Coleman’s Corner: Analyzing Einhorn
By Ed Coleman
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No secret – no surprise. That’s the way the latest David Einhorn saga has played out with the Mets. It’s been no secret that Einhorn wanted to eventually ascend to majority control of the Mets – and it’s also no secret that the Wilpons want to retain their control over the club if they can navigate themselves through the financial mess they currently find themselves in. So as a result it’s no surprise that Einhorn tried what he did, and it’s also no surprise that the Wilpons balked. A team’s control person does not necessarily have to be the majority owner, although with the Mets it is in owner Fred Wilpon. And it should be no secret or surprise that baseball has bent over backwards for the Wilpons, considering Fred’s longstanding relationship with Commissioner Bud Selig.
The landscape has changed for the Wilpons and Saul Katz, and their financial situation has somewhat improved since Einhorn was first welcomed aboard. When the Madoff lawsuit was moved out of bankruptcy court and into federal district court, it provided a clearer path for the Met owners to reduce the amount of money that they’ll have to pay to the trustee Irving Picard. Instead of losing upwards of $1 billion dollars in the process, they now hope and believe their losses will be in the $300 million range.
If Einhorn really is an experienced poker player, he didn’t show it with the way he played this hand. The Wilpons definitely and desparately want to keep the Mets in the family – and having Einhorn around jeopardized that. They will now seek family, friends or other interested investors to come aboard in smaller units that will add up to somewhere in the vicinity of $200 million. There will be no chance for any investor to become a majority owner – and that’s the whole point and purpose.
The Met owners believe that any potential losses from the Madoff lawsuit will not hinder their pursuit of Jose Reyes nor their ability to function somewhat normally in the upcoming off-season. That remains to be seen. The Met payroll will certainly take a hit in 2012, maybe not down to the level of $70-80 million that many fans fear, but probably a reduction to the $100-110 million range. Mets G.M. Sandy Alderson recently stated that it’s very difficult to have 3 or 4 players making $15million plus. Well, the Mets already have Johan Santana ($24 million), Jason Bay ($16 million) and David Wright ($15 million) under contract for next season for an aggregate total of $55 million – basically one-half of a projected budget – and that’s even before factoring in the money for Reyes. If you put Jose somewhere between the Bay and Santana salaries, it becomes obvious there is very little left, very little wiggle room for the other 21 players on the roster. That could be a problem.
I’ll leave you with a quote from Alderson – “So, I would expect we’ll be looking actively in the free-agent market, but we’ve got to get it to a position where we can be active every year and not be hamstrung by existing contracts. Part of that is making good decisions in the first place. If you invest $15 million, you would hope you’re going to get $15 million worth of performance. We haven’t always gotten that.”
Amen. But they better start getting it soon, or the long and winding road back becomes that much longer.
C U soon