Judge tosses all but two of the bankruptcy trustee’s claims against the Wilpons

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The judge has issued a ruling in the bankruptcy case involving the Fred Wilpon, Saul Katz and the Bernie Madoff fraud.  Full reports aren’t out yet, but it sounds like a bit of a mixed-bag, but generally good news for Wilpon and the Mets:

  • Good news for Wilpon and the Mets: all but two counts brought by the bankruptcy trustee, Irving Picard, have been dropped;
  • Bad news for Wilpon and the Mets: one of the two claims that remain — fraud — could, theoretically speaking, still leave them on the hook for a $1 billion liability, should the trustee prove his case;
  • Good news for Wilpon and the Mets: there appears to be a higher burden of proof placed on the trustee than he had originally sought in order to make such a recovery: he has to prove that “the defendants willfully blinded themselves to Madoff Securities’ fraud” as opposed to having to show that they could have been aware of it had they exercised good judgment.

There is still risk here, but the risk of the massive, Mets-killing award of $1 billion is much lower, because the trustee will have to show some serious bad acts on the Wilpons’ and Katz’s part in order to get there, not just that they were generally unaware.  And while, yes, there are many people who are skeptical that sophisticated business people like Wilpon and Katz had no reason to investigate Madoff’s investments further, there hasn’t been any suggestion that I’m aware of that they ignored actual evidence that a fraud was afoot and played the see-no-evil, hear-no-evil trick with respect to it.

So where does that leave things? Both sides seem to have risk here. The trustee has had most of his case blown away and, while there still exists the potential for a home run, it’s no sure thing at all. The Wilpons still have that giant potential liability there, but it’s not imminent. This is generally where parties to a big money suit take a step back and try to settle. It might be the best course for both parties here.

What happens with all the players the Braves lost yesterday?

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Yesterday’s unprecedented sanctions leveled on the Atlanta Braves hit them pretty hard, but it also turned a dozen players into free agents. What happens to them now? Who can sign them? When? And for how much?

First off, they get to keep their signing bonuses the Braves gave them. It wasn’t their fault the Braves messed up so it would make no sense for them to have to pay the money back. As for their next team: anyone can, theoretically, sign them. As far as team choice, they are free agents in the most narrow sense of the term.

There are limits, however, because as young, international players, their signings are subject to those caps on each team’s international bonus money which were imposed a few years back. Each team now has a “pool” of finite dollars they can spend on such players and, once that money is spent, teams are severely limited as to what they can offer an international free agent. Each summer the bonus pools are reset and it starts anew.

Which, on the surface, would seem to create a problem for the 12 new free agents, seeing as though a lot of teams have already spent much if not all of their July 2017-18 bonus pools. The good news on that, though, is that Major League Baseball has made a couple of exceptions for these guys:

  • First, the first $200,000 of any of the 12 former Braves players will not be subject to signing pools, so that’s a bit of a break; and
  • Second, even though these players will all likely be signed during the 2017-18 bonus pool period, teams have the option of counting the bonus toward the 2018-19 period. They can’t combine the money from the two periods, but they can, essentially, put off the cost into next year for accounting purposes.

Which certainly opens things up for clubs and gives the players more options as far as places to land go. A club can decide whether or not the guys on the market now look better than the guys they’ve been scouting with an eye toward signing after July 2018 and get a jump on things. Likewise, teams don’t have to decide whether or not to take a run at, say, Shohei Ohtani, burning bonus money now, or instead going after a former Braves player. Ohtani’s money will apply now, the Braves player can be accounted for next year.

The new free agents are eligible to sign during a window that begins on December 5 and ends on Jan. 15. If a player hasn’t signed by then, he can still sign with any club but cannot get a bonus. If a player hasn’t signed anywhere by May 1, 2018, he has the option of re-signing with the Braves, though they can’t pay the guy a bonus either.

Ben Badler of Baseball America has a rundown of the top guys who are now free agents thanks to the Braves’ malfeasance. Kevin Maitan is the big name. The 17-year-old shortstop was considered the top overall international free agent last year, though his first year in the Braves minor league system was less-than-impressive. There are a lot of other promising players too. All of whom now can find new employers.