Commentary

Mets end Madoff mess with a win

Amazin' math: A $162 million fraud judgment equals a victory of sorts for Wilpons

Updated: March 22, 2012, 11:25 AM ET
By Adam Rubin | ESPNNewYork.com

PORT ST. LUCIE, Fla. -- New York Mets principal owner Fred Wilpon and his family proved the big winners on multiple fronts Monday.

First, a settlement was announced in a lawsuit that originally sought $1 billion. Then, team officials acknowledged the organization successfully had received a $240 million infusion from minority investors and paid off immediate debts -- a $25 million emergency loan from Major League Baseball and a $40 million bridge loan from Bank of America.

The dual developments ensure the Wilpons will be able to navigate any immediate financial hurdles without their ownership of the team being jeopardized.

If you interpret that to mean the Wilpons are suddenly flush with money and the days of Mets austerity are over, however, you would be mistaken.

Unless the Mets unpredictably turn into a juggernaut this season, fans flock to Citi Field and the Wilpons' coffers are replenished, many of the same constraints that forced a $52 million payroll slashing during the offseason should remain in effect for the next few seasons.

That is because much of the cash infusion from 12 minority investors buying 4 percent blocks of the team will be devoted to paying down debt and withstanding 2012 operating losses.

Obligations such as $50 million annual bond interest payments on Citi Field should remain in effect. And unless revenues get back in line with expenses, payroll constraints should remain as well.

For the Wilpons, though, the settlement is a major headache resolved in allowing them to retain the franchise.

The reality of the $162 million settlement is that the Wilpons probably will pay less than half that amount, and not a dime until 2016.

That's because the settlement allows the family to apply to trustee Irving Picard -- who is distributing funds to victims of Bernard Madoff's Ponzi scheme -- for reimbursement for losses on some funds.

While the Wilpons made $162 million from some funds, they lost $178 million in other funds, the settlement indicates.

As a result of the settlement, the Wilpons can get on line with other duped investors to get their money back on funds that lost.

Will they get all $178 million? No.

But they might get 50, 60 or 70 cents on the dollar. If they get the middle of those figures -- 60 percent -- that means $106.8 million is deducted from the $162 million they owe.

The final obligation to repay the trustee collecting the Madoff money would be $55.2 million -- split in equal installments in four and five years.

It would be just another sort-of-manageable debt the Mets' owners will have on their plates while they operate on austerity for the next few years.

"I think the Mets got a pretty good deal," said bankruptcy attorney Michael J. Kline of Fox Rothschild LLP. "I would have thought the $162 million would have been done without allowing them to go forward and do the other aspect -- the claim as a victim. Clearly, the Wilpons walk away from this and say, 'We got a victory. We now can focus on baseball and rebuild the team and not go through the pain of weeks of a trial and appeals after that.' … I think on balance, the Mets did pretty well."

By Mets, Kline means the team's owners.

Fans, on the other hand, merely want to see a big-market team investing in quality free-agent players to supplement a robust farm system.

A knockout court judgment against the Wilpons might have forced new, deep-pocketed majority ownership and freed spending.

Instead, this resolution merely adds multimillion-dollar debts to the Wilpons' list for 2016 and 2017. And it means austerity remains the order of the day as far as the ballclub is concerned.

Adam Rubin has covered the Mets since 2003. He's a graduate of Mepham High School on Long Island and the Wharton School of the University of Pennsylvania. He joined ESPNNewYork after spending 10 years at the New York Daily News.
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