SBD/February 1, 2011/Franchises

Sources: Wilpons May Be Forced To Sell Controlling Stake In Mets

Wilpon reportedly has been shopping minority stake in Mets for several months
The Wilpons are "in a much tighter squeeze than they are letting on," and they "may be forced to sell a controlling stake" in the Mets, according to sources cited by Josh Kosman of the N.Y. POST. A source said that Mets Owner Fred Wilpon and his ownership team "have been shopping a minority stake ... to Wall Street titans and other deep-pocketed investors for at least three months." Wilpon Friday said that he is "seeking to sell a 20 to 25 percent stake" in the team, "implying that the process had just begun." But sources said that the process "has been going on for months." Sterling Equities, a holding company belonging to the Wilpons and team President Saul Katz, has a 60% stake in SportsNet N.Y. that "could be worth hundreds of millions," but sources said that it "cannot be used to attract minority investors to the team." Sources said that Sterling "would have to distribute any proceeds from the sale of its SNY stake to lenders under the terms of their credit agreement." Also, one source said that Sterling "cannot borrow any more against the team or SNY under the loan agreements." Kosman notes the Wilpons, "looking to raise several hundred million but hemmed in by debt," may be "forced to sell a larger stake than they wish" (N.Y. POST, 2/1). SportsCorp President Marc Ganis said that he "learned several months ago that the Mets approached three 'very wealthy people' in financial services and real estate." Ganis added that "none agreed to terms, one because he was not interested unless the deal included a path to a controlling interest." On Long Island, Jim Baumbach notes Glaceau co-Founder Mike Repole "has been a Mets season-ticket holder since 1997 and is 'intrigued' by the thought of becoming a part-owner." But he stressed that "any potential deal must make sense to both parties" (NEWSDAY, 2/1). The WALL STREET JOURNAL's Matthew Futterman reports "several bankers and lawyers who specialize in sports transactions said they had fielded numerous calls from individuals seeking more information about a potential deal." But "sorting out the contenders from the pretenders may prove to be the first big challenge" (WALL STREET JOURNAL, 2/1).

SETTING THE RECORD STRAIGHT: In Atlanta, Ernie Suggs reports Martin Luther King III, the son of the late civil-rights leader, "set the record straight" yesterday about his reported interest in a Mets stake. King: "For this to be released to the press is way premature. We haven't signed any agreement." King said that the "notion of owning the Mets began as a simple phone call but quickly grew into a media swirl." He noted that on Saturday morning he "received a call" from Vobile President of Cable & Sports Larry Meli, "who introduced the idea." King: "He asked me if I would want to be part of the ownership of a National League baseball team. I told him that it was something I would need to explore." Suggs notes the story was "picked up by several media outlets, some of which reported that King was leading a group of investors." King: "Larry gave me a lot of information that led to the impression that I was leading an effort. First, that is not accurate. What is accurate is that there has been a discussion. But there is no deal on the table and I am not leading an effort." King added that a "deal to be part of the group to purchase the Mets is not 'off the table,' but he is still trying to grasp the possibilities." King: "I am still in the exploratory phase" (ATLANTA CONSTITUTION, 2/1). In N.Y., Thompson, Vinton & O'Keeffe report King "made it clear that he is not leading the effort and Monday, King's potential partners were already downplaying his involvement in a group that hopes to buy 50% or more of the franchise." Meli: "He's not a deep-pocket financial guy. In his mind, he's not even the lead guy. But given his reputation and legacy, his name has percolated to the surface." A source close to King's group said that the investors are "expected to invite a former 'iconic' New York athlete to join the group." King's group already includes Meli, entrepreneur Donn Clendenon Jr. and former Mets 1B Ed Kranepool (N.Y. DAILY NEWS, 2/1).

NO QUICK FIX: On Long Island, Neil Best writes, "By going public Friday with the precariousness of their finances, the Mets left many fans concerned and confused, and they ensured a dark cloud will hang over the team as it begins spring training this month." It is "too soon to say" when the cloud might lift, but experts "doubt it will be anytime soon." Joel Evans, a professor at Hofstra Univ.'s Zarb School of Business, said that it is "not as simple as having a deep-pocketed business or individual write a $200-million check by the end of the week and being done with it." Prospective buyers "will want to assess the team's true value and not simply accept Forbes' much-quoted figure" of $858M. They also "likely will want to move the Mets off their position that SNY is off the table." A sale "would have to be approved" by MLB. New York Univ. sports management professor Robert Boland: "These transactions are usually six to 12 months." But he added that MLB "might expedite the process, especially for a non-controlling shareholder" (NEWSDAY, 2/1).

COURT REPORT: In N.Y., Thompson & Vinton report attorneys representing Mets ownership filed a motion in U.S. Bankruptcy Court yesterday alleging that the owners are "victims of 'significant leaks' and 'attempted character assassination' by Irving Picard, the trustee suing the Mets owners to retrieve money they might have made in Bernie Madoff's vast Ponzi scheme." The attorneys are "urging the judge in the case to keep Picard's lawsuit under seal, at least while settlement talks are ongoing, despite what they called the disclosure of confidential information from the lawsuit to the media." Picard "filed suit late last year against Fred Wilpon and Saul Katz and a constellation of businesses they run, including Sterling Equities." Picard "filed a motion late Monday, telling Judge Burton Lifland that he doesn't oppose a motion by media outlets seeking to unseal the lawsuit, which Picard filed on Dec. 7 of last year." A hearing on the unsealing motion is "scheduled for Feb. 9" in N.Y. (N.Y. DAILY NEWS, 2/1).

MEETING WITH THE COMMISH: On Long Island, Baumbach & Martin cite an MLB official as saying that Commissioner Bud Selig is "scheduled to meet with the Wilpons while he is in New York City this week." Upon "arriving in the metropolitan area late yesterday afternoon, Selig declined to weigh in on the Wilpons' financial state." Selig "has remained mum since the Wilpons made the surprising announcement Friday that they are willing to sell" 20-25% of the Mets. Selig and Fred Wilpon "have been close friends for years, a relationship that grew" while Selig owned the Brewers and Wilpon owned the Mets. The MLB official said that the Wilpons' meeting with Selig "already was scheduled before the Wilpons' announcement Friday" (NEWSDAY, 2/1).
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