Hoodwinked: Are the Wilpons about to pull off the ultimate developer’s dream?

By JE Sved on June 13, 2014

willets-point-designNEW YORK (Herald de Paris) –  We have not even reached the all-star break, and for the fourth consecutive year, the New York Mets are already on a tailspin that only leads one place – the cellar.  How did a franchise valued at $2 Billlion fall so far, so fast?  Perhaps they didn’t fall – they were pushed.

The Mets are principally owned by Fred Wilpon, who became majority owner after the club’s last World Series visit in 2000, when he bought  out his partner, Nelson Doubleday.  But was owning the Mets the end game for Wilpon, or simply a means to an end?  After taking control of the franchise, Wilpon, who has been tied so closely to Bernie Maddoff that sometimes the line blurred between them, immediately set about lobbying the City of New York for a new ballpark, to replace the rickety and aging Shea Stadium.   After several years, a few bond referendums, and an overall investment of about $1 Billion, the Wilpons walked away owning the new park and the land it sits on – land which was formerly owned by the City of New York Parks Department – under the names Mets Development Corporation and Queens Ballpark Company, LLC.  Wilpon’s son, Jeff, is the COO of both companies.

According to published reports, Fred leaves the day-to-day operations of the Mets and Citi Field in the hands of Jeff.  Fred is the parent company, Sterling Equities, which is one of New York’s biggest developers.  What is keeping Fred away from the day to day operations of the Mets?   Big development.  In 2008, Mayor Michael Bloomberg awarded 23 acres of land at Willets Point, valued at $500 Million and adjacent to the Citi Field site, to Queens Development Partners, LLC., a company formed by the partnership of developers Fred Wilpon, and Steve Ross, of The Related Companies.   Thus, in a span of five years, Wilpon has been handed more than $1 Billion worth of city land by the former New York Mayor.

At the same time, Wilpon and the Mets were implicated in the escapades of Bernie Madoff.  Indicted, the Wilpons reached a settlement with the Madoff trustees.  Wilpon had to pay $162 Million.

What does Willets Point have to do with the demise of the Mets, who are estimated the be the 2nd most valuable franchise is all of professional sports?  Plenty.  The Willets Point land award coincides with the steep slide of the Mets.  In 2010, the Mets fired their general manager, the successful and well-liked Omar Minaya, and replaced him with Sandy Alderson, who was working in the Commissioner of Baseball’s office.  Alderson, a child of MoneyBall, was brought in under the guise of rebuilding the franchise.  Nevertheless, the team’s fortunes have not improved.  Alderson brought in Terry Collins to run the team on the field.  A questionable choice, Collins was the victim of a mutiny by his players, when he was the manager of the California Angels.  Nevertheless, Collins and Fred Wilpon are tied together through their mutual friendship with Hall of Fame pitcher, Sandy Koufax.

Fred Wilpon is fond of telling people he and Koufax played high school baseball together.  So, too, Jeff Wilpon claims to have played part of the 1983 season with the low minor league Jamestown Expos, of the NY-Penn league.  Not according to the Jamestown Expos manager that year, the legendary college coach, Moby Benedict.  When asked if Jeff Wilpon played for him in the NY-Penn League Moby replied, “I don’t think he did … the years I was there, and I was there three years, and I don’t recall that he played. No. No — not for me.”  A report in the New York Times states that Jeff was signed by the  Expos as a favor to Fred Wilpon.  Jeff was assigned to the A-ball team, and was released a week later, never having played.

What is the connection with Montreal?  And why did Fred get a favor from the Montreal Expos when he was already a minority owner of the New York Mets, in 1983?

The Montreal Expos were taken under the control of Major League Baseball in 2002 during a flurry of activity when three teams changed hands, in a decision made by Commissioner Bud Selig, a friend of Fred Wilpon’s.  Selig, the car salesman-turned former owner of the Milwaukee Brewers, was convicted of colluding to hold down player salaries with Chicago White Sox owner Jerry Reinsdorf.  The two were forced to pay $280 Million to the Major League Baseball Players association.  The last Expos general manager was Omar Minaya, who ended up in the same position with the Mets, after the Montreal franchise was sold and moved to Washington, DC.

