The analyst’s disease is that you can’t stop analyzing, whether it has to do with the stock market or not.
I’ve been struck by what I think is peculiar behavior by the Mets over recent months.
1. All-Star centerfielder Carlos Beltran just had arthroscopic knee surgery that will likely keep him from playing during the first month of the upcoming season. The Mets are reportedly upset enough about this, even though Beltran says the Mets gave permission for the operation, to have sent him a letter that would be the first step toward voiding his contract.
Yes, not having Beltran in center field on opening day lessens the chance that the Mets will get off to a good start–and thereby help to fill the (very expensive) seats in their new home, Citi Field. But Carlos is a superb outfielder. He plays hard and has played hurt. What good does it do the Mets to make their displeasure public, other than to embarrass Beltran? Is the fast start really so important to the Mets that they’ll risk alienating one of their best players?
2. During this offseason, the Mets signed a strong-hitting free agent outfielder, Jason Bay. Yes, this is great–especially so if the Peter Gammons report that the Red Sox, his former employer, were worried about his long-term health proves incorrect. But where’s the pitching?
3. Bengie Molina has just reportedly turned down the Mets offer that had $1 million more in guaranteed money than the one he signed to play for San Francisco this season.
4. This brings us to the fourth B, Bernie Madoff, a long-time friend of the Mets’ owners, the Wilpon family, and–until his Ponzi scheme was uncovered–holder of season tickets right behind home plate. Madoff added insult to injury for his victims by commenting after his arrest that he only accepted as clients people he considered not financially astute enough to recognize the implausibility of achieving the financial results he claimed.
There’s no evidence to connect a suddenly more frugal Mets organization to losses they may have suffered from investing with Madoff. What we do know is this:
1. The list of 10,000 or so Madoff victims contains over 400 entries for the Wilpon family and about a dozen for the Mets.
2. Financial journalist Erin Arvedlund, author of a recent book about Madoff, claims the Wilpon family lost as much as $700 million in the Madoff Ponzi scheme, an assertion the Wilpon family strongly denies.
3. CNBC has reported that the Wilpon/Mets loss could be as high as $300 million.
4. The court-appointed trustee tasked with recovering Madoff investors’ assets says that two Mets accounts withdrew $47.8 million more than they originally invested. This isn’t necessarily as good as it sounds, since the trustee may seek to force the Mets to give back the money, since it isn’t investing profit but rather money others deposited with Madoff.
Let’s try to take a rough guess at the Mets’ revenue and expenses (I’ve read or heard some of the numbers. Others I’m making what I consider reasonable guesses, but they need to be refined with more research. But I think they’re at least directionally correct.)
Ticket sales for 2009 were reported to be about $115 million. The club has cut ticket prices by about 10% and season two at Citi Field may draw fewer fans coming just to see the new stadium. So let’s put 2010 ticket sales at $100 million. Add $20 million from Citigroup for naming rights and $15 million for profit from food, parking and team merchandise, net of related expenses and stadium operating costs. Figure that SNY cable TV generates $40 million. Total: $175 million.
Let’s take the Mets bill for players’ salary for 2009 as being $150 million. Add to that $40 million for what amounts to stadium debt service expense and another $10 million for coaching, the minor league system plus administration. Total: $200 million.
If these numbers are roughly correct, a $150 million player payroll seems to imply a $25 million loss for the Mets this year, even figuring in cable revenue. Without that, the loss would be $60 million.
I may be missing some important source of revenue, but if I’m not, the Mets would be in trouble whether it incurred Madoff losses or not. Madoff losses would only make the problem more pressing, by removing–from either the Madoffs personally or the Mets corporately, or both–a savings cushion that could postpone dealing with the cash shortfall.
In addition, if any money the Mets put aside for deferred payments to players was lost to Madoff, the team’s immediate problem may not be worsened but its long-term financial situation would be.