Wilpon's Partner Has Expressed Interest in Selling His Share of Mets
Saul B. Katz, who owns a majority share of the Mets in a partnership with his brother-in-law and business partner, Fred Wilpon, has expressed a desire to sell his portion of the team because he has grown tired of spending millions to prop it up, according to several people in baseball briefed on the matter.
But Katz has been hesitant to sell because it could result in Wilpon's no longer maintaining majority control, according to the people familiar with Katz's situation. This has created a situation in which Katz has been locked into subsidizing part of the team's losses in an effort to protect Wilpon, who considers the team a family heirloom and wants his son Jeff to control it for years to come.
The people in baseball who described the situation spoke on condition of anonymity because they were not authorized by Katz to speak publicly about his finances and feared possible retribution from the baseball commissioner's office, which discourages officials from discussing internal matters.
The Mets declined to make Katz available for an interview. David Newman, a spokesman for the Mets, said Monday that there was 'no truth' to the notion that Katz wants to sell his portion of the team. Katz, Newman said, is 'definitely not selling.'
Katz and Wilpon are business partners through Sterling Equities, their umbrella company, and they are believed to own roughly two-thirds of the Mets. If Katz were to sell his share of the team to someone other than Wilpon, it would create questions as to whether Wilpon, who currently serves as the team's chairman of the board and chief executive, could maintain his role as the club's ultimate decision maker.
Katz has long overseen the Mets' finances, dating to the days when he used Bernard L. Madoff's hedge fund, which was later exposed as a Ponzi scheme, to fund the team's operating expenses.
People who know Katz, 75, and Wilpon, 77, have said that Katz has less interest in baseball than Wilpon, who grew up playing the sport - he was Sandy Koufax's high school teammate - and serves on Commissioner Bud Selig's executive council.
Katz, meanwhile, has long been involved with philanthropic efforts in the field of medicine - a wing of North Shore University Hospital in Manhasset, N.Y., is named after him - and he also directs Sterling's real estate operations. But he has remained in the background when it comes to the day-to-day fortunes of the club, which has not had a winning season since 2008.
It is unclear whether Katz has attempted to search for potential buyers. Several bankers involved with deals involving sports organizations said they had not been asked to help appraise Katz's stake in the team, the first step toward brokering a sale.
Finding a buyer willing to spend hundreds of millions of dollars for a share in the team but not have a major voice in running it is likely to be difficult. In 2011, the Mets tried to sell a $200 million stake in the team, but their deal with David Einhorn, the hedge fund titan, fell apart in part because he wanted a greater hand in the team's decision-making than is normally given to minority stakeholders as well as a pathway to eventual majority control.
As a result, the Mets were forced to sell many smaller stakes, including several to their cable television partners. Wilpon and Katz also sold three shares to themselves.
There are no public profit-and-loss statements or other documents that definitively show the complete state of the club's finances or how its ownership is structured. But reports linked to the bonds issued to finance Citi Field provide a partial snapshot of the team's financial performance. Those documents show that revenue from the stadium's 10,635 most expensive seats has fallen 58 percent, to $41.8 million from $99.3 million in 2009. In that period, concession sales have decreased 29 percent and parking revenue has dropped 20 percent. The team reportedly lost $70 million in 2011. Meanwhile, attendance at Citi Field has fallen by 32.5 percent since the stadium opened in 2009.
Katz's apparent desire to sell suggests that the Mets' losses have tested his patience. Their financial woes, which started around the time that Madoff's fraud was exposed, in 2008, have had an impact on the team and its owners and limited how much has been spent in recent years on the club's payroll.
That, in turn, has frustrated many Mets fans, who reason that if more money were being spent on free agents the club, in turn, would be more competitive than it has been.
Wilpon and his son Jeff have maintained that the team's finances have improved more recently, but several people in baseball briefed on that issue said the situation remained troublesome. And the payroll essentially remains where it was in 2013, somewhere from $85 million to $90 million, leaving it in the lower third in the major leagues despite the fact that the Mets are a big-market team.
With attendance figures that have declined markedly in recent seasons (there has been a slight uptick in 2014) and with significant debt payments still due on Citi Field, the Mets are likely to lose money again this season, the people said. That makes it unlikely that the payroll will jump substantially any time soon.
The team's poor performance financially has also agitated other major league owners, who are dismayed that a club playing in as large a market as the Mets do is unable to generate more revenue.
It was in 1980 when Wilpon first bought a stake in the Mets, a simple 1 percent share. He and Katz became half owners of the team in 1986, with Nelson Doubleday, then bought out Doubleday's share in 2002.
Details about Katz's close relationship with Madoff were revealed as part of a lawsuit filed against them in 2011 by the court-appointed trustee recouping money from Madoff's victims. The trustee, Irving H. Picard, said that Katz routinely used money from Madoff's fund to finance businesses and deepen his and Wilpon's personal wealth.
The owners won their legal battle with Picard when he ultimately abandoned hundreds of millions of dollars in claims against them. But Katz and Wilpon had to agree to let Picard use the $178 million they lost in some of their Madoff accounts to pay back the trustee for the $162 million in fictitious profits that they received in other accounts.
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