Hedge fund manager David Einhorn is preparing to buy a large minority stake in the New York Mets, a US$200 million deal that could put him in a position to take control of the cash-strapped baseball team.
The president of Greenlight Capital is in exclusive talks with Mets ownership, led by real-estate developer Fred Wilpon, and hopes to cement a final agreement by the end of next month, both sides said on Thursday.
For Einhorn, 42, whose flagship fund fell 3.4 percent in the first quarter, the investment appears to be a comparatively low-risk proposition, provided that he obtains protections from further losses that the team may face.
Wilpon told Sports Illustrated this month that the Mets were “bleeding cash” and could lose US$70 million this year.
The team’s principal owners also face a US$1 billion lawsuit by Irving Picard, the trustee seeking money for victims of Bernard Madoff, to recover “fictitious profits” and principal from their dealings with the now imprisoned Ponzi schemer.
“There are all sorts of unknowns,” said Andrew Zimbalist, a sports economist at Smith College in Northampton, Massachusetts. “A US$200 million investment would help Wilpon hold onto the team, under a certain range of settlements with Picard. If the settlement with Picard is too high, Wilpon would have to sell control.”
Forbes magazine in March estimated that the Mets were worth US$747 million, down 13 percent from a year earlier. Wilpon told Sports Illustrated that the Mets have US$427 million of debt and would use US$75 million of an infusion to pay it down.
Neither Einhorn nor the Mets would discuss possible terms for the proposed investment. Any investment needs approval by Major League Baseball. It is unclear how Einhorn would finance the entire investment or whether he might seek a partner.
“I have no real plans to sell this investment,” Einhorn, a long-time Mets fan, said on a conference call with reporters on Thursday. “I expect to hold it for a very, very long time.”