Saturday, November 05, 2011
Mets willing to pay 3% Interest to Investors
The money-losing franchise, shopping $20 million to $30 million minority stakes to as many as 10 buyers, is now telling prospective investors that it is willing to pay 3 percent interest annually on the stakes over six years.
Conversely, an investor can opt to keep his stake should it appreciate at greater than a 3 percent rate. No interest will be paid under this scenario.
The investments will also have some loan characteristics.
People will be able, after a half-dozen years, to cash in their small stakes and get their money back -- with a 3 percent annual kicker tacked onto their principal, sources close to the situation said.
Additionally, the Mets are guaranteeing that the minority owners will not be called on to fund the money-losing team during their investment, three sources close to the situation said.
The $20 million stakes value the Mets at roughly $950 million, sources familiar with the new offer said.
“I do think this makes it more interesting for some people,” a potential buyer said. However, he added that there is no path to control of the team so a suitor would have to be comfortable trusting the maligned co-owners, Fred Wilpon and Saul Katz, to run the franchise.
One source familiar with the deal insisted the sweetened offer was not new and characterized the current pitch as basically the same as the first -- just with some tweaking.
The Mets for several months had been hoping to sell as many as 10 prospective investors on “units,” or stakes in the franchise, for $20 million or $30 million apiece, without the sweeteners.
The Mets are facing some deadlines.
Recently, the team told its lenders it would raise money to pay a total of nearly $50 million due in the next few weeks to Major League Baseball and New York City by selling the minority stakes, a source with direct knowledge of the situation said.
The Mets owe MLB roughly $15 million to $20 million from revenue sharing, in which all the teams combine 31 percent of their local revenue and then split the pot evenly.
That is due at the end of November.
Then, the Mets owe the New York City Industrial Development Agency for interest on bonds raised to build CitiField. That is about $26 million due Dec. 15.
MLB commissioner Bud Selig last November pressured the Mets to sell a minority stake when they ran into a cash squeeze and needed a $25 million emergency loan -- which is still outstanding.
After a disappointing season, the Mets are expected to lose $70 million in 2011. However, up to this point, the Wilpons have kept the Mets solvent by putting an additional $38 million in the team, the source said.
The Mets declined comment.
Monday, Mets COO Jeff Wilpon said the auction to sell the minority stakes was going very well.
Source: NY Post