NY Mets Said to Be for Sale With No Preconditions on Control

(Bloomberg) -- The proposed sale of the New York Mets to billionaire hedge fund titan Steve Cohen was scuttled by disagreement over a clause that would have allowed the current owners to control the franchise for five years after the deal had closed.

That probably won’t happen again.

No preconditions regarding control of the team will be attached to the upcoming sale, meaning whoever buys the Mets will likely assume control immediately from the Wilpon family, according to a person familiar with the matter. By showing a willingness to cede the control issue at the outset, the Wilpons may actually reap more than the Major League Baseball-record $2.6 billion that Cohen had agreed to pay, according to sports consultant Marc Ganis.

“In most cases an immediate sale with control will lead to a higher price than a sale today with a future option of control,” Ganis said. “Most parties who buy a team want to own and operate it sooner rather than later. They don’t want to be in a position where the interim owner may reduce the value, take on debt or make bad trades.”

The Mets and Cohen last week said they were abandoning negotiations. As part of their original deal, Cohen at the outset had agreed to the stipulation that Fred Wilpon would remain the team’s principal owner for at least five years -- after which Cohen would control the franchise Jeff Wilpon, his son, would stay on as the team’s chief operating officer for the same period. Cohen, who holds an 8% stake in the team, was in talks to increase his holding to as much as 80%.

Cohen, however, had sought to alter the agreement before closing, the person said, a sentiment echoed by MLB Commissioner Rob Manfred.

“I can tell you, and it’s based on conversations with the buyer and the seller on an ongoing basis, the assertion that the transaction fell apart because of something the Wilpons did is completely and utterly unfair,” Manfred told reporters at least week’s owners’ meetings.

The Mets didn’t immediately respond to a request for comment.

Allen & Co.

In his statement disclosing the collapse of talks, Cohen said he expected the team to get more money.

“I’m very disappointed we couldn’t work out a deal,” he said last week, “but as an 8% holder I’m looking forward to a higher bid for the team.”

The Wilpons are wasting little time trying to find another buyer for the franchise they assumed control of in 2002 at a valuation of $391 million.

Allen & Co., the investment bank retained by the Mets, will begin its post-Cohen sales process Monday, according to the person. As was the case with the Cohen deal, no part of the team’s profitable regional sports network, SNY, will be included in the sale.

Whoever buys the team will assume annual losses of at least $50 million, according to a person familiar with the team’s finances. The perfect buyer seemed to be Cohen, a lifelong Mets fan whose net worth of $9.2 billion, according to the Bloomberg Billionaires Index, made the annual losses palatable.

That said, the chance to own a major league sports team in New York will attract a growing list of well-capitalized buyers, Ganis said.

“The big positive is geographic desirability -- buyers want to be in the major market,” he said. “There’s a tremendous amount of wealth in the New York area, and the run-up in the stock market in the past three years has put a much larger amount of wealth in the hands of people who live there.”

The negative, Ganis said, is the exclusion of SNY, which will make it more difficult for any prospective owner to make money.

“If SNY is not included, the potential flip in losses to profitability is likely to be significantly deferred,” he said.

Unlike the Los Angeles Dodgers, whose new owners were immediately able to sell the team’s local broadcast rights upon buying the team in 2012, no such opportunity exists for whoever takes over the Mets, whose rights are locked up for another decade.

©2020 Bloomberg L.P.

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