Monday, February 28, 2011

What Madoff Means To Me

Bernie Madoff's Ponzi scheme defrauded thousands of investors of billions of dollars.  Recently, there have been disturbing questions raised about J.P. Morgan's complicity, with allegations that the nation's second largest bank ignored numerous red flags that suggested fraud.  It was recently alleged that Citigroup was aware of the fraud and tried to pass on its exposure to other banks shortly before Madoff was caught.  As summarized at Firedoglake, all the big financial players "knew about the fraud, but they all had a stake in keeping the fraud going. So nobody at a high level blew the whistle. And when the schemes looked to collapse from their own weight, the big money boys tried to get out from under the damage."

This is all very troubling for what it says about the most powerful financial institutions in the country, but what I really want to know is how the Madoff scandal will continue to affect the Mets.  As has been widely reported, the Wilpon family, the Mets' majority owners, are deeply entangled with Madoff, personally and financially.  It has recently been revealed that Major League Baseball provided $25 million to the Mets last fall to help them with a cash shortfall and an impending lawsuit which seeks to recover $1 billion for Madoff's victims.  In the Sunday Times it was reported that the Wilpons are now looking for another funding source.

Cash flow has not been helped by ticket sales, which have been sluggish; not a surprising development given the team's poor performance the last couple of years and the failure to make any significant player moves during the off season. The team has one of the league's highest payrolls, and, because of some really bad baseball decisions are stuck with several overpaid and extremely unproductive players (e.g., Luis Castillo, Ollie Perez).  The Wilpons have tried to raise cash by offering to sell 25% interest in the team, but potential investors understandably are unwilling to do so without the potential to acquire a controlling stake.  More recently, the Wilpons stated they would sell more of the club but continue to insist, at least for now, on retaining controlling interest. 

In the short term it is clear that the Mets have no money to invest in players that could help the team.  This was clear over the winter, when they failed to sign any impact players, declined to re-sign some productive ones (Hisanori Takahashi, Pedro Feliciano), and settled on acquiring players who are returning from injuries (Chris Young, Chris Capuano).  As for the longer term, my fear is that the Wilpons, in a desperate attempt to raise money, will sell the few exciting and productive players who would be worth something to other teams (e.g., Jose Reyes, David Wright) or their most promising young players (like Ike Davis and Jenry Mejia).  Will their new GM go along with this?  It is hard to say.  But such moves would undoubtedly devastate the team, alienate the loyal fan base that inexplicably remains (me, included) and only prolong the agony before the owners are eventually forced to sell the team.

Perhaps it is not so remarkable that a massive fraud that has affected major banks, investment firms, government agencies and countless investors would seep into other aspects of our lives.  But the Mets?  Haven't we suffered enough? 

[Related posts:  When Worlds Collide; Mookie Not Madoff]


Stephen said...

I hadn't before considered the possibility that Wright or Mejia might be auctioned off to help balance the book, but that's not entirely unlikely. The situation in Queens has soured so deeply that I'm not even sure Mr. Met's job security can be considered a lock.

As for Wright, he's probably dreaming of moving to a contending team. His best years are certain to be squandered remaining in New York.

Stephen said...

The thought crossed my mind that it would be a bitter irony if Ollie Perez pooled his millions and become a part owner of the Mets.

Lovechilde said...

Bitter indeed.

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