While Major League Baseball owners and players square off on how to proceed with the 2020 season, hundreds of millions of hard and soft dollars as well as perceived wealth is flying out the window.
The New York Mets were one of the teams that was likely to be hit the hardest by the COVID-19 lockdown and now comes the news that their debt commitment on CitiField has been downgraded.
I’ll spare you the details (reported by Forbes’ Mike Ozanian) but the bottom line is, the Mets are in deep trouble. The Wilpons have been trying to sell the team under their terms and these new developments may force them to abandon their pipe dream of holding onto any portion of majority control.
“The Mets are losing money and have a mountain of debt: $350 million on the team and perhaps another $450 million on SNY, their 65%-owned regional sports network,” writes Ozanian. “According to my sources, it is likely the team has added to its leverage by borrowing from the league’s expanded credit facility to deal with the lack of ballpark revenue during the sport’s shutdown this season.”
Earlier this year, their agreement to sell the club to billionaire hedgefunder Steven A. Cohen for $2.6 billion fell through when Cohen backed out, reportedly over the condition in which the Wilpons would not cede control to him for five years after the purchase. More recently, Alex Rodriguez and Jennifer Lopez were mounting a deal with the help of J.P. Morgan Chase, but that fell through as well. The new developments have them reconsidering another go.
But whoever buys the team is taking on a huge financial burden without much light at the end of the tunnel. They will need to restructure much of that debt – if possible – and that won’t be easy as MLB faces more financial hard times including labor issues. More from Ozanian:
“The outlook for Citi Field is troubling. “The CreditWatch negative placement reflects our concerns over the continued impact COVID-19 is having on the QBC (Citi Field) given that MLB is likely to cancel a significant portion of the 2020 season, that the 2021 season could entail limited attendance due to social distancing, and that destabilization could extend into 2022, a potential strike year,” S&P wrote. “Using debt service reserves may be necessary as early as December as we do not assume or rely on any team support. Additional draws could occur in 2021, depending on how the revenue profile unfolds.”
The Wilpons have to realize they are in a corner here and will likely have to sell the team outright at a bargain and give up their quest to continue to torture the Met faithful. Time to surrender the ship.
