Philips Arena Renovation Could Start Soon "TMNT" Returning As Chicagoland Race Sponsor Goodell: NFL "Studying" Marijuana Use Joshua-Klitschko To Draw Record Crowd NFL Draft Overnight Best Since '14 Sources: Pacers' Bird Stepping Down Raiders Hosting Draft Party In Las Vegas SBJ In-Depth: Facilities - Concessions Jack Link's Gets Creative With Draft Exposure Sharapova's Return Injects Needed Star Power
SBD/February 7, 2011/FranchisesPrint All
The trustee for victims in the Bernie Madoff-led Ponzi scheme is seeking to recover more than $300M from Mets Owners Fred Wilpon, Jeff Wilpon, Saul Katz and their firm Sterling Equities, according to court documents unsealed Friday in N.Y. In the extensive, 365-page clawback lawsuit, trustee Irving Picard is seeking $295.47M in what he claims as "fictitious profits," $14.2M in "transfers of principal," and $12M in "fraudulent transfers of payments." Settlement talks between the Mets owners and their lawyers and Picard broke down last week after an angry back-and-forth volley in various media outlets between the two camps. "There are thousands of victims in Madoff's massive Ponzi scheme. But Saul Katz is not one of them. Neither is Fred Wilpon. And neither are the rest of the partners at Sterling Equities," the lawsuit reads. "The Sterling partners, their family members, trusts and Sterling-related entities made so much easy money from Madoff for so long that despite the many objective indicia of fraud before them, the
Sterlingpartners chose to simply look the other way. … The Sterlingpartners were simply in too deep -- having substantially supported their businesses with Madoff money -- to do anything but ignore the gathering clouds." The suit alleges that "the Mets alone had 16 accounts (with Madoff) from which withdrew over $90 million in fictitious profits," with that money used to help fund the club's day-to-day operations. The Picard lawsuit was originally filed under seal in early December (Eric Fisher, SportsBusiness Journal). Picard alleges the "estimated returns from the Mets-related accounts were consistently built into the Mets' cash flow projections and budget analyses" (NEWSDAY, 2/5). Sterling
IGNORING THE WARNING SIGNS: Picard claims that the Chief Investment Officer for Sterling Stamos, a hedge fund independent of Madoff in which Fred Wilpon and Katz invested, said that he "repeatedly warned the men and their families" about Madoff. Picard also alleges that Merrill Lynch, which "acquired 50 percent of Sterling Stamos in 2007, had a prohibition on investing with Mr. Madoff and told Mr. Katz that Mr. Madoff’s operations would not meet its standards." But Picard indicated that Wilpon and Katz "kept investing with Mr. Madoff, in what the lawsuit calls a 'cycle of dependency.'" The lawsuit claims that in '02, when Wilpon and Katz "assumed full ownership of the Mets, they offered Mr. Madoff a piece of the club," which he declined (N.Y. TIMES, 2/5).
THEIR SIDE OF THE STORY: Sterling Equities officials fired back Friday with a strongly worded statement of their own, insisting once again they had no knowledge of Madoff's ongoing fraud and accusing Picard of attempting to "strong-arm" a settlement and trash their reputations and business interests. "This is a flagrant abuse of the Trustee's authority and we will not succumb to his pressure," the statement from Fred Wilpon and Katz read in part. "The conclusions in the complaint are not supported by the facts. While they may make for good headlines, they are abusive, unfair and untrue. We categorically reject them. We should not be made victims twice over -- the first time by Madoff, and again by the Trustee's actions. … The Trustee also alleges that we were blinded to Madoff's crimes because our businesses 'depended' on the returns. That is complete nonsense." Lawyers for Sterling Equities additionally said that the Madoff accounts included only those that succeeded and omitted those that lost money. Attorneys for the Wilpons and Katz said, "The Sterling partners had over $500 million in Madoff accounts at the time of his failure -- some put in only days before -- and all of it lost. … Contrary to what the Trustee asserts, the returns on the Sterling-related brokerage accounts were not 'staggering,' 'easy money,' or ‘too good to be true.’ The $300 million in profit alleged in the complaint, even if accurate, would not be 'staggering' or 'extraordinary' when viewed in the context of principal invested over the past 25 years" (Fisher). The statement continued, "Why should we 'have known' when the (Security Exchange Commission) and other government agencies that had oversight responsibilities did not know?" (MLB.com, 2/4).
