Mets fans—and, really, anyone looking for an MLB owner that's just the least bit interesting—squealed with joy last week over the team's new partner, David Einhorn. He made some smart bets as the economy was collapsing, finished 18th in the 2006 World Series of Poker, and, most importantly, was never a member of Fred Wilpon's family.
He spoke before last night's Mets-Pirates game—this is how we know he's a fan: he can attend Mets-Pirates games—and the above video is worth watching, if only because of his smile, which never wavers while he tells you, in the spine-tingling timbre of an exceedingly competent insurance adjuster, that he cannot ensure the Mets' financial health over the next few years.
Terms of Einhorn's not yet official deal with the Wilpons trickled out over the weekend, and, boy, they seem damning. (The Mets have denied the reports.) The gist, as reported by ESPN New York, and the New York Daily News, is that Einhorn forks over $200 million in June for one-third of the team. In three years, Fred Wilpon has an option: he can sell Einhorn enough of the team to increase his holdings to 60 percent, or he can give Einhorn his money back. If Einhorn got his money back, he'd keep "a sixth" of the team, according to ESPN New York.
So, in essence, for the opportunity cost and other associated risks of loaning the Wilpons $200 million for three years, Einhorn would get one-sixth of the team.
A 2011 Forbes estimate pegged the Mets' value at $747 million. One sixth of $747 million is $124.5 million, which, if you're playing at home, is 62 percent of $200 million. Which is one whole hell of a lot to pay as interest for a three-year loan. Simply: usury. Is Einhorn obligated to deliver his capital in unmarked bills, inside a violin case?
OK, to be fair, the Mets are presently buried under a banana republic's worth of debt ($625 million), as Fortune has reported. But Forbes took the bulk of that debt into account in their calculation. Lots of successful businesses—even successful MLB franchises—are leveraged. The Mets' problem, as others have explained, comes from some horrible timing: the team went bust just as the real estate market went bust (and a new stadium went up) AND the Madoff fraud unfolded (prompting the clawback lawsuit) AND the credit market imploded.
Jordan Kobritz at the Biz of Baseball argues that Wilpon effectively just sold the Mets, that he has no chance of scrounging up $200 million in three years to pay Einhorn. From here, it seems like Kobritz isn't taking Wilpon's reverie seriously. He just might be betting on limited Madoff damage and a major market recovery, that money will be flowing easily enough in three years that he'll have no trouble securing $200 million to buy back his team.
And yet, here's the new owner, who has made a fortune despite recent lean years on Wall Street, and who, when asked to guarantee against financial ruin, says, "It'll be what it'll be, it's not that people aren't gonna try really hard to avoid [financial oblivion], but the future is uncertain. ... That's true in life in general, and it's true in this circumstance as well."
You might get lost in that high-pitched voice and think he's your grandson, Fred, but make no mistake: David Einhorn, the reaper, is coming for your team.
Source outlines Mets-David Einhorn deal [ESPN NY]