Talk about snatching victory from the jaws of defeat: This week, Mets owner/accused Bernie Madoff unindicted co-conspirator Fred Wilpon 1) was the subject of a New Yorker profile in which he dissed his three best players, then had to apologize via clubhouse speakerphone, 2) was the subject of a Sports Illustrated profile in which he suggested the team payroll would plummet from $142 million to less than $100 million next year, then had to watch as GM Sandy Alderson publicly contradicted him, and 3) cut a deal to sell a minority share in the team to hedge-fund superstar David Einhorn for $200 million, staving off financial ruin with an 11th-hour influx of cool, sweet greenbacks. Which one do you think he’s going to be posting about on Facebook?
Yesterday’s sale announcement was the culmination of a three-month process by Wilpon and his ownership buddy Saul Katz to find a rich guy to cough up enough dough to dig the Mets owners out of their Madoff-spawned liquidity hole, and yet ego-free enough to accept a role as a minority partner. Interestingly, Einhorn wasn’t among the initial rumored candidates back in March; though presumably he’s been in negotiations to buy into the team for weeks, his name only surfaced in the last couple of days, and then only because he was apparently afraid it was about to leak out.
So, without further ado, let’s delve into the big questions every Mets fan must have about their new overlord:
Who is this Einhorn guy, anyway?
Clearly you don’t spend much time reading the financial pages. David Einhorn is the founder of Greenlight Capital, a hedge fund that holds about $4.8 billion worth of stock, including large chunks of Apple, Microsoft, and Pfizer. He’s best known for publicly calling out Lehman Brothers in 2008 for fudging its financial numbers (which was soon followed by the collapse of Lehman Brothers, the stock market, and the entire world economy — whoops!), and secondly for entering the 2006 World Series of Poker and coming away $660,000 more obscenely rich. His Mets buy only narrowly eclipsed his other big headline of the week, which was calling for the ouster of Microsoft CEO Steve Ballmer on the grounds that he was running the company with a “Charlie Brown management” style.
Why is he buying the Mets?
In his telephone press call yesterday to announce the deal, Einhorn stressed that he’s doing this for fun, not investment, even going so far as to note that he was so much of a Mets fan growing up that he once dressed as Dave Kingman for Halloween. (He didn’t say whether he completed the impersonation by striking out at every house.) Though as Deadspin pointed out, he previously told the Wall Street Journal that after leaving New Jersey for Milwaukee as a child (and, according to the Times, playing ball in the yard next to Bud Selig’s house), he became a diehard Brewers fan, though he retains “a little soft spot for the Mets.”
In any case, there’s something slightly fishy about Einhorn’s I’m-just-a-fan stance. As a hedge-fund manager, his job is to identify undervalued-but-risky properties that could take off if something makes things turn around, and the Mets purchase could fit that bill: It comes at a time when the team’s value has been plummeting — from $912 million in 2009 all the way to an estimated $700 million this week — and he had the buyers over a barrel: While Wilpon and Katz are sitting on a one-billion-dollar-plus sports operation (counting both the Mets and SNY), they remain cash-poor, and needed a new investor’s money in order to stop taking out loans from MLB to pay expenses. Einhorn didn’t divulge how much of the team he’d be buying — “less than 49 percent” was the official word — but unless it’s less than 29 percent, he should be sitting pretty if he ever decides to sell his stake in his new toy.
Is he going to be helping to run the team, or what?
The official announcement said that Einhorn was buying a “non-operating investment,” which implies that he’d be a silent partner, but then Wilpon said he’d “welcome his input” on running the ballclub. And asked on yesterday’s press call what role he’d have, Einhorn replied, “The Wilpons remain in control of the team, and that’s the way everyone should view it” — which, really, can be taken either of two ways. And in any case, it hardly seems likely that a guy who’s publicly called for the head of Microsoft to resign is going to blanch at criticizing Mets management, especially when eight million other New Yorkers are already doing so every night on WFAN.
Does this mean we’re not going be seeing the fire sale of Mets players that everybody on earth seems to have been predicting?
Inasmuch as Sandy Alderson won’t have to trade Jose Reyes and David Wright next week for a bag of balls just to make payroll, yes, but that wasn’t likely to happen anyway. (Wilpon told SI that the team could lose $70 million this year, but that’s pretty far-fetched, given that according to Forbes magazine’s estimates, not a single MLB team even lost half that much in 2010.) With the immediate money pressure off — the long-term threat of the Madoff lawsuit is still there, but the most likely scenarios are that either the charges won’t stick or they’ll blow up so huge that Wilpon and Katz will have to sell out entirely — Alderson (who got some nice props from Einhorn in his press talk) will once again be able to approach roster construction not from the perspective of how much money he can save, but of what will get him the most value in hopes of rebuilding the Mets before the food apocalypse strikes.
Tabloid conventional wisdom has been that dumping Reyes for prospects this summer would be the right move, but that’s not actually so clear. As my Baseball Prospectus colleague Jay Jaffe pointed out back in February, if the Mets ditch Reyes, they’d have little hope of finding someone to replace him in this dismal market for shortstops — when your best alternative is throwing money at a 34-year-old Rafael Furcal, suddenly paying market price for Jose Reyes may not sound so bad.
The best move, in fact, might be to swap Reyes in July to a team desperate for a quick offensive fix — think the suddenly Poseyless Giants — then re-sign him as a free agent next winter, having their cake and eating the trade haul too. Of course, to do that you’d first want to make sure Reyes still retained enough warm fuzzies for your city to want to return as a free agent, which should be easy enough so long as nobody in management goes around accusing him of being egomaniacal and injury-prone … d’oh!