Bankruptcy trustee: Mets owners reaped $300 million in phony Madoff profits

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The bluff has been called, the documents have been unsealed and the allegations of just how deeply the Wilpons, Saul Katz and the Mets were in with Bernie Madoff is fairly staggering.  The entire lawsuit can be read here.

Among the allegations: the Wilpons, Katz, their families and their business reaped $300 million in fictitious profits. The team itself had 16 separate Madoff accounts, from which $90 million was withdrawn and used to help fund the team’s “day-to-day operations.”  And then there’s this, with “the Sterling Partners” referring to the Wilpon/Katz business:

“The Sterling partners were simply in too deep—having substantially supported their businesses with Madoff money—to do anything but ignore the gathering clouds,” the suit said. “Despite being on notice and having every resource at their disposal to investigate the litany of legitimate questions surrounding Madoff, the Sterling partners chose to do nothing.”

Not surprisingly, the Wilpons slammed the allegations today, calling them lies and strong-arm tactics and characterizing the trustee’s entire suit as “an abuse of power.”  Their statement:

“The conclusions in the complaint are not supported by the facts. While they may make for good headlines, they are abusive, unfair and untrue. We categorically reject them. We should not be made victims twice over—the first time by Madoff, and again by the Trustee’s actions.”

In other news, non-Mets related allegations suggest that at least one bank — J.P. Morgan — knew that Madoff’s whole operation was a Ponzi scheme.

Yes, they are just allegations.  But many of them — specifically those related to just how much money the Mets and the Wilpons lost to Madoff — are pretty darn specific.  And they can certainly be true even if the ultimate conclusion the trustee makes — that the Wilpons knew or should have known it was all a scam — is shown to be false.

We’ve played some back and forth here about what the Wilpons knew and that’s all fun and worth watching, but this is most  relevant for our purposes for the practical effect it will have on the Wilpons and the baseball team.  Given the thermonuclear nature of the allegations and the sheer amount of money involved, it’s hard to sit here today and say that the Wilpons will simply be able to sell off a quarter of it, cut a check to the trustee and continue on their merry way.  Indeed, such an assumption is now bordering on the naive.

MLB execs go to bat in favor of shrinking minor leagues

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Tim Brown of Yahoo Sports published an article this morning in which he quotes several executives of MLB teams, including Diamondbacks GM Mike Hazen and Blue Jays president and CEO Mark Shapiro, defending the league’s proposal to cut 42 minor league baseball teams.

We first learned of the idea about a month ago. The proposal was widely panned, even drawing scorn from Congress as more than 100 members of Congress — including Bernie Sanders and Elizabeth Warren — signed a letter condemning the league. In the time since, MLB has spent considerable time defending itself amid the public scrutiny. MLB also got into a bickering match with Minor League Baseball.

To generally sum up what was said in Brown’s column: the GMs echoed what MLB previously said in defensive of its proposal, which is that cutting 42 minor league teams (mostly in short-season and rookie ball) would free up more money to pay players more and improve their working conditions, including food and travel as well as facility conditions.

It is hypocritical for the league and team executives to express concern for the salaries and the quality of life for minor league players. After all, Major League Baseball spent millions of dollars lobbying Congress in order for language in the Fair Labor Standards Act of 1938 to be amended. Doing so allowed the league to classify minor leaguers as seasonal workers and thus not owed things like a minimum wage and overtime pay, among other worker protections. This all happened because MLB is the defendant in a class-action lawsuit, originated by Aaron Senne and several other former minor league players, alleging that the league violated state and federal minimum wage laws with minor league players.

Shapiro is not a fan of Sanders’ constant harping on the league’s proposal. Shapiro said, “I’m never going to go toe-to-toe with him on domestic policy. But I will go toe-to-toe with Bernie Sanders on professional baseball.” As Brown explains, Shapiro is among those who believes that having a smaller minor league system would allow his organization to offer greater focus to each player remaining within that system. With the increased focus, the team would be better able to develop major league-caliber prospects. As we know, teams love prospects because their salaries are artificially depressed for the first six years of their careers.

One anonymous GM harped on the fact that “minor league baseball is not a moneymaker.” It didn’t sound like he was complaining; rather, simply recognizing how their parent teams view the situation. Another anonymous GM, however, said that the 42 teams are on the chopping block “for a reason.” He added, “I’m guessing that reason isn’t because they had overwhelmingly positive gate turnouts or that their facilities were in good shape. I think that’s been the criteria.”

As I pointed out last month, there are two teams that, at minimum, disprove the shabby-facility talking point. The Lowell Spinners (short-season) have had multiple renovations done in recent years. Team owner Dave Heller called his team’s stadium “arguably the best facility in the New York-Penn League.” The Quad Cities River Bandits, as another example, have earned awards from BallparkDigest.com for “Best Ballpark Improvement” and finished in third place as recently as two seasons ago for “Best View in the Minors.”

As for attendance, BallparkDigest has the 2019 numbers for all 160 teams here. The four Double-A teams on the chopping block — the Binghamton Rumble Ponies, Chattanooga Lookouts, Erie SeaWolves, and Jackson Generals — ranked 91st, 74th, 80th, and 130th, respectively. Only one of those teams is significantly below the 50th percentile. Furthermore, one of the High-A teams on the list, the Frederick Keys, ranked 57th in attendance this past season, close to being in the top one-third of the entire minor league system.

The arguments are obviously facile. We should expect nothing less, however, as these execs do the bidding of their team’s ownership. Their jobs necessitate developing players efficiently and thoroughly. Chopping 42 minor league teams would have the double benefit to them of helping reduce overhead so the owners can report higher profits, as well as making their system run more efficiently (or so they think). So be it if thousands of jobs in towns across the U.S. get slashed in the process. So be it if small towns lose a central focus of their local economies and cultures. So be it if baseball becomes significantly less accessible across the nation.