Friday, March 09, 2012

The Mets Mess – is it time for Bud Selig to act?

At the start of the 2011 Major League Baseball season, Commissioner Bud Selig acted in what he believed was in the best interest of baseball – taking control of the Los Angeles Dodgers. Dodgers’ majority owner Frank McCourt, and his ex-wife Jamie McCourt, were embroiled in a bitter divorce with ownership of the Dodgers. The start of the 2012 MLB is a month away and Selig must be wondering if he’ll be forced again to take control of another storied baseball franchise, the New York Mets.

Last Monday, Federal District Court Judge Jed S. Rakoff, ruled Mets owner Fred Wilpon “must pay millions of dollars to the victims of Bernard L. Madoff’s fraud and go to trial on the gravest accusation against them: that they blinded themselves to evidence that Madoff might have been up to no good during their many years of profitable investing with him.”

Last Sunday, New York Newsday reported the Mets' ballpark-related revenue, including parking, concessions, stadium advertising and more, has fallen by more than 30 percent since Citi Field opened in 2009, and premium-ticket sales have fallen almost 50 percent.

The Mets reportedly are in the midst of cutting their projected 2012 payroll to $91 million from the $143 million in 2011.

In one of the best examples of buyer beware – on February 3, 2009, the Mets signed pitcher Oliver Pérez to a three-year $36 million contract. On May 6, 2009, Pérez was put on the disabled list due to patellar tendinitis in his right leg. He returned to the rotation on July 8, 2009.

On August 26, 2009, Pérez was diagnosed with patellar tendinitis in his right knee and underwent undergo season-ending surgery. He finished the season 3–4 with a 6.82 ERA.

On May 15, 2010, Manager Jerry Manuel moved Pérez to the bullpen. After repeated attempts by the Mets' front office, Pérez refused a minor league assignment to work on his pitching, despite his poor pitching record. On June 5, 2010, the Mets placed Pérez on the 15-day DL due to a patella tendinitis of right knee. As Pérez was placed on the disabled list (DL) soon after refusing an assignment to the minor leagues a second time, the league investigated the timing of the DL stint, later clearing it. After July 21, Pérez made only six appearances, all in relief. Pérez finished the 2010 season 0-5 with a 6.80 ERA in just 46.1 innings pitched.

The Mets unconditionally released Pérez on March 21, 2011, still being responsible for the remaining $12 million on his contract.

Perez’s agent Scott Boras lashed out at the Mets for announcing they would lower the team’s payroll and focus on developing their team through player development.

"When they are not providing fans with the highest quality of play, and they take an attitude of 'we're going to take on a development role,' knowing that the TV contracts, the market size and such allow them revenues that far exceed many of the clubs that have to pursue those development policies, that impacts the game," Boras told ESPN New York. "The major franchises who are getting the majority of revenues should provide a product, or an attempt at a product, that has the near-highest payrolls commensurate with the markets they are in.

"If a player does not perform for the betterment of their team, then teams bring in other players. On the other side, there has to be an equation where there are requirements for ownership to perform at certain levels, and if they don't, they would lose their right to own a club and be replaced. I believe if we do that, we're going to have a better game."

It’s not as simple as Boras makes it out to be. It is always in the best interest of a professional sports franchise to build their team through player development. The Boston Red Sox 2012 payroll is expected to exceed $160 million. The Red Sox 2012 lineup is anchored by players the Red Sox have drafted and developed including: Dustin Pedroia, Jacoby Ellsbury, Kevin Youkilis, Clay Buchholz, Jon Lester and Daniel Bard.

Boras continued: "When you're seeing franchises in major markets not pursuing to the levels that the revenues and the fan base and the market provide, then I think you have an ethical violation of the game."

Who is Boras kidding? The New York Mets ownership challenges have little to do with an ethical violation of the game – the Mets are hemorrhaging money everywhere and have no choice but to cut their team payroll. That isn’t a moral or ethical dilemma as Boras suggests, but it does present Selig with a decision – should take steps to force Fred Wilpon to sell the New York Mets.

Speaking to reporters last week at the Mets spring training facility in Port St. Lucie, Florida, ESPN New York reported the Mets were on the verge of completing seven $20 million, 4 percent minority shares to investors, with Major League Baseball approval granted and the money sitting in escrow. The sales of two more shares are nearing approval by MLB, Wilpon added, while an additional two are "in the process."

In total, Wilpon told ESPN New York, as many as 12 shares may be sold, which would generate as much as $240 million into the organization. That would go toward paying off a $25 million loan from Major League Baseball, and pay down the first mortgage on the team and provide cash on-hand for franchise operations.

If the Mets are infused with $240 million, will they be forced to take $83 million that the trustee has sought from the proceeds of the sale, and give it to the victims of Madoff’s Ponzi scheme? And if so, how will that impact Wilpon’s ability to conduct the day-to-day business of the New York Mets? If, as New York Newsday reported, the Mets baseball revenue has dropped by as much as 30 percent, an $83 million hit to the Mets could cripple the Mets financially.

Selig has to be concerned if Wilpon is on the verge of doing harm to the image of Major League Baseball. The New York Times’ Richard Sandomir reported: “a greater, perhaps more perilous problem for the team’s owners, Fred Wilpon and Saul Katz, was that (Federal District Court Judge Jed S.) Rakoff cleared the path for a jury to sit in judgment of the competing claims at the heart of the lawsuit:

“Were the men, who invested some $1.6 billion with Madoff over two decades, innocent victims of a man they considered a friend and a financial whiz? Or were they sophisticated investors who, in myriad ways over many years, were shown evidence that Madoff’s returns were too good to be true, alarms they chose to ignore or discount because they and their businesses had grown too dependent on their Madoff profits?

“That trial will begin on March 19 in federal court in Manhattan, and it could see Wilpon and Katz testify under oath about the inner workings of their considerable real estate, sports and financial empire.”

On the verge of the 2012 season, the Mets are a mess of near biblical proportion. Bernie Madoff is one of the most hated men in recent American history. If Fred Wilpon is in any way connected to Madoff other than as another victim, Bud Selig must act in the best interest of baseball.

If the Mets ownership damages the reputation of Major League Baseball, and if Fred Wilpon no longer has the financial wherewithal to manage the business dealings of the New York Mets, Bud Selig will act in the best interest of baseball and force Fred Wilpon out of the game.

Insiders used in this Insider Report: The New York Times, ESPN New York. For Sports Business News this is Howard Bloom

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