Best part: you, the fan, get to pay for it! - HM
Make of the following what you will.
In the summer of 2015, Fred Wilpon and Saul Katz refinanced roughly $700 million of debt owed by the team and SNY, stemming from the Bernie Madoff implosion and its aftermath. At the time, Sterling Equities owned 65% of SNY and 60% of the Mets. The new five year loans against separate entities carried lower interest rates and tied the maturity dates together, according to reports both in the New York Post and FORBES.
Then there's this Twitter exchange I recently had with writer/editor Howard Megdal:
Now it is theoretically possible that they have paid down some, hell even all, of that massive amount of debt. Intrepid reporters ought to find out, because the saddling of that annual interest, plus the stadium payments, have been a virtual MLB payroll on their books since 2009.— Howard Megdal (@howardmegdal) February 13, 2019
No I totally hear where you thought this was coming from. Generally if you are servicing the loans and the banks judge you have adequate capital/assets to cover the loan itself (which they do with Mets/SNY) they’ll be happy to let you keep paying interest because, why not?— Howard Megdal (@howardmegdal) February 13, 2019
Again, and not trying to be difficult here: the article doesn’t remotely claim that the Mets are on track to pay off the debt in five years. You are misunderstanding how this loan term works. Hope this is helpful.— Howard Megdal (@howardmegdal) February 13, 2019
No one is reporting they are doing either atm. But that is both what they did for years with previous loans and almost certainly how they are handling this one, though I am open to new reporting that states otherwise. The loan term definitely does NOT mean this.— Howard Megdal (@howardmegdal) February 13, 2019
Last point on this: hard to even see what their motivation would be to pay down the loan, since they can service it using revenue that would otherwise be spent on the baseball team, and MLB obviously isn't going to step in. Best part: you, the fan, get to pay for it!— Howard Megdal (@howardmegdal) February 13, 2019
Call me naive, because I actually believed ownership was paying down debt. But Howard is in the business whereas I do this for fun. He could very well be spot on in suggesting the Wilpons have indeed been doing nothing more than paying off interest. Suddenly, we may even have a hint of circumstantial proof. Fred Wilpon recently paid $180 million to buy back a 12% stake in the team owned by Comcast and Charter Communications in a deal Josh Kosman of the New York Post says, "values the struggling team at roughly $1.5 billion, the Post has learned." In their 2018 annual report, FORBES valued the Mets at $2.1 billion. Simple math puts the difference in valuation from one year to the next at $600 million. Is this due to the six to seven hundred million of principle potentially still owed by Saul Katz and the Wilpons?
Sure would explain a lot, wouldn't it?
Last year I also broached The Case of the Missing $20 Million Dollars:
According to a a Joel Sherman article, the Mets in 2017 had an Opening Day payroll of roughly $155 million. Fans and media were then informed during the off-season the Mets would be slashing their 2018 payroll by $20 million. Jeff Wilpon offered no detailed explanation other than to say the club desired to spend less money more wisely. However, the underlying truth may have been revealed by Mike Ozanian of FORBES, when he wrote in a March 2018 article how Citi Field posted revenue of $168 million and net income of $75 million in 2016, then in 2017 generated revenue of $163 million and net income of $97 million. Although they lost $5 million in revenue, they gained $20 million in net income. But as Mike Ozanian puts it, the $97 million net income was goosed by a $28 million credit for Requisition of PILOT O&M credits (Payment In Lieu of Taxes/Citi Field bonds). Simply put, they overpaid and received money back. However, it's money they would not realize again for the 2018 season. Considering Citi Field attendance dipped slightly from 2016 to 2017, it's my opinion ownership therefore tried hedging themselves to at least keep net income steady at $75 million.
I ask you, is this all coincidence or just my Mets imagination running wild?
On Jacob deGrom's contract extension:
Jacob's contract does not necessarily raise payroll insofar that his big money years kick in when Yoenis Cespedes' contract expires. In the meantime, Jacob agreed to defer money and pair down his upcoming 2019 salary to $7 million. Otherwise, Mets payroll entering Opening Day remains near the $150 million range, the same it's been more or less since 2017.
UPDATE: March, 29, 2019
FORBES: Citi Field Profits Fell 44% in 2018
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