Buy or Sell: The New York Mets

Would you buy the New York Mets? In the case of SAC Capital's Steve Cohen the answer is a resounding YES. I am not so sure that this is a smart play. Not just for Cohen, but for any investor.

Today I would like to hear thoughts on the potential purchase from the analyst's perspective. I guess the better question would be... do you guys see baseball teams as a good investment overall? With the sport steadily losing ground as far as popularity and revenue is baseball the cash cow it once was? It seems that a ton of teams are having a hard time making money and even the country's most prized media market has felt the pain.

The Mets in particular present an interesting situation. They lost $60 million last season and were forced to take an emergency loan of $25 million from Major League Baseball in November. They have an expensive new ballpark, a malcontent fan base and a not-so-solid ball club. As a long time fan of the club, I am being pretty gentle in my description of their situation. If I were to be brutally honest, I would probably go so far as to call them an eternally sinking ship which is on its final descent to the bottom of New York harbor. Still, however, they are a major sporting franchise on the most lucrative stage...they have to be a buy, don't they?

I am really curious to hear opinions as to their perceived value on this forum. Many of you guys spend your days in attempts to properly value companies. Many of you soon will. How would you value a sports team, outside of the standard measures and metrics?

Is buying a sports club in a major market like New York the same as buying a regular company? Are sports really as profitable as they seem? How do you account for prestige and control in a situation such as this one? What makes a buy like this worth it?

I just can't help but to think that baseball is become one of those businesses that is slowly but surely pricing itself out of the market. The Mets seem to be the perfect example.

 

I would buy an MLS team if I was going to get into the sports game. There is way more upside in that league than any of the others.

Tampa Bay turns a profit from revenue sharing and low salaries, at least they did in the past. That the Mets can't turn a profit in NYC is SHAMEFUL....Wow 430 million in Debt. That's staggering (unless that's from the new ballpark, then it's more reasonable).

 
Best Response

I really do wonder sometimes what SAC is thinking--I remember reading somewhere that Cohen grew up a Mets fan, and if he has the money, why not let him give it a shot? How awesome would it be to grow up as a fan of a team and one day be wealthy enough to buy it?

I know a lot of people would say that playing better baseball is the best way to fill seats and increase revenue, but look at the Marlins! They're playing excellent baseball and can't fill half their ballpark, and they want to have a new stadium next year? There's always someone worse, Midas. The Mets just need some fire, some grit--that's why so many people loved the 1986 team, and their finances weren't in such great shape then, either.

Hell, I'm a Yankee fan and I enjoy going to Citifield! There's gotta be a way to make it all work.

Metal. Music. Life. www.headofmetal.com
 

I dont think many owners buy teams bc of the expectation of great or (even positive) returns. It's a toy for billionaires. Their version of.collecting.baseball cards. Look at the mavericks...i believe itcame out I'm court filings last year that they have lost something like 250mm since cuban took over, but he is obviously happier than a pig in shit (when theyre winning at least).

Football might be different because the nfl makes crazy money. But baseball, basketball. etc are just a means of empire building. Nothing wrong with that either.

 

The problem is, if we assume revenues are tied to winning (reasonable), then those cash flows are going to become crazily unreliable/volatile. This would seem to make a sports team of any kind an unattractive candidate for a takeover. Even the Yankees have their down times...

Metal. Music. Life. www.headofmetal.com
 

While winning is important, the mets have other problems much like the clippers have. The lakers are LAs team just like the Yankees are NYCs team. The Clippers and Mets are put in a mega markets yet they arent the team that people associate with those markets.

Follow the shit your fellow monkeys say @shitWSOsays Life is hard, it's even harder when you're stupid - John Wayne
 
heister:
While winning is important, the mets have other problems much like the clippers have. The lakers are LAs team just like the Yankees are NYCs team. The Clippers and Mets are put in a mega markets yet they arent the team that people associate with those markets.

That's a good point. Marketing and branding is such a huge part of the sports world now. I know Midas and many other Mets fans love to hate on Steinbrenner (God rest his soul) but he helped revive a franchise that many believed would never win anything ever again. Hell, even the Cubs have managed to be incredibly successful despite not even appearing in a Fall Classic since 1945. If they can do it, why can't the Mets?

Metal. Music. Life. www.headofmetal.com
 
heister:
While winning is important, the mets have other problems much like the clippers have. The lakers are LAs team just like the Yankees are NYCs team. The Clippers and Mets are put in a mega markets yet they arent the team that people associate with those markets.

The Clippers and Mets are second tier teams because their city counterparts have consistently outperformed them in the past twenty years. Either of those franchises get back to winning, they'll be popular and profitable.

This is an easy buy for me. If you continue to spend $150mm on payroll, you will eventually return to the upper echelon of baseball teams. And once you do that, you'll have the biggest market in the country on which to capitalize, unlike the Royals, who could capture the attention of every person in Kansas City and never come close to the marketing/financial opportunities available to the Mets and their fan base.

"I don't know how to explain to you that you should care about other people."
 

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