Maury Brown: Shell game may stave off take-over

PolaroidThis morning at Baseball Prospectus, Biz of Baseball’s Maury Brown characterizes Mets ownership’s money moves as a ‘shell game,’ which ultimately could help keep them keep control of the team.

During the last year, talking heads, columnists and reporters have suggested the Mets might owe around $1 billion in debt, which, in combination with poor attendance and a lack of revenue, plus potential legal bills, could ultimately force a sale of the team.

However, Brown’s research indicates that too much is being made of the $25 million loan to MLB, as well as the SNY loan, which he says is essentially a no-interest loan that can easily be restructured.  In other words, “Is the debt so unmanageable as to crush Sterling,” he asks. “The answer is ‘no,’ maybe,” he goes on to explain.

Brown also digs in to how much Ownership could end up owing the Madoff trustee, how minority shares will help the team’s short-term outlook, how does Fred Wilpon’s relationship with Bud Selig factor in, and how much of their fate hinges on player payroll and attendance.

In the end, Brown concludes by writing:

[jbox color="white"]“Sterling’s failing is that they invested poorly in contract construction, and when headwinds hit, here they sit. Is it not entirely out of the question to say that a similar calamity could befall Mike Illitch (with the Prince Fielder deal) or any of the clubs out of compliance with MLB’s debt service rules (the Phillies, for example)? Fans need to take a closer look at what their team owners are really about. There is a constant tug of war that goes on between “my team isn’t spending competitively in the free agency market” and “my team is spending inefficiently in the free agency space.” In the midst of all this, the idea that owners are spending—albeit to a detriment, at times—gets lost. Do you want an owner that is willing to not only spend, but to go into debt to try and bring you a championship? Or are you looking for one that shuttles it aside? … t’s an extreme view, but the reality is, they’re going to move the deck chairs around to try and keep ownership of the Mets. The question is, “Are they rearranging deck chairs on the Titanic?” At least for the time being, the answer appears to be “no”. For the current Mets ownership group, 2012 appears to be make or break.”[/jbox]

To read Maury’s analysis, which requires a paid subscription to Baseball Prospectus, click here.

[line]

Matthew Cerrone: This is a very balanced, fair report from Brown, who does a nice job recapping what’s what and what’s next. In talking to qualified experts in finance and law and sports, I keep hearing that this Ownership’s future in baseball hinges on the upcoming trial and subsequent appeals in the Maddoff suit and how the team performs on field and in the stands this year.

This is why so many fans worry that – in an effort to drive a profit in the face of poor business at the ballpark, because the team isn’t doing well – Ownership will keep slashing the budget, crushing payroll and limiting on-field talent, thus perpetuating the losing, which, in the end, is all fans really care about. It’s a fair concern. However, as one NL East executive said to me, “That can’t continue, it’s a very short-term answer, because at some point those two roads have to cross.” He said, eventually, to increase revenue and generate cash, a team in New York has to sell tickets, and to do that they have to field a competitive team.  He concluded by asking, “The question for the Mets is, and this is the case for every team, where is that balance?”

It seems, to me, it’s in waiting for the farm system to produce a pitching staff (Jon Niese, Matt Harvey, Zack Wheeler, etc.) and a few strong hitters (Ike Davis, Daniel Murphy, Lucas Duda, etc.). So that, after 2013 and going in to 2014, once they can move beyond Johan Santana, Jason Bay and maybe David Wright (who combine to earn close to $60 million), and most of these legal and off-field financial issues are resolved, the Mets can begin spending again and build around their best, young, home-grown talent. It sounds nice, but it’s still a gamble. What’s up, Generation K?

All the while, fans will hang their heads, question management, mope, and they’ll call for people to be fired and traded. But, then they’ll blink, look up and see Victor Cruz salsa dancing with a Super Bowl trophy, despite wanting to fire their coach and quit on the season six weeks earlier … or they wake up in line waiting for a Jeremy Lin jersey they didn’t know they needed a week before. The point is, sports is mostly random. I think the Mets have a plan, but there is no telling how this will play out, or what will happen in the meantime.