Fast forward to 2014, when the New York Mets and the Toronto Blue Jays played two exhibition games in Montreal, prior to the opening of the current baseball season.  MLB executives reported to Selig the “Astonishing” attendance for the exhibition series.  This was no surprise to Selig, the consummate shell-game player who use the same exhibition tactic to move the Seattle Pilots to Milwaukee after his bid to purchase and relocate the Chicago White Sox was denied by the owners.

Why were the Mets, of all teams, in Montreal to play the Blue Jays?  Selig, again, holds the cards.  After the Madoff scandal, the Mets owners took out a $25 Million bridge loan with the approval of the Commissioner’s office.  MLB later extended an additional loan of $25 Million to the Mets, to keep them afloat during the Madoff frenzy.  Earlier this year, the Mets refinanced that loan, to avoid the loan coming due.  Selig, it seems, has a finger in the Mets, which may be why his right-hand man, Sandy Alderson, is now running the team.  If Selig wanted the Mets in Montreal for two games, the Mets would be there.  They couldn’t say no.

But they may not have denied the opportunity if they wanted to.

Jeff Wilpon extolled to anyone who would listen how impressed he was with the Montreal fans.  Jeff, who often says things in the media he ought not, may have tipped the family hand.

The Wilpons are, first and foremost, developers.  Fred Wilpon was handed $500 Million worth of city-owned property, known as Shea Stadium, on which he built Citi Field.  Then Fred was handed the adjacent Willets Point property by the City.  The development of the Flushing-Corona location fulfills a proposed plan by NYC urban planner Robert Moses, the same guy who drove Walter O’Malley to take the Dodgers to Los Angeles, by planning to relocate them from Brooklyn to Flushing.  Would a developer, like Wilpon, invest in the construction of Citi Field to secure $1 Billion worth of free land from the City of New York?  In a heartbeat.

With the Willets Point project moving forward, how much more valuable would the adjacent Citi Field site be if it were also developed as a mixed-use development, and no longer played home to the Mets?  Fully developed, each piece of the Flushing-Corona properties could easily yield $4-5 Billion.  Thus, the Wilpons are sitting on a $10 Billion section of New York.  Maybe more.   They just need to move the Mets off the site to realize their developer dreams.  All they really need to do is strip the club of its top players and its high salaries, then drive the fan base away with a lousy product on the field.  They seem to be doing just fine, in that regard.

The Flushing-Corona location is a developer’s dream.  It has water, sewer, an electrical grid, roads, a subway platform, a LIRR stop, highway access, and is located close to LaGuardia Airport.  Nothing makes a developer drool more than a property which needs no infrastructure, as it has already been provided by the municipality.  That the property is free, to boot, is like a perfect storm scenario for a property developer.

Say the Mets move to Montreal, where baseball fans and elected officials are so thirsty for major league baseball that they would gladly build a new ballpark for a new ownership group.  The sale of the team would yield the Wilpons $2 Billion, more than covering their ill-fated ballpark construction, and help Selig fulfill his shell game of moving teams hither and yon.  And if the WIlpons don’t sell the franchise?  Jeff Wilpon owes Montreal a favor, for the Expos having drafted him.  But why would Selig want the Mets out of New York?  The 2000 Subway Series, between the Mets and the Yankees was great for New York.  It was a nightmare for MLB.

Selig has insisted he is leaving the Commissioner’s post since 2012.  His latest decree has him in the position until January, 2015.  Is Selig part of the whole plan?  Seems likely.  It also seems likely that upon exiting the Commissioner’s Office, Selig will turn up as a trustee of the Corona-Flushing development.

Inevitably, New York baseball fans would clamor for another National League team in New York.  Ultimately, MLB would have to allow another National League team to move to NYC, or the league would have to expand to accommodate two new teams.  Where would a new team in New York build a ballpark?  Why, Brooklyn, of course, the fashionably revived Borough which has already become the home of the NBA Nets and the NHL Islanders.  And who owns the baseball rights to Brooklyn?  None other then the Wilpons, who have a minor league team at Coney Island.