Fred Wilpon's ability to hold onto the Mets was "cast into more doubt Friday when a lawsuit filed by the trustee in the Bernard L. Madoff fraud case was unsealed and revealed in vivid detail the depth of Madoff’s involvement in nearly every aspect of Wilpon’s empire, particularly his team," according to Richard Sandomir of the N.Y. TIMES. The financial pressure on Wilpon “will now continue to mount, and his preference to sell 20 to 25 percent of the Mets to alleviate the strain, a plan that he announced a week ago, may not turn out to be enough of a remedy.” David Sheehan, the lead lawyer representing Madoff trustee Irving Picard, said that "'the entire [Saul] Katz-Wilpon enterprise' was being looked at as assets that could be used to resolve the lawsuit.” Sheehan: “What the trustee is looking for here is a payment in cash. So whether they utilize the Mets, SNY, Sterling properties or any other resource is of no moment to us. What we’re looking for is a billion dollars, and unless we settle for less than that, which we’re not inclined to do, where they get the money is of no moment to us.” Former MLB Commissioner Fay Vincent said, “It looks like a very messy situation for Fred. I know Picard and he’s a serious and solid lawyer, and what he’s doing has to be taken seriously.” Forbes Exec Editor Michael Ozanian believes that Wilpon “would have to sell the team and the SNY television network ‘to get out of this mess.’” The Mets, Citi Field and SNY “have considerable debt -- about $1.5 billion in all by some estimates.” Analysts said that there “might not be enough money available to Wilpon to settle with Picard and make bond payments, including $52 million a year for the stadium.” The Mets also have “hit their limit on borrowing” from MLB’s credit line (NYTIMES.com, 2/4).
BUYER'S MARKET: Wilpon and Katz in a statement Friday said, “We are now seeking one or more strategic partners in the New York Mets specifically because of the uncertainty created by the lawsuit” (WALL STREET JOURNAL, 2/5). New York Univ. sports management professor Robert Boland thinks that “a minority owner actually might be more willing to come forward now, viewing the lawsuit as a path to take control if the Wilpons lose big.” But industry experts said that the “key remains whether the Wilpons are willing to include a ‘first right of refusal’ clause, which gives the potential limited partner the legal recourse to match whatever price the Wilpons get if they ever do decide to sell their majority stake” (NEWSDAY, 2/5). The N.Y POST’s Kosman & Bennett wrote it is “time for someone new to meet the Mets.” There is “no way Fred Wilpon can keep his grip on the team with a billion-dollar lawsuit hanging over his head.” A source said Wilpon "can’t settle." The source added that he “doesn’t have the money” (NYPOST.com, 2/5).
TIME TO BID ADIEU? In N.Y., Mike Vaccaro wrote under the header, “Wilpon Should Step Away From Broken Mets.” Vaccaro: “The Mets are broken. And need to be fixed.” The “more you read the unsealed lawsuit,” the “more it became apparent that the Mets -- and that still means Fred Wilpon -- are guilty of either one of two things: Corruption. Or gullibility” (N.Y. POST, 2/5). The Nation's Dave Zirin: "If you ask most New York Mets fans, and I have to say I count myself as one, the best scenario would be the Wilpons making a graceful exit" ("Nightly News," NBC, 2/6). ESPN N.Y.’s Ian O’Connor wrote, “It isn’t fair to assume the Wilpons are guilty of anything but managing their investments the same way they’ve managed the Mets. By putting their money in the wrong horse, time and time again” (ESPNNY.com, 2/5). The N.Y. Daily News' Andy Martino said as long as the Madoff lawsuit is "hanging over the Mets, everything that they do, fairly or unfairly, will be viewed under that lens." Martino: "Anything in baseball operations, the pubic is going to want to know, 'Does this have to do with your lawsuit?'" ("Daily News Live," SNY, 2/4).
WORK IN PROGRESS: In N.Y., Bill Madden noted MLB Commissioner Bud Selig has indicated that he will retire in ’12, but if Selig “didn't need any more reason to continue on in the job he's held since 1992, he's now got four clubs in extreme duress, including two of baseball's signature franchises, the Mets and the Dodgers.” It is “ownership issues that plague the Mets and Dodgers and venue issues that threaten the viable existence” of the Rays and A’s. For Selig, “consumed as he is with his legacy, to walk away from baseball with the futures of these four clubs unresolved is unthinkable.” Even if the Mets' owners are “successful in defending themselves," their "prospects of being able to hold onto the team appear gloomy." Meanwhile, sources said that Selig wants Dodgers Owners Frank and Jamie McCourt “out,” and he “already has more than a half-dozen prospective local buyers lined up to liberate" the team (N.Y. DAILY NEWS, 2/6). Former MLB Rangers Minority Owner & President Michael Cramer, now Dir of the Texas Program in Sports & Media at the Univ. of Texas, said the Mets are a “critical piece” of the league and regardless of the relationship Selig has with Wilpon, “he’ll do what’s best for baseball” (“OTL,” ESPN, 2/4).
