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Saturday, May 28, 2011

Money Matters: Einhorn's deal provides Mets stability through next year

According to the NY Times, the $200 million from David Einhorn's investment is almost certain to meet the team’s most pressing needs and potentially stabilize its finances at least through next year, several bankers and baseball executives said.

The Mets are expected to use $75 million of Einhorn’s money to retire some of their bank loans and another $25 million to repay a loan, due next month, that the team received from Major League Baseball, according to several people familiar with the team’s finances. This should save the Mets tens, and perhaps hundreds, of thousands of dollars in interest payments.

The remaining $100 million should help with the team’s most urgent issue — paying its players.

With a payroll of about $142 million this season, roughly $12 million in checks must be cut every two weeks. At the very least, Einhorn’s investment would mean that the Mets will have little trouble on that front for the remainder of this season.

But whether Einhorn’s cash would provide the impetus to sign a prominent free agent this November or December is another matter.

Last winter, the Mets ignored that option and instead added a dozen players from baseball’s bargain basement for less than $11 million over all. The results, so far, have been decidedly mixed.

Of course, Einhorn’s money would stretch further if the Mets’ payroll drops substantially, and it almost certainly will:
  • Carlos Beltran ($18.5 million) is in the last year of his contract and will not be back and may soon be traded. 
  • Jose Reyes ($11 million) is also in the last year of his contract and he, too, is not likely to be a Met in 2012. 
  • Francisco Rodriguez ($11.5 million), Plus $17.5 Million 2012 option becomes guaranteed with:

    1. 55 games finished in 2011, and
    2. 100 games finished in 2010-11, and
    3. doctors declare Rodriguez healthy after 2011
  • And the $18 million now being paid to the already departed Luis Castillo and Oliver Perez will also be coming off the books.
Vince Gennaro, a marketing consultant to several major league teams, said Einhorn’s $200 million buys the Mets “a significant amount of time, possibly well into next year.” And shedding numerous contracts, he said, “gives them a chance to realistically find pieces in the free-agent market.”

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