Mets, Einhorn end negotiations for investment
Wilpon says team will resume search for minority ownership
NEW YORK -- Unable to finalize what once appeared to be an inevitable agreement, the Mets and hedge-fund manager David Einhorn have terminated negotiations for Einhorn to purchase a minority stake in the team, both parties announced Thursday, ending more than three months of exclusive talks.
Einhorn, 42, had previously pledged to pay $200 million for an unspecified minority stake in the team, in a framework offering a potential avenue toward majority ownership. The team has been seeking a minority investor since February, as a result of trustee Irving Picard's $1 billion clawback lawsuit designed to claim funds for the victims of Bernard Madoff's Ponzi scheme.
In lieu of Einhorn's investment, the Mets said in a statement Thursday that their ownership group has provided additional capital to cover all 2011 losses, lifting the Mets out of immediate financial danger and eliminating any perceived deadline to find a minority investor. Half of Einhorn's pledged $200 million was reportedly earmarked for team operations, with another $75 million designated for bank debt and $25 million for an overdue loan from Major League Baseball. But one person with knowledge of the situation said that even without Einhorn's investment, the team will have no trouble satisfying all financial obligations for 2011.
"We are very confident in the team's plans -- both off and on the field," Mets principal owner Fred Wilpon said in a statement. "We will engage with other individuals, some who have been previously vetted by Major League Baseball, along with other interested parties, regarding a potential minority investment into the franchise. My partners and I thank David for his interest in considering this opportunity and wish him well in the future."
Einhorn was more critical of the deal's dissolution on a conference call Thursday, saying that much of its press coverage had been "inaccurate and unhelpful," and calling its closure "a sad outcome." The president of Greenlight Capital, Inc. and a lifelong Mets fan, Einhorn blamed the team for altering the framework of the deal as recently as last week -- an action, he said, that ultimately prompted him to abandon negotiations.
A second person familiar with the negotiations called the notion of attempted alterations "categorically untrue." Einhorn declined to address specifics due to a confidentiality agreement, and Mets officials declined comment beyond their written statement.
"I was very surprised to see that many of the provisions of the deal, that were in place since May, had been changed," Einhorn said, noting that he will not pursue any litigation as a result of the stalled negotiations. "A week ago I thought this deal was in great shape and would be done very soon."
The two parties, Einhorn said, originally finalized details of the deal in July, more than a month after initially expressing hope for their completion. But Einhorn also said that the Mets later "lobbied" against his desire for preapproval as the club's control person in the event he became majority owner -- an unprecedented move that would have run counter to MLB policy.
Asked about those comments, a person familiar with the negotiations called them "absolutely, categorically false."
Einhorn did say that he will remember the experience fondly due to his interaction with Mets fans, who had seemingly welcomed him as a part of the ownership group. Indeed, the hedge-fund manager had apparently entered the team's inner circle, appearing periodically at Citi Field both alone and with his family.
"I've negotiated a lot of deals. A lot of them get done and some of them don't," Einhorn said. "When they fall apart, they always fall apart at the end."
What impact the deal's dissolution will have on baseball operations remains to be seen. Mets general manager Sandy Alderson has said on multiple occasions that he expects his club to decrease payroll from its current figure of more than $120 million to something closer to $100 million. More than half of that money is already earmarked for three players: left-handed pitcher Johan Santana, outfielder Jason Bay and third baseman David Wright.
The Mets, meanwhile, are still actively pursuing minority investors, though it now appears more likely that they will seek smaller influxes of cash from up to a dozen backers instead of one lump sum from a single minority owner. The lack of a pressing deadline is expected to aid in that search.
But if a negative financial impact is to stem from Thursday's announcement, it will likely surface quickly. One of the team's stars, shortstop Jose Reyes, will become a free agent after this season and almost certainly will seek a nine-figure multi-year contract. Questions linger regarding the Mets' willingness to shell out such cash, if not their ability to do so.
"I don't have a plan yet to see what's going on after the season," Reyes said Thursday, with one of his representatives, Chris Leible, in attendance at Citi Field. "I still haven't sat down with my agent yet. It's still too soon to talk about what's going to happen. We'll have to wait and see until after the season."
Reyes' teammates offered similar shrugs when asked about the dissolution of the Einhorn deal.
"It's got zero impact on us," Wright said. "There are so many things to worry about when you play every day. The last thing I want to do is get involved in something that I have zero control over."
"No matter what happens between Jeff and Einhorn or whoever else, it doesn't change once we run on the field," said starting pitcher R.A. Dickey, who, like Wright, possesses a guaranteed contract for next season. "It's still 60 feet, six inches to the mound. It's still 90 feet to the bases."
Manager Terry Collins, who spoke to ownership Thursday but had no plans to brief his team on the matter, described the day as "business as usual."
"This stuff has nothing to do with us," Collins said. "We can't worry about it."