March 5, 2021

Mets’ Deal With Einhorn Is Off

The move by the Mets immediately raised questions as to what they would now do to seek an influx of cash to address their continuing financial problems. One person directly involved in the talks between the Mets and Einhorn said the team would try to recruit investors willing to buy stakes in the team for perhaps $20 million apiece.

Doing so might create a roomful of partners for the Mets’ owners — Fred Wilpon and Saul Katz — and would be time-consuming to carry out, but none of those individuals, with their relatively tiny stakes in the team, would have a potential pathway to majority ownership, as Einhorn clearly sought.

In announcing that negotiations had ended without a deal, the Mets said that they had decided “to explore other options,” that they had additional capital “to cover all 2011 losses” and that they were under no deadline to arrange new deals with other investors to provide more money for the team.

Meanwhile, in a conference call shortly after the Mets’ statement was issued, Einhorn said that the Mets sought changes to their agreement late last week, setting the stage for the breakdown in talks.

“I received a new round of comments on our definitive agreement,” he said. “I was very surprised to see that many of the provisions of the deal, that were in place since May, had been changed.”

He added: “A week ago I thought this deal was in great shape and would be done very soon.” But he said that the conversations held with the Mets’ owners after receiving the comments were “troubling.”

In particular, he cited his disappointment at the Mets’ opposition to a provision that would have given him preapproval to be the majority owner of the team at some point in the future. He said that Commissioner Bud Selig “assured us there would be no problem” with such a provision and that after the Mets agreed to it, they then lobbied against it.

The original agreement with the Mets provided Einhorn with an option that he could trigger in five years to gain majority control of the team. The Mets could block that option, but to do so they would have had to return his $200 million. If they did, Einhorn would have remained a minority partner.

The Mets announced their pending deal with Einhorn in late May, four months after disclosing their need to raise money. They have encountered significant financial difficulties, in part because of their investments in the Ponzi fraud run by Bernard L. Madoff, and in part because of the team’s sagging performance and declining attendance at Citi Field, which opened in 2009.

Of the $200 million that Einhorn would have invested, $100 million was to go into team operations, $75 million was to pay bank debt, and $25 million was to repay a loan made in November by Major League Baseball, which was due in June.

Adding to the financial pressures is the fact that Wilpon and Katz are embroiled in a costly legal battle over a $1 billion lawsuit filed against them by Irving H. Picard, the trustee for the victims of Madoff’s scheme.

In seeking to attract people willing to purchase what amounts to a vanity share in the Mets, the owners will be pursuing an option that was previously available to them. The Mets’ investment banker, Allen Company, was contacted by a number of small investors when they were conducting a search for a minority partner that eventually settled on Einhorn.

As for Einhorn, he had been a periodically visible presence at Citi Field over the last few months — with his family in a luxury suite, or standing with Wilpon on the field during batting practice. He was even at the ballpark Tuesday to watch the Mets play the Florida Marlins, the same day that the exclusive negotiating period with the Mets ended. And now, quite suddenly, he is out of the picture.

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