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Why MLB Must Compel the Mets Sale

January 2015

Situation Overview
It is in the best interest of Major League Baseball ( MLB) that the Commissioner compel
existing ownership to sell the New York Mets (Mets) to a party with the financial wherewithal
and credibility necessary to return a winning National League franchise to New York

On-Field Performance

The Mets, which share the largest media market in the country with arguably the most storied franchise in baseball history,
have been mired in mediocrity under a decade-plus of Wilpon majority ownership

The Mets have averaged 79 wins per season over such time (2003-present), while spending $1.47mm per win (on average
21% above the league average), and posting a below average total team WAR in 9 of 12 seasons
Further, the Mets have only reached the playoffs once, losing in the NLCS in 2006, while missing the playoffs on the
last game of the season in back-to-back years in 2007 and 2008
Home attendance has consequently declined by 2.2% per year since 2002, and 7.4% per year over the last 5 seasons(1);
MLB attendance increased by 0.7% annually since 2002, and remained flat over the last 5 seasons
In the near-term, absent an infusion of established and likely expensive players to complement its crop of young talent, the
Mets risk squandering a window to win a window that will be further truncated should the Mets lack the financial means
to extend their young players as their salaries dramatically escalate; this would further demoralize the fan base

Off-Field Performance

In the long run, a failure to provide the resources to field a competitive club will harm the franchise and MLB
The Mets poor on-field performance, coinciding with an ownership that proclaims financial commitment and strength while
undergoing endless emergency capital raises, refinancings, and dramatic payroll cuts, along with the Wilpons business
relationship with Ponzi schemer Bernard Madoff, and other alleged malfeasances, have damaged the team significantly
Having drawn fully on the leagues $70mm line of credit, in fall 2010 the Mets received a $20mm emergency loan from
Major League Baseball
In 2011 the Mets were forced to seek out additional investors, obtaining a $40mm bridge loan in the process
The Mets sold 12 minority equity stakes totaling $240mm in March 2012
In 2013 the Mets refinanced the $450mm of debt encumbering their crown jewel SNY television property, and
reportedly borrowed an additional over $250mm against SNY, all of which comes due in 2015
In 2014 the Mets refinanced an additional $250mm in team debt
Source: Baseball Almanac, Capital New York, ESPN, Fangraphs, the New York Times.
(1) The Mets moved from Shea Stadium, which had a seating capacity of ~56,000 to Citi Field, which has a capacity of ~45,000, beginning in the 2009 season.

Situation Overview (contd)

Commissioners Prerogative

Off-Field Performance (Contd)

The Mets $85mm 2014 payroll was an astounding $32mm lower than the $117mm payroll when Fred Wilpon took
ownership of the team for the 2003 season; despite managements repeated mantra of flexibility, payroll has fallen by
15.9% and 11.2% annually over 3- and 5-year timeframes, and sat 45% below its $154mm 2009 peak in 2014
The club is in the untenable position of having a payroll in the bottom third of MLB while inhabiting its biggest market;
meanwhile, division rivals such as the Nationals and Marlins have made significant financial commitments to upgrade
their clubs this offseason, while the Mets have solely signed a 35 year-old OF who played 49 games last season

Whether it necessitated the aforementioned capital raises or not, the Mets were required to pay $162mm to settle a
clawback lawsuit in connection with the Madoff Ponzi Scheme, though this number has since declined
Nevertheless, the Wilpons relationship with, and substantial funding of their operations via Bernard Madoff further
diminished the Mets finances and public face

In Sept. 2014 COO and heir apparent Jeff Wilpon was named in a sexual discrimination lawsuit by a former Mets employee

A 2014 ESPN survey of over 1,000 fans, judging based on 25 criteria, ranked the Mets 118th out of 122 that is, 5th worst
out of all teams across MLB, NBA, NFL and the NHL, in terms of fan opinion

In a time of rising franchise values, the Mets worth as indicated by Forbes has plummeted in recent years

The Major League Baseball Constitution (the Constitution) charges the Commissioner with the power to act on any
matter that involves the integrity of, or public confidence in, the national game of baseball (Article II, Section 4 of the
Constitution)

Integrity shall include without limitationthe ability of, and the public perception that, players and Clubs perform and
compete at all times to the best of their abilities. (Article II, Section 4)

Public confidence shall include without limitation the public perceptionthat there is an appropriate level of long-term
competitive balance among clubs. (Article II, Section 4)

By words and actions, the Wilpons financial means and/or competence and commitment to winning must be questioned,
while public confidence in the team has plummeted based on the Mets poor performance, and ownerships lack of
investment and credibility; these failings fall well within the purview of the Commissioner, and require imminent redress

The Mets fans and MLB deserve a competitive and entertaining National League team befitting of New York City; the Mets
current ownership has failed in connection therewith, requiring the Commissioner to take action
Source: Major League Baseball Constitution dated June 2005, Capital New York, Court documents, Cots Baseball Contracts, ESPN, Forbes, and The New York Times.

