The term Hot Stove League describes the off-season action in the world of baseball including but limited to trades, free agent signings and injury updates. Now we have a new twist to the topic and our beloved and beleaguered New York Mets find themselves in the eye of the storm. This storm has nothing to do with the status of Johann Santana. Nor does it have anything to do with the new regime of General Manager Sandy Alderson and Manager Terry Collins.
No, this storm has to do with the Mets’ ownership dealings with Bernard Madoff ponzi scheme which indirectly may be the reason why Fred and Jeff Wilpon’s Mets have not been very active participants in the free agent market as of late.
Over the past week, revelations came out that the Wilpons are looking to sell a minority interest, between 20-25%, in order to pay pending litigation fines as a result of their dealings with Madoff. In December, a class action lawsuit was filed on behalf of the victims of Madoff’s wheelings and dealings. Irving H. Picard, lawsuit trustee, is seeking compensation from all of those who benefitted from the ponzi scheme. Now this is where things get interesting.
All along, the general consensus was that the Wilpons lost money in this investment. Now we come to find out that they actually made money, approximately seventy-five million dollars off an initial investment of five hundred million. If they were only on the hook for the seventy-five million dollar payment, perhaps, this would not be as so significant. We now come to find out that there is a possibility that the defendants could go after monies that the ponzi scheme participants withdrew as well. Based on court documents, the Wilpons, through their parent company, Sterling Equities, withdrew their five hundred million principal investment.
If this is case, the Wilpons could be liable for a minimum of over six hundred million. There are some reports that indicate that Picard, on behalf of his clients, will be seeking close to a billion dollars from the Mets owners. Not only are any profits and principal amounts withdrawn subject to retribution penalties but any monies that were used or generated as collateral for other business ventures. Considering that the Mets just built a new state of the art stadium that principal might have found its way toward that financing. I’m not suggesting that is the case. However, it is possible.
News came out last week that the organization will be seeking a minority partner in order to infuse about seven five million dollars into their operation budget.
A group led by former Met Ed Kranepool, the son of former Met Donn Clendenon and Martin Luther King III has expressed interest in the stake. Clendenon Sr. and Kranepool were teammates on the ’69 World Series team and Clendenon was that series MVP. However, they are seeking 50% ownership.
Prior to making the Major Leagues, Clendenon graduated from Morehouse College where the school gave him a Big Brother to help mentor him through his freshman year. That individual, someone you might have heard of him, was Martin Luther King Jr. The families have remained close all of these years, thus, the origin of their two sons’ relationship.
Mike Repole, former Vitaminewater exec and the owner of Kentucky Derby favorite, Uncle Mo, and Long Island liquor entrepreneur, Martin Silver, have also expressed interest.
One has to wonder now if the reason the team did not go after some of the bigger free agents over the past two or three years is because they might have had a feeling that this pending lawsuit would wreak havoc on their coffers. The organization has and continues to tell anyone that will listen that the Madoff situation will not impact the day-to-day operation of the team. And that this quick infusion of cash will make sure that this is the case.
Many have criticized the Mets of not being forthcoming regarding the impact of the Madoff situation will have on the organization. Maybe that is because there is a pending lawsuit hovering over the club like a dark cloud. You know in any class action suit, the plaintiffs’ representatives go after the defendants with the biggest pockets. I would guess that puts the Wilpons and Sterling Equities at or near the top of the list. Only time will tell. But like my mother always told me, “it will all come out in the wash.” We will just have sit back and see how this plays out.