Mets Are Said to Be Suffering Sizable Losses
The Mets, long one of baseball’s most highly valued franchises, have lost millions of dollars in recent years, including nearly $50 million in 2010, according to two people briefed on the team’s finances.
The team’s losses — projected to hit another $50 million or more this season based on factors including advance ticket sales — come with a range of implications for its owners, who are trying to sell a portion of the club, and for major league teams that rely on the Mets to share revenue with them.
Two years ago, the Mets contributed more than $40 million to baseball’s revenue-sharing pool — a system meant to create a more level playing field for small- and large-market teams. But in 2010, the Mets put in around 40 percent less.
The losses — the club’s falloff in revenue was the largest year-to-year decline for any major league team in recent years — are certainly jarring for a franchise operating in the nation’s most lucrative market.
In 2009, the Mets, boasting one of the sport’s most expensive payrolls, opened the season in a new park, Citi Field, and the club took in revenue of more than $350 million. Still, it lost close to $10 million, according to the two people briefed on the matter.
The team then struggled again in the field in 2010, ending the honeymoon for the new ballpark, and attendance figures fell precipitously, with almost 600,000 fewer fans showing up.
As a result, according to a person briefed on the finances, overall revenue slid by more than $60 million, and net losses, after interest, totaled roughly $50 million.
The falloff in revenue in 2010 for the Mets was one of the most striking for any club since the losses suffered by the Florida Marlins in 1998, when their roster was decimated by cost-cutting ownership a year after the team won the World Series.
The individual finances of baseball teams are some of the most closely held data in professional sports, and the public is most often left to accept the word of the league’s owners about any team’s profitability or losses.
So the revelations about the particulars of the Mets’ finances are hardly commonplace. The people briefed on the club’s finances would not be identified because the information is considered confidential.
For its part, Forbes magazine produces its own annual valuations for major league teams, and this week dropped its estimate of the Mets’ value by 13 percent, to $747 million.
The coming months, on the field and off, appear to be loaded with numerous challenges for the team.
The owners, Fred Wilpon and Saul Katz, have been sued for $1 billion by the trustee representing victims of Bernard L. Madoff’s Ponzi scheme.
And sales of what are known as full-season equivalents — a mix of small and large season-ticket packages — are projected to top out at 10,000 this year, less than half the total sold just two years ago. Without any major player signings after last season’s 79-83 record, there might not be much for fans to root for.
The Mets would not comment on their financial situation, other than to say that ticket sales for the 2011 season are up over the same time last year.
The revelations about the team’s losses come as Wilpon and Katz look to raise cash to keep the team running by selling at least 25 percent of the club. Five to eight prospective bidders are taking their first looks at the club’s recent financial history — and examining documents that help with projections.
Analysts and sports investment bankers have doubted that the team can find anyone willing to buy a minority stake. Instead, they have said, more than 50 percent of the club might have to be sold to give a buyer control.
"Even as the sale of part of the team goes forward, the Mets have engaged in angry legal exchanges with the Madoff trustee over allegations that Wilpon and Katz turned a blind eye to warnings of Madoff’s fraud."
The analysts and bankers said that the only way a minority portion would be attractive was if it came with a piece of the Mets’ two-thirds interest in SNY, their cash-producing cable network.
But bidders are being told SNY — a reliable source of profits for the Mets’ owners — is not for sale, and they are not being shown the network’s financial statements, said a person briefed on the sale. They are seeing documents showing that SNY is paying the vast majority of more than $60 million in media revenue to the team.
The team’s financial struggles have already required the intervention of Commissioner Bud Selig, who last fall approved a $25 million loan to sustain the club’s operations. The money was apparently needed because 2010 revenue fell tens of millions of dollars below projections, said one of the people with knowledge of the finances.
Perhaps not surprisingly, the Mets, as they have solicited partners to buy a share of the team, have tried to paint a brighter future, said one of the people briefed on the finances. By 2015, the team is forecasting significant profits and revenue well above $400 million.
The 2009 and 2010 seasons were the first since Madoff’s fraud was uncovered. The owners insisted at the time of Madoff’s arrest that the club’s financial health was not imperiled by their Madoff losses.
But the lawsuit filed by the trustee for Madoff’s victims has asserted that the team’s owners for years had been using their reliable profits from their Madoff investments to sustain and promote a variety of business, including the Mets.
Even as the sale of part of the team goes forward, the Mets have engaged in angry legal exchanges with the Madoff trustee over allegations that Wilpon and Katz turned a blind eye to warnings of Madoff’s fraud. In a court filing Sunday, the owners said the trustee, Irving H. Picard, had withheld or distorted critical evidence in the case.
David Waldstein contributed reporting.