On-Field Performance
The Mets have persistently remained in the National League East (N.L. East) cellar while
assembling a below-average roster over the last decade-plus
Historical N.L. East Standings
Wins

Place

GB

35

25

23

18

25

24

22

17

WP

.407

.438

.512

.599

.543

.549

.432

.488

.475

.457

.457

.488

Team WAR Ranking


WAR

Source: Baseball Reference and Fangraphs combined position player and pitching WAR as of January 2014.

% (Worse)/Better
Than Average

Attendance
Attendance Figures by Season

Citi Field Per Game Attendance

Commentary

Since moving to Citi Field, paid per game attendance has


fallen below projections every single year

Per game attendance also declined each season since Citi


Fields open, prior to a slight uptick in 2014
Meanwhile, MLB attendance over such time has
grown at a CAGR of 0.1%

Note: The Mets moved from Shea Stadium, which had a seating capacity of ~56,000 to Citi Field, which has a capacity of ~45,000, beginning in the 2009 season.
Source: 2009 PILOT Bond Prospectus, Baseball Almanac and ESPN.

Payroll Considerations
Not only have the Mets spent less than their large market competitors at a declining share of
total MLB spending, but the franchise has spent its money highly inefficiently; their $97mm 2015E
payroll(1) would put them behind the small market Brewers, Reds, Royals and Twins
Mets vs. Large Market Payroll Comparison
$mm

(2)

$ in Millions per Win

Source: Payrolls per Cots Baseball Contracts. Wins data per Baseball Reference.
(1)
Via Jeff Passan of Yahoo Sports (https://twitter.com/JeffPassan/status/555813915863433219).
(2)
Large Market index comprised of the Boston Red Sox, Chicago Cubs, Chicago White Sox, Los Angeles Angels, Los Angeles Dodgers, New York Mets, New York Yankees, Philadelphia Phillies and
San Francisco Giants.

Management in its Own Words


Mets ownership has consistently set expectations about financial strength, payroll flexibility and a
commitment to winning universally contradicted by the facts
Public Statements
As we have said before on numerous occasions, this [Madoff] does not and will not affect the day-to-day operations and long-term
plans of the Mets organization and the Citi Field project, the team said in a statement.

2009

In explaining why the Mets will not be affected by family or corporate loses caused by Madoff, Jeff Wilpon said in December, Just
because you guys dont know how much money we have, we have other money from outside of this, from diversity. New York
Times, 2/5/09
Its [allegations of the Madoff investments potentially forcing a sale of the Mets] outrageous, unfounded, irresponsiblegrossly
irresponsibleWe have said from the outset that the losses incurredhave not and will not effect the operation of the Mets. The
team is not for sale, in whole or in part, it is family owned, it will be family owned for the long-termThe team will not be sold, it is
not for sale, they are not seeking investors, they will not seek investors. New York Mets Executive VP, Dave Howard on Fox
Business, 8/31/09
[Fred] Wilpon also denied the team had any financial constraints limiting its ability to spend like a big-market team. He pointed to the
fact that the Mets have the third-highest payroll in baseball.

2010

That answers that, he said. New York Times, 2/20/10


We want to be in the [free-agent] market every year, Alderson said when he was introduced last week. New York Post, 11/7/10
I wasn't hired to apply a Moneyball approach to the New York Mets. I would not have accepted the position were I required to run
the Mets on a shoestring budget. Sandy Alderson blogger conference call transcript, Amazin Avenue, 12/10/10
were always going to have a very high payroll [said Sandy Alderson].
Q: So people shouldnt have the misconception that you guys arent going to be players on the free-agent market down the line?
A [Alderson]: No. Weve got lots of money coming off the books next year. Star Ledger, 2/2/11
[Fred] Wilpon also said the lawsuit would not affect the Mets day-to-day operations and pointed to the teams payroll, which is
projected to be the fifth or sixth highest in baseball in 2011. He said players should not be concerned.

