Photo: By David Berkowitz on Flickr
Reports are blowing up that the hedge fund manager David Einhorn has agreed to pay somewhere around $200 million for a less-than 49% stake in the New York Mets.The stake would reportedly not include any controlling interest in the management of the club and doesn’t include a stake in the SNY sports network, which is actually more valuable than the baseball team.
So how is this a good investment, again?
Our theory? Einhorn (or whoever it is, if turns out to be a different guy) would like to own the whole team. This tiny slice is all that the Wilpons are willing to offer. Despite the team’s financial turmoil, they’re determined to hang on at all costs.
But they can’t hang on forever. If the Irving Picard/Bernie Madoff lawsuit isn’t settled (or worse, if it goes to court and they lose it) the Wilpons will have no choice but to cash out.
The team and the network will have to be sold, or else Major League Baseball will step in and do it for them. Given what we’ve seen happen to the Dodgers, these are real possibilities.
When that happens, who will be in the best position to scoop up the pieces? David Einhorn.
Yes, his $200M gives the team a much needed lifeline (making a sale less likely) and may not give him a say in management, but what it does do is get him in the game. He now has something at risk in the final outcome of this saga – though any purchase agreement will protect him from the Madoff mess.
Best of all, he’ll be “pre-approved” by the other MLB owners, who have final say on any team sale. He’ll be in the club.
So when MLB decides the time has come for the Wilpons to go, he’ll have an advantage over everyone else hoping to take control. And if that never happens … hey, at least now he owns a share of his favourite baseball team. We hear the owners’ boxes have pretty good seats.
UPDATE: It’s official. The Mets have announced that Einhorn will indeed pay $200 Million for a non-controlling stake of the team.
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