The unsealed Madoff lawsuit against Sterling Equities shed some interesting light on the condition of the New York Mets.
The suit alleges the Wilpons ignored warnings from a number of financial experts that Madoff was a fraud. The rhetoric came from a number of different sources, including the hedge fund of Sterling Stamos and the wire house Merrill Lynch.
Yet, the Wilpons continued to invest with the Ponzi schemer, either because they didn’t care or they couldn’t stop, as their companies relied upon the Madoff returns to operate.
No matter what the reason, it has come clear the Wilpons need to take a step back from the New York Mets until this lawsuit is settled.
And if they will not do it by their own free will, then Commissioner Bud Selig must invoke the best interest of baseball clause to remove the Wilpon family from the day to day operation until this lawsuit is settled.
With the Wilpons in charge, the story will continue to be front page news on every paper in the New York area damaging the Mets and the game itself, and dominate the talk around Citi Field, where the players should not have the distraction of discussing their bosses’ matters.
We saw it this week after they Wilpons announced their intention of selling a minority stake in the club. Every day there were stories leaking about the Wilpons dealing with Madoff and the amount of debt the team carries. These will not go away and every move general manager Sandy Alderson makes will be scrutinized. ‘Did they make this trade to help the Mets or in order to pay the clawback due to the Madoff suit?’ will be the question asked by every reporter, blogger, and fan when the team makes a move.
Will Jose Reyes get sold off? Will David Wright? Forbes.com today reported the Mets need to cut a $30 million profit this year just to pay off the debt interest on Citi Field.
By many accounts, the club is over $1 billion in debt, not including SNY – which also holds debt – and many of the Wilpon credit lines have dried up. That’s why they are forced to put a portion of the club up for bid, rather a less public sale of one of their other assets.
The Wilpons maintain their innocence here and feel they are being “victimized” by Madoff victims’ trustee Irving Picard, and of course they are innocent until proven guilty. Yet, that doesn’t mean they should be allowed to conduct business as usual in Queens.
Commissioner Selig needs to step in, allow the Wilpons and Saul Katz to step aside, and put the club under MLB conservatorship with Alderson taking the role as president – a position he held with the San Diego Padres – with Paul DePodesta and J.P. Ricciardi running the baseball operation.
With Alderson at the helm, getting every major move blessed by Selig, the paying public will be satisfied with the knowledge that every trade or signing will be motivated by improving the club, rather than financial issues. Although the Wilpons will still own the club, with them out of sight will move the story off the front and back pages for now. MLB will set the team’s budget and the management team can be free to improve this sorrowed franchise.
This will also allow the Wilpons to worry about the future of their families, rather than trivial matters like how much they should charge for a burger at the Shake Shack.
Once the Wilpons are cleared of the allegations or lawsuit is settled, baseball does its due diligence on the Picard Lawsuit, and minority owners are in place, then the Wilpons will be free to come back to run the club.
Or if the courts or MLB’s investigation find that the Wilpons had “unclean hands” in the Madoff matter, baseball can force a sale of the club.
And if the Wilpon finances get too out of control and a full sale if voluntary, there can be a smooth transition with MLB running the club.
It has been done before. Last season, MLB put the Texas Rangers into conservatorship while the club was up at auction. The result was a World Series appearance.
And when George Steinbrenner was suspended for a few seasons back in the early 1990s, Gene Michael was able to build the franchise in to a dynasty.
Maybe the Wilpons will follow Steinbrenner’s lead and change the way they do business during their time away. And maybe the Alderson managerial team will be able to build the Mets from within without interference from Jeffrey Wilpon.
Yet, those will be just byproducts of the situation. More importantly, the Wilpons need to concentrate on the lawsuit at hand, clearing their name, and leave the running of their beloved franchise to MLB for the time being.
Posted under Best Interest, Blogger, Clawback, Commissioner Bud Selig, David Wright, Debt Interest, Financial Experts, Front Page News, Hedge Fund, Joe Mcdonald, Jose Reyes, Merrill Lynch, Mlb, New York Mets, Sandy Alderson, Schemer, Sny, Sterling Equities, Sterling Stamos, Top Story, Wire House
This post was written by Joe McDonald on February 4, 2011