The MLB Giants' annual FanFest drew a record crowd of more than 40,000 people at AT&T Park Saturday, "far more than the 25,000 to 30,000 the FanFest has drawn in past years" as fans continue to "bask in the glow of a World Series triumph," according to a front-page piece by Bob Egelko of the S.F. CHRONICLE. The crowd "lined up for four and five blocks outside of the stadium," and Giants President & COO Larry Baer 10 minutes before the gates opened at 11:00am PT "went on the radio and urged everyone who wasn't already in line to stay home and listen to the festivities." The team "closed the gates briefly at 11:45am, and then redirected entrants to the stadium's upper deck." Once inside the ballpark, fans "waited in line for a half hour just to stand on the pitcher's mound," and there was a 45-minute line "just to enter the home dugout." One autograph line "stretched from behind third base to the left-field bleachers and took more than two hours to traverse." Giants Senior VP/Communications Staci Slaughter said that the team "would consider making FanFest a two-day event in the future." Meanwhile, Slaughter noted that season-ticket sales "have passed 23,000, already 2,000 more than last year, and should approach the San Francisco record of 28,000." The team has sold around 105,000 advance single-game tickets, "up from 60,000 at the same time last year." Giants Managing General Partner Bill Neukom said that the World Series win has delivered "revenue boosts from ticket sales, advertising and demand for apparel." He noted that it is "hard to put a dollar figure" on what winning the title has brought to the team. However, he said, "It's worth millions of dollars, and over time should be worth tens of millions" (S.F. CHRONICLE, 2/6).
The Knicks Saturday formally named former Nuggets VP/Basketball Operations Mark Warkentien Dir of Pro Player Personnel, a hire that "has as much to do with Warkentien's vast knowledge of the college game and the NBA as it does with the team's pursuit" of Nuggets F Carmelo Anthony, according to Alan Hahn of NEWSDAY. Knicks President of Basketball Operations Donnie Walsh said that Warkentien's history with the Nuggets and the fact that he has "close ties to that organization and Anthony -- as well as Anthony's representation, Creative Artists Agency, is mere coincidence." Walsh turns 70 on March 1 and has "endured three surgical procedures in his two-plus years as team president." Warkentien, 57, "gives the franchise an experienced basketball executive who can assist Walsh with some of the heavy lifting." Hahn reported the two have "talked about teaming up for more than a year" (NEWSDAY, 2/6). In N.Y., Mitch Lawrence reported the hiring of Warkentien "is the strongest signal yet that Walsh will be coming back to run the team next season." The move is "less about Anthony's future in New York and more about Walsh continuing in his present position." It is a "huge development because Walsh had been unsuccessful since the start of the season in trying to hire executives for his front office." He wanted to hire Chris Mullin as GM, but Knicks Owner James Dolan "wouldn't allow it." Lawrence: "For Warkentien to be hired, Dolan had to give it his OK" (N.Y. DAILY NEWS, 2/6). In N.Y., Frank Isola cites a Knicks source as saying that Warkentien's contract "runs through July 1." It "doesn't mean Warkentien, whose main responsibility is college scouting on the West Coast, won't be retained but it's unlikely that he'll be" Walsh's successor (N.Y. DAILY NEWS, 2/7).
WHO'S CALLING THE SHOTS? In N.Y., Marc Berman reported MSG Sports President Scott O'Neil, not Walsh, was the "one to push" Dolan into hiring Warkentien. O'Neil is "not part of basketball operations and is supposed to run the marketing end of the franchise." But a source indicated that O'Neil "pushed for Warkentien's hire because he feels it is important for the Knicks to do business with CAA, the agency that represents" Anthony and Hornets G Chris Paul, another potential free agent this offseason. Warkentien has "told confidants he considers Walsh his mentor and it is a dream to work for him." But the league source said that O'Neil's "influence on the Warkentien hire suggests the Garden power structure is cockeyed, since O'Neil is not supposed to influence basketball operations" (N.Y. POST, 2/5).