your warnings proved to be correct...

Dallas said...

Maybe we hit gold with De Aza and don't know it yet. Maybe we go into the trade deadline again being forced to upgrade the position by giving up young talent when we could have done it right the first time by spending a little more. Maybe Nimmo is the answer if he flails around. I guess we will see. The team is better than last April but that was a .500 team. Its probably not better than the August/September team we fielded. Maybe by the time Wheeler joins the rotation or if some of our hitters grow it will be better. They still have to sign a reliever so lets see how that goes.

bob gregory said...

Then MLB should never have treated the Wilpons differently than McCourt ' s Dodgers.

Mack Ade said...

Anonymous -

You are correct too.

I've said this over and over...

You build your future with draft picks and international free agent signings.

You then use trades and the free agent season to fill in the holes

IBfromWhitePlains said...

I say, read S. Guilbert's article carefully. He doesn't know if the Wilpon's are still using team profits to pay off debt. He throws it out there as a possibility for not signing big time FAs. Then he cites an article written in 2013(!) and, lo!, it quotes Wilpon saying he had been doing it but it's a done deal!

I'm not here as Wilpon apologist. Just a cautious reader. He might very well still be siphoning money. I have no way of knowing this.

As far as the anger is concerned, yes, it was far too predictable.

bob gregory said...

Megdal had an article today indicating this is still happening, I believe

Mack Ade said...

IB -

Stephen is quoting Howard Medgal.

Howard is a well known Wilpon hater who has written a book on this subject.

I'm not defending the Wilpons and I wish they would sell the team and go buy some more real estate, but...

if you own a business and you owe hundreds of millions of dollars... and your interest payments alone are more than your current revenue... and someone comes to you and says that the answer to your future problem is to offer a multi-year deal to the most expensive player available in the free agent market... it's NOT going to happen.

IBfromWhitePlains said...

Fair enough Mack. It's not going to happen. But, I only see a link to the Daily News article from 2013. Nothing for Megdal's recent reporting. My Googling search came up empty.

Mack Ade said...

IB -

Here it is but it's old news:

http://www.vocativ.com/news/262818/the-new-york-mets-operate-like-a-ponzi-scheme/

bob gregory said...

And so.....
MLB needs to step in

Mack Ade said...

Bob -

I'm not sure what Howard is accusing the Wilpons of.

I owned radio stations in Florida that included a $2mil loan. I only had to make interest payments in the first year.

If a particular month ended, and my checking account had more money in it that there was when the last month ended, that meant I made money that month.

I had the right to write myself a check for some of it, as long as I reported it on my profit and loss statement each month. A copy of that P%L report was sent every month to my bank.

Now, if Howard is accusing the Wilpons of siphoning off money without reporting it on the financial statements... well, NOW you have a legal problem and BOTH the banks that gave you the loans and the league office should be notified.

What Howard needs to do is tread lightly. The Mets are fully capable of suing him for his statements if they are untrue.

bob gregory said...

I only care in so far as the Wilpons situation should be treated now as the McCourt situation was then.

MLB has the power to make the Wilpons sell.

Mack Ade said...

Bob -

That isn't going to happen. This is a case of bad judgement by the Wilpons (Madoff) that we are all going to have to live with for 4-5 years

bob gregory said...

More than 4-5 years Mack.
This financial position the Wilpons are in is not going to improve for more like 15+ years given the sheer size of the debt.

Keep in mind, baseball salaries will continue to rise and other team payrolls will continue to rise, putting the Mets farther and farther behind.

More fan drop off continues the complications.
If the finances are in such poor shape now that the team can not have a $120- $130 million payroll after 5+ years......

It will definitely take more than 4-5 more years.....

The fans have been patient beyond what is reasonably acceptable.

The Wilpon's need to understand many fans will now go beyond being angry. At least anger shows passion that can result in the return of fans like occurred this past summer & fall.

Now... anger will give way to disinterest. No return from disinterest.

IBfromWhitePlains said...

Mack. Thanks for the Megdal link. Question: What business runs debt free? You think about buying a stock you check the assets, the cash, the DEBT, price to earnings, etc. Everything is leveraged. Megdal just sort of intimates the Wilpons are up to no good without ever saying that directly. Like you said, he better tread lightly -- and it sure looks like he does.

Anyway, I've put in more than my 2 cents. I'll shut up now. Cheers.



Herb G said...

Bob-
I hope you see this so late in the day. I've been in the City at a show and this is the first chance I have had to check back in.

I'm not making light of the reaction to the De Aza signing. I realize that it is born from years of suffering and frustration from losing coupled with the lack of spending. However, I am saying that the failure to sign Cespedes is what ignited that frustration and we would not be seeing this reaction if Cespedes was signed. The reaction, IMO, is primarily from fans who equate winning with spending, and don't see any other way to build a winner. The response, IMO, is totally inappropriate. Sandy's plan is as valid today as it was last year. There are no guarantees, of course, but he believes that what he is doing is the best way to get us back to the WS. I think he has earned our trust and we fans should give him the benefit of the doubt rather than bitching and moaning and disparaging him and/or the owners.

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