2011

This is an ownership issue, a Sterling Equities issue, and it has nothing to do with what goes on here, he said. As you know, our
payroll is going to be $145, $150 million. Thats tops in baseball, or right up there, and were going to be committed to make sure all
the resources are here and continue to run this team the way its been run. New York Times, 2/17/11
Wilpon provided that answer to SI when he confirmed the likely scenario is that the Mets will not re-invest most of the money
coming off the payroll.
"That's fair," Wilpon said when presented with that assessment. "If you invest your $100 million properly, as most clubs that are
competitive are in that range . . . I think that we have to see what Sandy [Alderson, the general manager] wants to do, and Sandy
wants flexibility. And I'm trying to give him the ultimate amount of flexibility. He's going to have to make those decisions . . . The
answer to your question is yeah, that could happen." Sports Illustrated, 5/24/11

Management in its Own Words (contd)


Public Statements

2012

2013

If you look at payroll, for me, there are really two components. Theres this core group of quality that most teams have. And then
theres the balance of the payroll. And right now, we have a lot of money tied up in a handful of players. So what I hope is that we do
end up with more flexibility over the next couple of years. But also that we can grow the payroll to some extent. Sandy Alderson,
NJ.com, 10/3/12
When you say financial things, when I said three years ago that the Mets weren't affected by the Madoff thing, I was telling the
truthI know you don't want to hear itbecause we weren't sued then. This was prior to the suit, OK? Then did it affect it?
SureListen, we certainly act in certain broad parameters. But the parameters always change. Capital New York, 2/27/12
"I don't know what the market will be at that point, but the payroll will be commensurate with anything we've ever done, because we
can do it," Wilpon said upon arriving at the club's Spring Training complex Wednesday. "Now the people have to come to the
ballpark, but if you have a competitive team, they will. Everything that was in the past -- and you guys saw the pain that we went
through -- is gone.
The Mets' Opening Day payroll decreased from more than $142 million in 2011 to just over $93 million last season, a nearly $50
million drop that was the largest in Major League history. Wilpon said the decline was due in part to uncertainty over the Madoff
situation, in part to conservative baseball-operations decisions and in part to bear financial markets in the country at large. - MLB.com,
2/23/13
The Mets may not be counting stacks of money "as high as some people expect," in general manager Sandy Alderson's words, but
they do expect to increase their payroll heading into 2014.
Alderson said Tuesday that he expects the payroll to be higher than the $87 million that he calculated for last year's budget, though
the GM stopped short of guessing how much higher.
"I don't think our payroll will be below what we saw last year," Alderson said. "As far as where it will finally land, let's defer that
question until all precincts have reported. MLB.com, 11/19/13
We have heard, through sources in direct contact with the organization, that the Mets are expecting another payroll in the $85-90
million range in 2015. Again, Alderson pushes back.
Its important to keep in mind a couple things, the GM said. One is, I actually believe we will have some payroll flexibility that goes
beyond what some people are thinking.

2014

But at the same time, I dont think we expect to go out and spend money just to get to a threshold. We have to see whats there,
both in terms of the free agent market and over time the trade market. We have to evaluate what we have.
If Alderson makes a case for a payroll above $100 million, that needs to be fine (the GM wouldnt comment when asked if could
hit that target, saying: I dont want to talk about any specific number, because that creates expectations. All I am saying is I think we
have some flexibility. But at the same time, I want to spend our money wisely.). New York Daily News, 9/16/14
Jeff Wilpon says Alderson has payroll flexibility in trades/fr agents to improve #Mets this offseason - Joel Sherman/Twitter,
9/23/14
Alderson says he doesnt know if there will be a payroll spike, but that #Mets wont be constrained by money, have plenty of latitude.
Anthony DiComo/Twitter, 9/23/14

Damaging the Reputation of the Franchise


Mets management has come off as incompetent, tone-deaf or worse in a series of bizarre and
for fans highly embarrassing public relations episodes, of which the following represent only a
small sample; these episodes have been amplified by the Mets 2007/2008 collapses, mishaps from
dropped pop-ups to bullpen disasters and the yips, and numerous ill-fated free agent signings
In January 2015, the same day the N.L. East favorite Nationals announced the signing of one of baseballs
top pitchers in Max Scherzer, the Mets announced upgrades to Citi Fields scoreboard, reflecting in the
words of COO Jeff Wilpon the Mets commitment to provide our fans a superior experience(1)
The Mets sole major baseball transaction of the offseason was the signing of Michael Cuddyer
Earlier in January 2015, an embarrassing report surfaced that Mets players were paying $1,000 each, outof-pocket, to train at a team facility; the Mets claimed the workouts were completely voluntary(2)
In September 2014 the Mets former head of ticket sales Leigh Castergine filed a discrimination suit against
Jeff Wilpon, who Castergine alleges fired her over his opposition to her bearing a child out of wedlock(3)
The trial is expected to last through 2015(4)
In April 2014 the Mets circulated a letter asking fans so-called true New Yorkers to support the
team (in spite of the Mets continued on-field failings)(5)
The letter was panned by one of its own signatories, former Met and current Mets announcer Ron
Darling(6)
Throughout 2014 the Mets and top pitcher Matt Harvey appeared to publicly squabble over Harveys
messages on social media and during public appearances(7)
(1)
(2)
(3)
(4)
(5)
(6)
(7)

