Published May 26, 2011
In an attempt to breathe new financial life into the debt-ridden franchise, the New York Mets have inked a deal to sell a major stake for about $200 million to influential hedge fund manager David Einhorn.
According to ESPN, the deal is for less than 49% of the club and does not include a stake in SportsNet New York, the franchise’s profitable television network.
In a statement, the Mets confirmed they have selected Einhorn, who co-founded hedge fund Greenlight Capital in 1996, as the team's preferred partner. The two sides have entered into exclusive negotiations about a "minority, non-operating investment" in the franchise involving a $200 million investment, the statement said.
"David's investment immediately improves the franchise's financial position," said Fred Wilpon, the team's principal owner."Equally important, David's intelligence, integrity and success in both business and civic affairs provides us with another perspective in evaluating what is best for this organization and our fans, and we welcome his input."
The deal is still subject to the negotiation of a "mutually acceptable definitive agreement" and approvals from Major League Baseball. Einhorn and the Mets said they expect to enter into a definitive agreement by late June.
Einhorn, who lived in New Jersey for part of his childhood, said he grew up a Mets fan and has coached his daughter's little league team.
"Having an opportunity to become part of the Mets franchise is exciting beyond my wildest childhood dreams," said Einhorn.
Einhorn is well known on Wall Street and is considered one of the most influential hedge fund managers. He famously shorted the stock of Lehman Brothers in 2007, a year before the investment bank crumbled. Einhorn was one of the most vocal critics of Lehman’s management.
Sports fans may also recognize Einhorn as he went deep in the main event of the World Series of Poker in 2006.
Led by Allen & Co.’s Steve Greenberg, the Mets have been actively shopping for a buyer for months in an effort to stabilize the team's balance sheet.
Mets owners Fred Wilpon and Saul Katz decided to sell a portion of the club after they became the target of a $1 billion lawsuit from Irving Picard, the Madoff trustee. Picard alleges Wilpon and Katz, who lost about $550 million in Bernie Madoff's Ponzi scheme, knew or should have known about the epic fraud.
At the same time, the ball club is reportedly on track to lose $70 million this year due to poor attendance, slumping sales of premium inventory like luxury boxes and heavy debt.
Einhorn’s investment should improve the finances of the Mets, who reportedly have a debt load of $630 million and were valued earlier this year by Forbes at $747 million. That puts the team’s debt-to-value at an alarming 84%.
"I look forward to partnering with the Wilpon and Katz families through the good seasons, the tough seasons and especially the championship seasons," Einhorn said.