Last month, the New York Mets announced that David Einhorn would buy a non-controlling, 33% share of the team for around $200 million.
Because Einhorn didn’t become one of the best investors in the world by being an idiot, the purchase agreement includes a path to full ownership.
Reports say that he has the option to buy a 60% stake of the team in three years.
The strike price for that 60%? According to Forbes, it’s just $1.
There is only one way for Fred Wilpon, the current owner, to prevent that. He can give Einhorn his $200M back. In that instance, Einhorn still retains an 1/6 ownership share of the team.
(The terms of the deal have not been publicly disclosed and it has not been approved by Major League Baseball, although there’s been no indication that it won’t be.)
This sweetheart agreement underscores not only Einhorn’s savvy, but the Mets’ desperation. They’ve basically agreed to take his risk-free, three-year loan, with the ownership of the franchise at stake.
Either he gets all his money back, plus a sizeable ownership share of his favourite baseball team. (They might even get him control of the profitable SNY network as payment.) Or he gets to keep the whole thing, without committing any extra funds.
Considering the Mets are going to lose $70 million this year and the owners are embroiled in a $1 billion lawsuit over the Bernie Madoff debacle, the odds of them having $200M extra dollars in three years are pretty slim.
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