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Bank of America Corp
For a normal baseball team, agreeing to pay a $162 million settlement to the trustee for victims of the largest Ponzi scheme in history counts as bad news. That’s enough money, after all, to cover last year’s payroll at every club except for the New York Yankees and Philadelphia Phillies. But this is the New York Mets. And the news that Fred Wilpon, Saul Katz, and the rest of the team’s ownership have settled with Madoff liquidator Irving Picard is a very good thing. To begin with, $162 million is a lot less than the $386 million that U.S. District Judge Jed Rakoff put on the line at a trial that had been scheduled to begin today. Not to mention, Wilpon and Katz avoid the tabloid circus the trial inevitably would have become. Plus, they have five years to pay and can use their net losses in the Madoff scheme toward most (if not all) of their tab. Yes, the Mets are still short on cash—and still paying off a $40 million loan from Bank of America (BAC) and a $25 million loan from Major League Baseball. But now, at least they know just how strapped they are and can go about trying to build a team with what they have left.
“This is the best thing that could have happened to the Wilpons, other than a dismissal,” says Michael J. Cramer, director of the Texas Program in Sports and Media at the University of Texas at Austin and former president of the Texas Rangers. “There’s no cash that has to go out the door. It’s likely there won’t be any cash even in the next few years. It allows them to focus on running the team efficiently and paying its bills.” Cramer compares the Mets to homeowners facing a large mortgage; the Madoff losses are a fixed cost they can work around.
Legendary baseball statistician Bill James puts the matter more starkly. “Poverty is a fantastic discipline,” he writes by e-mail this morning, “In general, it is very good for teams to be forced to make choices. An excess of resources leads to laziness and poor decision-making.” (For proof of that last point, see the past half-decade of Mets teams.)
Luckily, the Mets have the right team for the job in a front office led by general manager Sandy Alderson. Brought in to begin cleaning up the mess in Queens in 2010, Alderson is the Godfather of Moneyball. As general manager of the Oakland Athletics from 1983 to 1997, he schooled Billy Beane in getting more for less through rigorous statistical analysis. His staff at the Mets now includes Harvard grad Paul DePodesta, who served as the primary inspiration for Jonah Hill’s character in the Moneyball movie, and J.P. Ricciardi, who also worked with Beane in Oakland. These guys now control the fate of the Mets. As Cramer points out, this is a big improvement for a team that seemed as though it might soon be headed for a date in bankruptcy court, or with mystery owner X. Are Alderson and Co. well-equipped for the choices ahead? “Absolutely,” writes James. If he’s right, then maybe the Moneyball sequel could be set in Flushing.