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Less than 24 hours after hedge-fund titan David Einhorn struck out in negotiations to purchase a minority stake in the Mets, the cash-strapped team already was pitching a plan B.
Mets owners Fred Wilpon and Saul Katz, who abruptly ended talks with Einhorn yesterday morning, are said to be pursuing a strategy of raising capital from an investor consortium rather than a single investor in an effort to retain ownership of the team.
Sources say that the Wilpons are hoping to hammer out a deal with as many as 10 prospective investors to sell “units,” or stakes in the Mets baseball franchise, for $20 million or $30 million apiece, with talks beginning as early as Tuesday.
The new course of action for the Mets owners comes after 69 days of extensive talks to sell a minority interest in the team to the 42-year-old Wall Street whiz ultimately broke down during an early-morning meeting yesterday, say sources.
Einhorn’s talks turned sour when the Mets accused the Greenlight Capital chief of focusing on minting deal terms that put him squarely in position to take control of the Mets.
Owners of a losing 65-69 record going into yesterday, the Mets have been scrambling to raise $200 million to help the money-losing franchise stanch the bleeding caused by losing as much as $500 million to Bernie Madoff’s massive Ponzi scheme.
“We are very confident in the team’s plans, both off and on the field,” Wilpon said in a statement.
For the past year, Major League Baseball and the Mets’ bankers, including JPMorgan, have placed pressure on the team to get its financial house in order.
The Amazin’s have seen attendance drop by 10 percent this year, and the organization is facing a $70 million loss for the year while carrying nearly $430 million in debt.
The team lost $51 million last season.
On top of that, the club’s owners are also facing a whopping $1 billion lawsuit brought by Madoff bankruptcy trustee Irving Picard.
Picard’s lawsuit has been a looming concern for the Mets, which sparked the owners to seek a partner.
But over the past several months, the Wilpons have appeared to be more emboldened about the prospects of receiving a favorable outcome from Picard’s suit that might be far less financially damaging.
“They seem to be in a lot less desperate situation than they were late winter, early spring,” said Douglas Furth, a partner at law firm Golenbock Eiseman Assor Bell & Peskoe LLP, who was not involved in negotiations.
However, some of the bidders are said to feel slighted by the Mets owners — who abruptly cut off talks with many of them, including former Glencore International commodity trader Ray Bartoszek — when Einhorn entered the picture in May.
Nonetheless, the owners either have reached out to or are planning to reach out to a number of prospective investors, including hedge fund manager Anthony Scaramucci, as well as Steve Starker, co-founder of trading firm BTIG, and Ken Dichter, co-founder of Marquis Jets.
Banks that have provided loans to baseball, including JPMorgan, are not expected to balk at the Mets’ latest move, as they are first in line to get paid back if the team’s finances worsen, according to Furth.
With reporting from Kaja Whitehouse, Lenn Robbins, Joel Sherman