The Mets' Sale: Should Mets Fans Be Happy?

The Wilpon brothers, who are majority owners of the New York Mets are in final negotiations with billionaire hedge fund manager David Einhorn to sell a 30-33% interest in the team to him for a reported $200 million.  The deal supposedly includes a provision allowing Einhorn to purchase an additional 27-30% in three years, so that he would then own 60% at the same valuation. The Wilpons can avoid the latter sale and retain majority ownership of the club by repaying the initial $200 million to Einhorn, in which case Einhorn retains his 30% interest for essentially nothing while receiving a $200 million cash return on his $200 million investment.  So, the question presents itself is how should Mets fans react to this sale?

It's no secret that the Wilpons, and their business and team ownership partner Saul Katz, have been distracted lately.  It's also no secret that they and the franchise are in desperate need of cash.  Both issues stem in part from the fallout of the Bernie Madoof saga, as the trustee for the victims in the Madoff affair are suing them for a $1 billion.  As if that were not enough, the club is said to be hemorrhaging cash and is on pace to lose $70 million this season.  Anything that can ease both situations, as this sale will do, has to be a positive for the team's performance.  The idea that the Wilpons may be gone in three years probably brings new joy to the clubhouse - especially following principal owner Fred Wilpon's interviews in the New Yorker and Sports Illustrated last week.

There is another reason Mets fan should have reason to hope.  The track record of hedge fund owners in professional sports is generally a good one.  Whether it's the application of lessons learned in the hedge fund business, the ability and willingness to spend the necessary time to lead the organization - since most of them are billionaires and have the luxury of time, or it's the knack for picking the right personnel, the track record holds up across sports.  In baseball, there is John Henry, whose Red Sox broke an 86 year drought two years after he bought the team.  In basketball, there is James Pallotta, a member of the ownership group of the Boston Celtics.  In hockey, you have Philip Falcone, who owns part of the Minnesota Wild.

Which brings up a somewhat unrelated topic, but interesting nonetheless.  I'm sure many of you are aware of the Stadium Effect; the negative effect on stock price and financial performance of companies that enter into naming rights agreements for stadiums and arenas.  There may be a corollary to that rule emerging and it would indicate that investors in Greenlight Capital, the hedge fund managed by David Einhorn,  should be wary.  This curse applies to investors in hedge funds whose managers acquire sports franchises.  There appears to be a negative correlation between fund performance and franchise ownership.  Whether due to distraction or market luck is hard to say, just that the correlation is apparent.

Vancouver is Happy, NBC Not So Much

Vancouver Canucks fans celebrated long into the night when the Canucks reached the Stanley Cup finals for the first time in 17 years. Fans in Canada also got their first Canadian finalist since 2007, although there are many Maple Leafs and Canadiens fans who just can't bring themselves to root for the west coast upstart.

However the Canadian fans sort out their loyalties, one thing is now clear:the suits at Comcast and NBC are strongly rooting for the Boston Bruins to close out the Lightning in their Eastern Conference finals. A Vancouver-Tampa Bay match-up would likely be a ratings disaster, given one Canadian team and one Sunbelt team with no real fan attraction outside Tampa Bay. After all, half the country hasn't been awake for the Canucks' games, not to mention that several of them have been on Versus which the casual fan is still struggling to locate. Add to that the fact that no Canadian numbers go into the ratings and the boys at Comcast could, with a Lightning win in game 7, be looking at the lowest rated Stanley Cup final perhaps ever. So, Flyers' fans, forgive Comcast I'd just this once, they root for the Bruins.

UPDATE: With the Bruins win, NBC/Comcast can breathe a little easier.

Derby 137 One for the Ages

The Kentucky Derby is often referred to as the Greatest Two Minutes in Sports and it lived up to its nickname again on Saturday in a race that featured 21-1 shot Animal Kingdom come roaring down the homestretch from out of nowhere to take the garland of roses by almost three lengths.  Animal Kingdom defied not just the betting public but history, by being the first horse to ever win the Derby without having run a race over a dirt track.  Animal Kingdom's previous races had all been on turf or synthetic tracks.  His four career starts marked the fewest since Exterminator in 1918, and his six week layoff coming into the Derby marked the longest layoff since Needles in 1956.  That should help him going into the Preakness in two weeks.  The Triple Crown is grueling since it is three races in the span of five weeks, something that these young three year olds are not really used to doing yet.  Animal Kingdom should be better prepared than most being considerably more rested than average going in.

The well-beaten favorite Dialed In will be challenging Animal Kingdom  in the Preakness and has the chance to earn more money than the Derby winner should he take the black-eyed susans. As the winner of the Holy Bull and the Florida Derby, he is eligible for a $5.5 million bonus for capturing all three races being offered by MI Developments (formerly, Magna Entertainment) the owner of Pimlico, home of the Preakness, and Gulfstream, home of the first two races.  Dialed In's trainer Nick Zito acknowledged that the bonus was a definite factor in deciding whether to run in the Preakness and how could it not be, if the horse is sound?

What the Kentucky Derby win means for Animal Kingdom's value is too early to tell.  With so few races, we can't tell if the Derby is an aberration or a confirmation of his ability.  The Derby was not only his first Grade I win, it was his first Grade II or Grade I race.  How he does in the Preakness, Belmont and later in the summer at the Travers and the Breeders Cup in the fall, should he manage to stay in training that long, will ultimately determine his value.  Of note, the winners of the last two Derbys never won again.

One thing seems certain, the stud fee for his sire, Leroidesanimaux, who stands at Stonewall Farm Stallions in Ocala, Florida, is going up from the current price of $10,000.

One last lament, this was almost a unique Derby for your loyal scribe, save for a still inexplicable last second decision.  You see, I bet a trifecta on the Derby which included both Animal Kingdom and Nehro, but for some reason which I still can't recall I switched out Mucho Macho Man for Archarcharch.  In other words I dropped the horse which came in third for one which broke his leg and is now retired from racing.  It was the story of my betting day.  I cashed three exacta tickets which won  a collective $5.80.  I didn't cash another ticket all day.  Needless to say, that trifecta could have really come in handy.