The New York Mets could not reach agreement on a deal for David Einhorn to buy a minority stake in the team and have broken off talks, the organization announced Thursday.
The sides have been in negotiations for months, with Einhorn reportedly poised to pay $200 million for a non-controlling stake in the team. Einhorn would have had the option of boosting his stake to roughly 60 percent in three to five years, a source told ESPNNewYork.com's Adam Rubin. That option could have been blocked if the Wilpons returned Einhorn's $200 million and allowed him to keep one-sixth ownership of the team.
A source close to the situation told ESPNNewYork.com's Rubin on Thursday that the Mets will now change course. Instead of turning to one of the reported runners-up, such as commodities trader Ray Bartoszek, the team will now try to sell a series of smaller units to family and friends to reach the $200 million stake they desire.
Anywhere from four to 12 such shares could be sold, with no member being able to put together a group to form a majority stake. According to the source, Bartoszek would be welcome to buy one of the smaller shares.
The source said such an arrangement could come together quickly.
The source also said that Einhorn's claim that the Mets kept changing terms at the last minute was not accurate and that it was actually Einhorn who thought the Mets were in a compromised position and tried to bend the terms to his advantage.
There were signs that the talks were not progressing in July when the team briefly began talks with other bidders, but sources said that the Mets still expected to close a deal with Einhorn.
The Mets have been seeking a minority partner to infuse cash into the organization because they face uncertainty over a lawsuit brought by the victims of Bernard Madoff's Ponzi scheme. The victims' trustee, Irving Picard, is seeking to recover what he considers ill-gotten gains the Mets received from the scheme. With penalties, Picard has sought as much as $1 billion.
Einhorn, president of the investment firm Greenlight Capital, had attended a Mets game as recently as Tuesday but was informed of the Mets' decision at a meeting between the parties in Manhattan on Thursday morning, according to a source.
Einhorn said he believed the deal was on track as recently as the middle of last week, but then was troubled when he received modifications to the contract before last weekend.
One example, Einhorn said, was that he wanted a clear path from Major League Baseball to gain approval from other owners to become majority owner of the Mets should he successfully exercise that contractual right in a handful of years.
Einhorn, 42, said the Wilpons informed him early on that MLB would have a problem with that language in the contract. So Einhorn indicated he met with Bud Selig, who said that the commissioner's office would not be an impediment to the contract calling for a trigger for other MLB owners to vote to approve him as majority owner should the agreement with the Wilpons eventually call for it.
But, Einhorn alleged, the Wilpons subsequently lobbied MLB to prevent the language calling for a vote of other owners from being included. And the latest contract revisions had omitted the clause that previously had appeared in the agreement, Einhorn said.
"After all, it wouldn't make sense to invest $200 million into a team and then be denied the ability to exercise a negotiated option down the road due to the inability to obtain the required vote of other major league owners at that time," Einhorn said.
Einhorn said that was only one example of several unilateral changes made to the agreement by the Wilpons entering last weekend.
"I was surprised," he said. "I was very surprised."
Einhorn said he does not intend to pursue another MLB ownership opportunity in the near future. He added that there will be no forthcoming litigation with the Wilpons. He declined to speculate about whether he believed the Wilpons had become emboldened because of apparent positive developments in the $1 billion lawsuit against them over the Madoff scheme.
Einhorn thanks the Mets and MLB for the experience and concluded: "This has been a very interesting summer for me. I've learned a lot."
Despite the Einhorn deal falling through, the Mets said Thursday they are not in trouble financially -- that they can cover 2011 losses and still operate the team. The team said it is not under financial pressure to get a deal done sooner rather than later.
"We are very confident in the team's plans -- both off and on the field," Mets chairman and CEO Fred Wilpon said. "We will engage with other individuals, some who have been previously vetted by Major League Baseball, along with other interested parties, regarding a potential minority investment in the franchise. My partners and I thank David for his interest in considering this opportunity and wish him well in the future."
Mets manager Terry Collins said Thursday night that the situation will not affect the team on the field.
"When I took this job, I was going to try and stay out of stuff that I have no control over, that doesn't include me," he said. "(I knew) going in that there's a lot to this job on the outside away from the field, but I'm responsible for the promotion of this team, the play of this team and that's pretty much where I leave it.
"Am I informed on things going on? Of course. But Jeff (Wilpon) was just in and just said, 'Look, I want you to know we're moving forward, and it's business as usual as far as you're concerned.' "
"I think it has zero effect on us," third baseman David Wright said. "I got a chance to meet him. He seemed like a nice guy, seemed like a very smart guy. I enjoyed the conversations I had with him.
"But at the end of the day, it has really no effect on anybody in here. It's obviously the people upstairs that know more about it than we do. We just read the headlines. I just don't think it has much effect on the guys on here at all."
There has been talk that uncertainty around the team's finances might prevent the Mets from re-signing impending free agent shortstop Jose Reyes.
"It's still too soon. I don't have a plan yet to see what's going on after the season," Reyes said. "I still haven't sat down with my agent yet. Like I said, it's still too soon to talk about what's going to happen. We'll have to wait and see until after the season."
Adam Rubin covers the Mets for ESPNNewYork.com. Information from ESPNNewYork.com's Mike Mazzeo was used in this report.