I knew that there would someone who would agree to pay $200 million for a minority share of the New York Mets. I just didn't think it would David Einhorn of all people.
If you don't know of Einhorn, he's not exactly a "sit back and watch" kind of guy.
He was the guy that turned on , before they filed for bankruptcy. He was the guy, who yesterday, called for Microsoft CEO Steve Ballmer to resign. Einhorn's hedge fund Greenlight Capital owns nine million shares of Microsoft stock . Einhorn made that call despite the fact that those shares only equal 0.1 percent of Microsoft stock.
Now he's an approval away from getting his share of the Mets, but the majority owners, the Wilpons, have made it pretty clear that Einhorn won't have much say. Unless that's just a public show and it's not for real, it's just surprising that this would be the guy who would accept these terms.
The prospective deal, on the surface, also seems suspect from a financial perspective. It does not include a stake of SNY, the Mets TV channel, which is the money generating part of the business. For what it's worth, Einhorn surprisingly said today that he wasn't ever interested in "owning a TV station." And the $200 million investment will also get more expensive, once the deal is approved, as Einhorn will be expected to cover his share of the losses, which Wilpon recently said could hit $70 million this year.
Here's what Einhorn wrote in his 2010 book, "Fooling Some Of The People All Of the Time":
"If the downside of an opportunity is no short-term return or 'dead money,' we can live with that. We are happy to hold for more than a year before succeeding. In practice, some 'dead money' opportunities work out more quickly than we expect. A portfolio where some investments work quickly, some work slowly, and the rest retain their value generates exciting results. The trick is to avoid losers. Losers are terrible because it takes a success to offset them just to get back to even."
What Einhorn is walking into is a current loser with the upside being fairly limited even if the Mets turned it around because he won't have a stake in SNY.
Einhorn told me on Thursday morning that this investment, which is not using Greenlight Capital funds, is "a personal investment."
"All I can really say is that I'm very comfortable with the financial arrangement that we're contemplating for this transaction," he said.
Perhaps this is just about being a fan and Einhorn, who is 42 and wore a David Kingman costume for Halloween when he was seven. That's OK. He can do what he wants with his money that he has rightfully earned. But from a business perspective, which I'm charged to analyze, it doesn't seem to make sense. Unless, and I'm told this wouldn't be the deal, it includes to buy the majority share in future years.
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