Think of buying a sports team like purchasing art. It is an analogy offered to me by a few folks involved with Major League Baseball.
The value is essentially a moving target, often fueled by rarity. If there are just two available Rembrandts, that is it, and it is not like he is going to be painting more considering he has been dead for 351 years.
There are just 123 teams in the four major North American sports. Lots of rich folks would love to have one. Maybe there will be expansion soon, but that is pretty much the inventory. They come up for sale on occasion, but not often. And New York franchises hardly ever.
So, now imagine you are Steve Cohen. He wanted a baseball team. At a time, he thought he was getting the Dodgers. But the Mets are his white whale, as Gerrit Cole was for Brian Cashman and the Yankees. More than that. In the past dozen years, Cole has been drafted twice, traded once and signed as a free agent. He may yet get traded again or have another free-agent deal in him.
The only time the Mets are likely to be available in the rest of the 64-year-old Cohen’s life is now. And he grew up a fan. His wife is a fan. He already owned 8 percent of the team. He was on the goal line to buy the Mets just a few months ago before a dispute with the Wilpons led to him backing out. Was he really going to let it slip away again?
At this point, it should be mentioned that Cohen is one of the foremost art collectors in the world, with his works valued at more than $1 billion. He tends to get what he wants. And he wants the Mets. And he is worth roughly $15 billion.
So after sitting out the auction process initially and hinting he was not interested, Cohen jumped in. Many potential bidders at that point figured, why bother. Even those in the process believed they might just be setting a price for Cohen to beat. Which he did. And the sense is not by a little bit. Since the Wilpons would have preferred not to do the deal with him.
The others — the Alex Rodriguez consortium and Josh Harris/David Blitzer — stuck around to see if they could get close enough and/or if the Mets wouldn’t pick Cohen on the chance he is not going to pass an ownership vote. The Wilpons went with Cohen, who now is in exclusive negotiations to buy the team. So the Wilpons either believe they have the votes or could get them, or are willing to risk it because even in a pandemic Cohen was obsessed enough to invest so much on his white whale.
How much is that? Nothing has been made public yet. But remember the numbers can be fudged in so many ways, because the Wilpons have so much debt everywhere and the question is who is picking up what. For example, there is roughly $550 million owed on the bonds to build Citi Field. So is Cohen, say, giving the Wilpons and Saul Katz $2 billion and taking on the debt service for the stadium, and you can say that is $2.5 billion, or is Cohen willing to pay the current owners $2.5 billion plus take on the debt service, in which case this could be trumpeted as a $3 billion-plus deal.
If Cohen gains ownership approval, that will be the biggest reason. The owners may not love him, but they love franchise values going up. There is no spectator revenue this year and it is dubious for next year. Plus the Mets are looking at perhaps $150 million in operational losses this year and something huge in 2021. That the hedge fund manager looked at that and still wanted the Mets at sizable cost would be his ticket into the country club, if he gains admittance.
It also is what makes him so attractive to so many Met fans. He can write a check for any player. But those who know him say it will go beyond that. Cohen will invest in the best people and technology in the way the Wilpons were unwilling. And clearly he sees the potential in this franchise, that this can, if operated right, be another masterpiece in his collection.
The Mets’ TV ratings stand right with the Yankees. Their fan base is mammoth and devoted. Their ticket prices not only are viewed (sorry fans) as low compared to the Yankees, but to the industry. So those can rise. There is room for the local TV deal to go up. And everyone who was bidding was interested in the 23 undeveloped acres the Wilpons own around the park, not to mention what potentially could be done with the chop shops across the street.
The Wilpons already had received permission to build low-income housing on six acres. But there is the potential to do what the Braves and Rangers have done around their new parks to create revenue is a strong pull. The A-Rod group, for example, was imagining his fiancée, Jennifer Lopez, helping to turn part of it into a world-class entertainment center.
And A-Rod was real in this. He pulled together a lot of money, a powerful narrative. But he also had strong polarizing negatives and ultimately not the cash Cohen could muster.
So Cohen, for now, wins. For estate and tax purposes, the Wilpons want this deal closed by the end of the year and, remember, that Cohen was in the documentation stage with the current owners just a few months back. So that can go quickly. The hurdle is if Cohen can get the 23 owner votes needed for approval.
If he does, he would have mastered the art of this deal.
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