Can the Mets Find Investors?

As you probably know, the Mets are in severe financial straits and in dire need of cash. Toward that end, they’re trying to raise about $200M by convincing 10 investors to pony up $20M each, in return for the following:

– 4% interest in the ballclub
– “access” to Mr. Met (but not Mrs. Met)
– free parking space at Citi Field
– access to a luxury box that can’t be otherwise sold
– some kind of a fantasy camp type of “workout”
– chance to throw out first pitch of a ballgame
– discount on Mets merchandise
– an assigned gopher / executive assistant
– one free trip with the team during the season
– a business card that states “owner”
– one free weekend stay in Port St. Lucie during spring training
– unspecified luncheons with unspecified former Mets players
– an offseason luncheon with the Mets GM and manager
– option to cash out your share after 6 years with 3% interest

Does this sound like a good deal?

I have no idea, since I’ve never been in the market for shares of a MLB team. Strangely enough, Sterling Equities — the real estate company owned by the Wilpon family and Saul Katz — has supposedly purchased two of the shares. Huh. Is that to ensure the Wilpons will have at least 8% of the team in the event they need to sell off the club? Again, I’m not qualified to understand why someone would buy shares from themselves, but I’m sure there’s some kind of tax advantage or other protection that involves details way over my head.

Jeff Bradley of the Star-Ledger published interesting angles on this, including quotes from Marvin Goldklang. If you’re not aware, Goldklang is one of the most prolific minor league baseball owners, and purchased a tiny piece of the Yankees back in the late 1970s.

“In my view, the New York Yankees are a unique, iconic brand, so it’s difficult to compare to almost anything else in sports. With the Mets, I still suspect different things will motivate different people. Some may be interested in the economic aspects of it. Others may be more interested in just being a part of something that’s exciting, to be a part-owner of a major-league baseball team in a major market.”

Can Wilpon, Katz and Co. get 10 to a dozen people to take that leap of faith? “My guess is that they should be able to do it,” says Goldklang. “Because I think there enough people in the New York market who for varying reasons would like to be a part of a franchise like the Mets. We tend to look at things from a microscopic perspective. How you did yesterday, a week ago or the past year. But if you look at the Mets franchise over the course of its history, it’s still a very attractive picture. It’s a solid sports franchise.”

It sounds like finding investors could be as easy as locating rabid Mets fans who have $20M burning a hole in their pocket and a desire to have Mr. Met appear at their kid’s birthday party. In regard to the previously mentioned perks of ownership, Goldklang goes on to say this:

“Minority sports ownership is not about perks,” says Goldklang. “It’s about being part of something that’s successful and demands the attention and support of the community. As far as I’m concerned, as far as so-called perks I’ve gotten from the Yankees, there’s nothing that compares with sharing in the ticker-tape parades up Broadway after the world championships. To be even a small part of that. Money can’t buy that.”

Then Goldklang joked: “Of course, we don’t have a mascot like Mr. Met.”

Ouch. That last sentence aside, Goldklang brings up a key point: he values his tiny ownership in the Yankees because it makes him feel part of something special — a world champion. There’s cachet associated with owning the Yankees. Is there any cachet surrounding Mets ownership right now? The team is a laughingstock, with no sign of changing that anytime soon — especially not with the Nationals, Marlins, and Braves all seemingly poised to make a simultaneous run for the Phillies’ aging jugular. Everyone in the NL East is getting stronger while the Mets get weaker.

So if mere association with the Mets is not enough to convince someone to buy a share, what other motivation is there? The 3% return on investment, and/or potential increased value of that share?

First of all, one can do just as well in terms of return by buying T-bonds — though, the government won’t throw in a parking space, a luxury suite, nor lunch with Mr. Met. But let’s put that aside and focus on one very obvious detail here: after the Bernie Madoff scandal, why would anyone invest their money with Fred Wilpon?

It doesn’t matter which side of the Madoff case you stand — either way, investing with the Wilpons and Saul Katz is a bad idea. Because here are the two sides of the story:

1. You believe Bernie Madoff and Fred Wilpon when they say that Wilpon was/is not a sophisticated investor, and had no idea that Madoff was doing something fishy.

2. You think Madoff and Wilpon are lying, and that Wilpon knowingly used an illegal ponzi scheme to make tons of funny money and fleece investors.

Think about this: in case #1, if you sincerely believe that Fred Wilpon was a gullible investor who didn’t know any better, would you trust this man with your $20M? If he’s as unsophisticated as he and Madoff claim — so naive that he didn’t realize that something was wrong with drastically outperforming the market in a down economy — then how can you possibly believe he can figure out a way to pay you back 3% of your investment, and/or turn your share into something more valuable in the future?

In case #2, wouldn’t you be concerned about investing your dough with the Wilpons — though for obviously different reasons?

I would argue that case #2 sounds safer for an investor; one would think that after the Madoff scandal, the Wilpons would be very careful not to be breaking any rules in the future.

Finally, there is the simple practicality of investing in a business that publicly appears to be going bankrupt. The franchise is in deep debt that is growing every month, with attendance and revenues that are plummeting, a dismal public perception, and a “product” on the field that is losing value with no signs of turning around anytime soon. In short, the Mets’ liabilities are much greater than their assets, and the immediate future looks bleak.

So why would anyone invest in the Mets? Please, give me reasons in the comments.