Report: Mets seek cash through loans

The New York Mets are attempting to sell minority shares of the team in the form of loans, according to a report in the New York Post.

Since a $200 million minority investment from hedge-fund guru David Einhorn fell through in September, the Mets have attempted to sell smaller shares of the team in order to infuse cash into the organization.
The Post reports minority investments in the team are being offered like loans.

In essence, the report states, an investor who purchases a $20 million or $30 million share of the team would be given 3 percent interest per year for six years. At the end of that period, the investor would be able to recover his principal and the accumulated interest -- the equivalent of a high-stakes certificate of deposit.

Alternatively, the Post reported, the investor would be able to retain his minority share in the team and not collect the interest. Either way, there is no path to majority ownership.

It's a similar structure to the arrangement with Einhorn that fell through.

Sources told ESPNNewYork.com that Einhorn originally would purchase 33 percent of the team for $200 million. Einhorn, within three to five years, then would have had the option to increase his stake to 60 percent.

However, Mets principal owner Fred Wilpon and his family could have blocked that option by returning Einhorn's investment and allowing him to retain one-sixth of the team -- which means that, for loaning the Wilpons $200 million, Einhorn would have owned 16.5 percent of the Mets.

Earlier this week, chief operating officer Jeff Wilpon declined to discuss the progress of the sale of minority shares in the team, other than to characterize it as "going very well."

He declined to identify anyone who has invested at that $20 million level or thereabouts.

"Some of the people don't want to be public," Wilpon said. "Some of the people might never be public. I don't think anybody knows all the minority shareholders in each of the other teams. Do you know all the minority shareholders in Atlanta or Kansas City or St. Louis, Cincinnati, the Yankees? It's just not widely known."

Jeff Wilpon additionally asserted that this would be a non-issue if the minority investors had come on board at the same time as his family bought in.

"If they were brought in Day 1, it would be just like any other (team's) situation," he said.

However, the Wilpons' predicament is not like other teams' situations because Fred Wilpon has estimated that the organization would lose roughly $75 million in 2011.

The family also still faces a lawsuit from the trustee trying to recover funds for victims of convicted swindler Bernard Madoff's Ponzi scheme.

The Wilpons recently indicated in court filings that they will settle a second Madoff-related suit, this one with employees of another of their businesses, Sterling Equities. That lawsuit claimed Sterling Equities breached its fiduciary responsibility in allowing its employees to invest 401(k) retirement funds in Madoff funds.

The Mets acknowledged Friday a layoff off nearly 10 percent of their workforce.

And commissioner Bud Selig recently acknowledged the Mets had not repaid a $25 million loan from Major League Baseball, though Selig expressed confidence in the state of the team's finances.

"We're doing fine with the Mets," Selig said. "I don't have any concerns about the Mets, as I think I've told you before. They're working on an alternative financing plan, and they seem to be very encouraged, and I'm encouraged. I do have a lot of worries today, but frankly I'm happy to say the Mets are not one of them."

The Post report stated the Wilpons recently had to inject another $38 million into the team to keep it afloat.

As for getting the minority investors all on board, Jeff Wilpon said: "There's an internal timetable that we're not going to share. There's not a deadline -- that everything has to be done."

Adam Rubin covers the Mets for ESPNNewYork.com.