$1 for a MLB Franchise

It wouldn't be another terrific Tuesday if I didn't bore you guys with my thoughts on the potential sale of my beloved and much maligned New York Mets. I can't help it. Aside from my loyalties, I feel like we are watching a real live hostile takeover/leveraged buyout/pump and dump all rolled into one big soap opera.

When Greenlight Capital boss David Einhorn shoots up Fred Wilpon’s broke and in the red New York Met veins with $200 million worth of capital, he may be a lot closer to owning the prized property outright than anybody imagines.

Even though Mets management firmly denies all claims, stories have been swirling about Einhorn possibly owning the Mets outright… for one additional dollar over the agreed upon $200 million cash infusion amount.

In case you haven’t read about this story, you read the previous sentence correctly. Einhorn will (supposedly) become the 60% majority owner of the New York Mets if Fred Wilpon cannot pay back the $200 million in full within the three-year open payback window. Considering that the Mets are due to lose $70 million dollars this year, we are not exactly talking about a likely scenario. As Einhorn didn’t make his billions by being a fool, this sort of embedded contract option is precisely the sort of thing one might expect from a hedge fund manager dealing with a real estate guy used to simple monthly and annual cash coupon payout rationale.

Though the alleged loophole is likely not a reality, it does bring up some very interesting notions relevant to Wall Street’s daily grind. How often have we seen someone (investor, client, counterparty) absolutely robbed, raped and beaten half to death at the negotiating table? Can any of you remember a situation where you saw a market actor extremely desperate for cash put a valuable asset out to pasture just to save their skin in the short term?

I recently sat with a guy who bought a 2005 Audi A4 in 2007. He got it for $20K but didn’t have the required minimum down payment. The combination of his lust for the ride and the dealer’s unscrupulousness lead to deal that made my head spin. The guy wound up paying $600/month for almost four years. After the fees and interest payments, he wound up dropping nearly $27K for the car. The best (worst) part of the story is that he didn’t quite pay the car off. He wound up getting a shitty deal on a trade in (think 20% of book trade in) for the exact same car, just a 2011. He’ll be paying the prorated equivalent of 1.5 times more per month.

Dumb as this random guy may seem, he is still not risking an asset believed to be worth over a billion dollars for a one time loan of $200 million. Even if Wilpon winds up paying back the loan in full in the allotted time frame, Einhorn will retain an approximate 1/6th ownership in the Mets. As a Met fan I have whined and cried for Wilpon’s departure for over a decade. Now that it seems to be happening I can’t say that I am happy. I feel like I am watching a degenerate gambler playing the ponies, except each hoof can pay off the national debt of a third world country.

It never ceases to amaze me how hard of a time people have letting go of their toys. Even when it is so obvious they cannot afford or utilize them properly. Any of you guys want to give an example of such fiscal irresponsibility that we may not have read in the headlines?

My guess is that anyone working on the street in the mid 2000’s has more than a dozen Wilpon like characters in their memory bank...