August 14, 2022

Hedge Fund Manager Negotiating Minority Stake in Mets

The Mets have settled on selling Einhorn less than 49 percent of the team for $200 million; Einhorn would not receive a portion of SNY, the team’s profitable cable network. The sale is subject to approval by Bud Selig, the commissioner of baseball, and the Mets said they expected a definitive agreement by late June.

In a conference call Thursday, Einhorn would not criticize the stewardship of the team by Fred Wilpon, the principal owner; did not offer any details of his investment; and said he was not looking for a short-term payoff from the Mets. “I expect to hold it for a very, very long time,” he said.

He said that acquiring a piece of SNY never became an issue, as it did for other bidders, who wanted profits from the channel to offset losses on the team, which could be as much as $70 million in 2011. He said, “I’m not really interested in owning a TV channel.”

Einhorn, 42, the president of Greenlight Capital, moved with his family from Demarest, N.J., to Milwaukee when he was 7. As a child, he once masqueraded as the former Met Dave Kingman at Halloween; in Milwaukee he played softball in his best friend’s backyard, which was next door to Selig’s home.

“If we hit the ball really hard, it landed in the Seligs’ yard,” he said.

By announcing a tentative deal with an investor willing to take a noncontrolling stake in the team, the Mets have changed the topic of conversation after weeks of grim news and controversy. But several sports bankers said that by identifying a single investor, the Mets have scared away other bidders and given Einhorn leverage to demand a better deal. If the talks fall through, the Mets could be embarrassed.

“Rule No. 1 is you never have a press conference unless you have a deal signed,” said a banker who spoke on condition of anonymity because he did not want to affect the business he does with the team. “Now Einhorn owns them because they have to do the deal.”

In the conference call, Einhorn’s language underscored that the agreement with the Mets was not done. And while he emphasized his comfort with the terms of the deal, he never said what the Mets expect from it. But the Mets clearly need the financial boost from his money, after exhausting their $75 million credit line with Major League Baseball and getting a $25 million loan from baseball in November. Half of Einhorn’s investment will finance operations and losses; the rest will repay the M.L.B. loan and bank debt.

In a statement released by the team, Wilpon said: “ We are very excited about David joining our ownership group for several reasons. David’s investment immediately improves the franchise’s financial position. Equally important, David’s intelligence, integrity and success in both business and civic affairs provides us with another perspective in evaluating what is best for this organization and our fans, and we welcome his input.”

Einhorn emerged from a group of prospective buyers Wednesday.

The team lost $51 million last season and has hundreds of millions of dollars in debt. As such, a number of interested parties looked at the Mets’ books and went no further.

“They have to do something,” the banker said. “Their attendance is way off, and they are going to run out of cash.”

Many hurdles remain in any potential sale. Einhorn is likely to want indemnity from any legal settlements involving the court-appointed trustee representing the victims of the Bernard L. Madoff fraud. Given the Mets’ financial woes, he may also want protection from future capital calls that owners are often requested to pay when there are shortfalls.

Then there is the money. If the stake is $200 million, it may take time for Einhorn to organize the financing.

“The problem is, it’s a big check to write,” said Rob Tilliss of Inner Circle Sports, a sports financial advisory firm. “The money and the governance, those are the two inhibitors.”

David Waldstein, Ken Belson and Michael S. Schmidt contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=daf8a49dbbb22831e87481771d9eb1d4

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