Wednesday, February 02, 2011

Dark Days Ahead For Mets Ownership

The Wilpons are in huge trouble. They've been denying that their financial situation was adversely affected by the Madoff scandal, but revelations in the past 48 hours shows a significantly different picture.

It suggests that the Wilpons made out like bandits for being associated with Bernard Madoff and that the Met organization's financial situation was tied to Madoff.
Now, however, a lawsuit against Mr. Wilpon and Mr. Katz brought by the trustee for victims of Mr. Madoff has suggested the relationship — financially and personally — was deeper than anyone might have suspected. The trustee, Irving H. Picard, has alleged that the two men’s dealings with Mr. Madoff were extensive and longstanding, and that they went on even after suspicions about Mr. Madoff’s operation were raised, according to two lawyers involved in the case.

As a result, according to the lawyers, Mr. Picard has asserted that Mr. Wilpon and Mr. Katz either knew or should have known that Mr. Madoff’s operation was a potential fraud. Mr. Wilpon, Mr. Katz and their lawyers have refused to comment on the lawsuit, which was filed under seal in December in federal bankruptcy court in Manhattan.

But interviews with current and former associates of Mr. Wilpon and Mr. Katz, as well as former employees of the club, former employees of Mr. Madoff and others, make it clear that the relationship was substantial and that the role Mr. Madoff played in the financial life of the ball club and the Wilpon and Katz families was pervasive.

“The relationship between Fred and Bernie became closer and closer because Bernie was returning more and more to Fred in terms of his investments while Bernie is getting exposure from Fred and Saul,” said Jerry Reisman, a lawyer in Garden City, N.Y., who has represented 10 or so commercial real estate investors who lost a total of some $150 million to Mr. Madoff.

“They both relied on one another,” he said. “It was reciprocal, symbiotic. They both relied on each other for money, and Bernie also relied on Fred for contacts.”

One former executive with the Mets recalled how it could work:

“I remember vividly Madoff’s name being brought up a lot when” the team “would negotiate contracts, particularly with deferments,” said the former executive, who would not be identified because he did not want to harm his career in baseball. “That money would be turned over to Madoff.

“And as part of friends and family of the Mets, they offered people the opportunity to invest in Bernie. There was talk about Bernie averaging like 15 percent for the Wilpons. It just seemed too good to be true, but then you think the owner has vetted it.”

Frank Cashen, the former general manager of the Mets who built the team that won the 1986 World Series, said it was his understanding that several million dollars of his deferred compensation had been invested with Mr. Madoff, but that he had been paid. Asked whether it was Mr. Wilpon or Mr. Katz who was more likely to push the idea of investing with Mr. Madoff, Mr. Cashen, who stepped down as general manager in 1991, said, “To me, they operated in unison.”
If Cashen's statements can be corroborated by the evidence, and there's further evidence that the Wilpons shilled for Madoff, we may yet see the Wilpons perp-walked for their involvement in the Ponzi scheme.

What does this mean for the Mets organization? It may result in a sale of the entire team, rather than just a fractional share as the Wilpons announced earlier this week. The last thing that baseball, and the Mets, needs is for the team to be embroiled in a major financial/criminal scandal.

Mets GM Sandy Alderson
says that the situation wont affect the Mets on the field, but that's just putting a spin on things. The financial situation is tenuous at best, and Alderson is limited as to how much money he can spend on bringing players to New York because of the situation. Players may also be shying away from the Mets because of the unsettled financial situation.

It will take time to untangle the financial holdings of all the parties involved, but if this means the end of the Wilpons' ownership of the Mets, I think that Met fans would cheer heartily.

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