http://hardballtalk.nbcsports.com/2015/01/19/the-mets-will-have-a-bigger-scoreboard-at-citi-field-this-season/.
http://ftw.usatoday.com/2015/01/mets-charge-players-workouts-1000-dollars-mlb.
http://www.newsday.com/sports/baseball/mets/leigh-castergine-vs-mets-jeff-wilpon-lawsuit-1.9280944.
http://www.capitalnewyork.com/article/media/2014/11/8556288/wilpon-court-proceeding-sets-potentially-ugly-2015.
http://hardballtalk.nbcsports.com/2014/04/30/the-mets-want-true-new-yorkers-to-sign-an-open-letter-of-support/.
http://www.nydailynews.com/sports/baseball/mets/mets-insider-darling-embarrassed-true-new-yorker-article-1.1783544.
http://newyork.cbslocal.com/2014/08/15/6-times-matt-harvey-has-gone-rogue/.

Damaging the Reputation of the Franchise (contd)


In June 2013 it was reported that the Mets had reached out to CougarLife.com to encourage its users to
vote for David Wright for the All Star Game, only to retract the offer after apparently realizing that it might
be inappropriate to partner with a site that works to match strong, successful, sexy older women and the
vibrant, ambitious young men who want to date them(8)
In February 2013 it was reported that Amway, a company in an industry unrelated to baseball, which was
accused of being a pyramid scheme and forced to settle for over $150mm in economic value as part of a
class-action lawsuit in 2010, had signed on as the second tenant with a storefront at Citi Field(9)
In January 2012, Mets reporter Adam Rubin revealed in a series of tweets shocking allegations as to the
Mets mishandling of, and/or lying about injuries to Mets players, several of which proved significant(10)
In May 2011, owner Fred Wilpon disparaged Mets stars Carlos Beltran, Jose Reyes and David Wright in a
New Yorker magazine profile(11)
In July 2009, following a Binghamton Mets game, former Mets VP for Player Development Tony Bernazard
reportedly removed his shirt and challenged several Mets AA players to a fight during a postgame tirade(12)
During the press conference announcing Bernazards subsequent firing, GM Omar Minaya seemingly
accused Mets reporter Adam Rubin of leaking the Bernazard story to force his firing and thereby open up
a spot for Rubin himself in the Mets front office(13)
In June 2008, following a cross-country flight and subsequent win over the Los Angeles Angels, then-GM
Omar Minaya, waiting at the team hotel, received and fired Manager Willie Randolph, pitching coach Rick
Peterson and first base coach Tom Nieto(14)
The Mets reported the decision at 3:12AM ET, in what some speculate was an attempt to bury the story
(8)
(9)
(10)
(11)
(12)
(13)
(14)

http://www.nydailynews.com/sports/mets-david-wright-jilts-cougarlife-ladies-public-relations-rout-article-1.1371931.
http://www.sportsonearth.com/article/42361768/.
http://deadspin.com/5877176/the-mets-colossally-inept-medical-staff-exposed-in-a-beat-writers-twitter-rant.
http://sports.espn.go.com/new-york/mlb/columns/story?id=6578283.
http://www.nydailynews.com/sports/baseball/mets/sources-mets-vp-player-development-tony-bernazard-challenges-binghamton-mets-fight-article-1.426149.
http://deadspin.com/5324064/minaya-calls-out-daily-news-reporter-mets-season-descends-further-into-farce.
http://www.nytimes.com/2008/06/18/sports/baseball/17cndmets.html?pagewanted=all.

Declining Franchise Value


Forbes recently valued the Mets at $800mm, the 9th most valuable team in baseball; the Los
Angeles Dodgers, perhaps the best recent comparable sale, were auctioned off at $2bn in 2012

The Mets
could be
valued at
$1.3bn had
franchise
value
increased at
the league
average

It appears that substantial franchise value has either not been realized, or been destroyed under Wilpon ownership
Hypothetical #1: If the Mets were to have grown at the league average increase in valuation, they would be worth $1.3bn
Hypothetical #2: If the Mets were to have grown at the league average increase in valuation, post-Madoff troubles in 2012, they
would be worth a projected $164mm more than today
Source: Historical annual Forbes MLB team valuations.

Appendix

Citi Field Financials


The Mets Citi Field projections have proven substantially more aggressive and optimistic than
the clubs actual operating performance

Source: Actual data per Queens Ballpark Company annual reports. Projected data per New York Industrial Development Agency PILOT Bond Official Statement dated January 28, 2009.
Actual Attendance figures per Baseball Almanac.
Note: $USD in millions.
(1)
Projected total attendance calculated by multiplying projected per game paid figure by 81 games.