If You Have to Ask, You Can't Afford It
At The Athletic today, Daniel Kaplan poses the question as the whether the bids being offered on the Mets reflecting a "pandemic discount". Specifically, Kaplan points to the $2 billion bid that Steve Cohen is rumored to have placed in the just completed first round of bidding, 23 percent less than the $2.6 billion that Cohen bid on the club back in February.
Kaplan goes on to refute the idea that the pandemic will affect the long-term value of sports franchises, citing experts at franchise valuations and bankers that the effects from the virus will be short-term. Unfortunately for the Wilpons, they aren't in a position to hold onto the team until the outlook clears up in a couple of years.
Apparently all is not lost for Fred and Jeff, however. Kaplan cites Michael Rapkoch, the founder and president of Sports Value Consulting, that something called an earnout might be written into a potential deal that would allow the seller to get additional compensation if future revenues exceed a certain level. I find it interesting that the Wilpon, once accused by Nelson Doubleday of deflating the value of the club when Fred was buying him out, would now be dependent on the new owner's accounting in that case. Doubleday might have a chuckle over that development if he was still around.
Kaplan pointed out that one of the reasons sports franchises like the Mets are so highly valued is for the large tax write-off. A buyer can amortize the purchase price over 15 years, which would provide a huge tax benefit. So, even if a potential buyer might be looking at decreased revenue for a couple of years, that sweet tax write-off is good for the next decade-and-a-half.
The story also includes a few digs at the Alex Rodriguez-led group that supposedly had the second-highest bid. Mentioning the story in ESPN about some celebrity football players that were investors in A-Rod's group, Kaplan quoted an unnamed investment banker that showcasing famous investors might be a sign that the group is desperately trying to attract investors because they're short of capital. I won't speculate on that, but if Alex wants to give me a call I'm willing to throw in my 4 figure investment with him that was so rudely spit on in the first round of bidding. All I'm asking in return is one of the smaller luxury suites furnished with two comfortable dog beds for a couple of good friends. Call me.
Of course a lot can change between now and the final sale of the club. I don't think I'd be as quick as Kaplan's source to write off A-Rod's bid. Alex and Jennifer Lopez have done a good job of attracting some big investors along with the football players, and I believe their plan to turn Citi Field and the surrounding area into an entertainment and shopping venue is a really good one. Frankly, no matter who wins the bidding, I would think the buyer would have to look at expanding their investment into that neighborhood. You could turn that area into something really special, and the fact that it hasn't been done yet is a huge missed opportunity.
Continue reading by clicking here.
Kaplan goes on to refute the idea that the pandemic will affect the long-term value of sports franchises, citing experts at franchise valuations and bankers that the effects from the virus will be short-term. Unfortunately for the Wilpons, they aren't in a position to hold onto the team until the outlook clears up in a couple of years.
Apparently all is not lost for Fred and Jeff, however. Kaplan cites Michael Rapkoch, the founder and president of Sports Value Consulting, that something called an earnout might be written into a potential deal that would allow the seller to get additional compensation if future revenues exceed a certain level. I find it interesting that the Wilpon, once accused by Nelson Doubleday of deflating the value of the club when Fred was buying him out, would now be dependent on the new owner's accounting in that case. Doubleday might have a chuckle over that development if he was still around.
Kaplan pointed out that one of the reasons sports franchises like the Mets are so highly valued is for the large tax write-off. A buyer can amortize the purchase price over 15 years, which would provide a huge tax benefit. So, even if a potential buyer might be looking at decreased revenue for a couple of years, that sweet tax write-off is good for the next decade-and-a-half.
The story also includes a few digs at the Alex Rodriguez-led group that supposedly had the second-highest bid. Mentioning the story in ESPN about some celebrity football players that were investors in A-Rod's group, Kaplan quoted an unnamed investment banker that showcasing famous investors might be a sign that the group is desperately trying to attract investors because they're short of capital. I won't speculate on that, but if Alex wants to give me a call I'm willing to throw in my 4 figure investment with him that was so rudely spit on in the first round of bidding. All I'm asking in return is one of the smaller luxury suites furnished with two comfortable dog beds for a couple of good friends. Call me.
Of course a lot can change between now and the final sale of the club. I don't think I'd be as quick as Kaplan's source to write off A-Rod's bid. Alex and Jennifer Lopez have done a good job of attracting some big investors along with the football players, and I believe their plan to turn Citi Field and the surrounding area into an entertainment and shopping venue is a really good one. Frankly, no matter who wins the bidding, I would think the buyer would have to look at expanding their investment into that neighborhood. You could turn that area into something really special, and the fact that it hasn't been done yet is a huge missed opportunity.
Continue reading by clicking here.
1 comment:
NY Post this morning has Sheldon Adelson, a despicable lizard of a person, joining the bidding. I feel like I’m staring into the abyss.
Post a Comment