Could it be true?  Sadly for this Mets fan, it could.


Comments
Joe Cogan June 15, 2014

The author lost me at Omar Minaya being a “successful” GM…

tony lazzaro June 15, 2014

you must read this

Glen C June 15, 2014

Pretty disgusting and most likely 100% accurate. The Wilponds, Maddoffs and Seligs are the 1% that are destroying this country for the rest of us with their selfish, ruthless greed.

Joseph Abbadi June 15, 2014

This is an interesting article that is almost certainly full of crap. No proof for anything. I can’t even see the Mets being sold to someone who would move this team. Being in a city like NYC adds value. Why would someone move them to a small city like Montreal? Answer: No one would.

xknight65 June 15, 2014

A problem with the conclusion. Sterling does not yet own the land east of 126th street. The owners are fighting the eminent domain order. Also that entire area is not connected to the NYC sewer system. The entire area between Northern Blvd and Roosevelt Avenue will require a complete infrastructure rebuild. Finally, NYC’s Marxist mayor, Bill DE Blasio is not likely to turn over the property to any private developer without ironclad guarantees that will provide extensive benefits for the city’s poorer residents. If that requires setting aside part of the area for low income housing then the entire property becomes less attractive for residence, hotels, and shopping for the upper income the developers would want to attract .

Manny Sama June 15, 2014

Never liked that slimy Selig!

CowCrusher June 16, 2014

xknights,
You are correct. Also add the liability of all the hazardous substances underfoot that were discharged over the years from the days of coal dumps to the present facilities on site. What was once part of a vital wetlands the once produced some of the largest shellfisheries in what is now NYC, was merely filled in over the years, primarily for farming and then as a hazardous wasted disposal area.

The remediation costs will most likely exceed any costs for the installation of a municipal wastewater system. The area is prone to flooding due to poor soils (native and fill) and due to Sandy and other storms, large holding tanks will be necessary to retain wastewater along with a separate stormwater treatment system prior to discharge.

These are just the basics and they all come at a high dollar. I doubt Jeff or Fred have the money to pay for these.

CowCrusher June 16, 2014

If there was ever to be a “valid candidate” going to Montreal, then it would most likely be the Tampa Bay Rays.

While it is true that there is a strong following for the Mets in Northern New York (Watertown to Plattsburgh), Quebec, and eastern parts of Ontario along with other teams like the BoSox and the Bluejays, it is not enough to move our Mets from the Big Apple.

Hal H. June 16, 2014

I’m with Joseph Abbadi. Never in a million years would a major market team be moved to Montreal, even if NY got a new team in the long run. Also, if all this wheeling and dealing came to pass, someone would probably go to jail. I’m thinking the Wilpons have had it with legal headaches.

Gary June 16, 2014

Is Sidd Finch going to be the manager of the new team???

dennis June 16, 2014

this is like the movie , major league !!!…. what a sham …. but i could not put this past them …., with the pitching staff we have lined up for next year ….. i guess what the mets do in the off season will tell the story …… the wilpons are a joke …. they have sold there souls to the devil ….

Mickey June 16, 2014

There is no way the Mets are leaving NY. They invested heavily in the park and the TV network which broadcasts games. The Mets make no sense to leave. The amount of money they can bring in NY is much more than they can ever make in Montreal.

Don’t think think they forgot what happened to the Expos. No matter what you say, this is pure speculation. Nobody from any legit source comments in your article and the Mets have not even a single time expressed interest. If they wanted to move, they would never have built a new stadium so recently.

Guy June 16, 2014

Excellent points, you had me going for a little bit. However, you clearly do not live in New York because if you did you would know that there is no place in Brooklyn to even fit the Mets. Barclay’s Center where the Nets (and soon the Isladers) play was built with the eminent domain law put in effect and it was built under a tremendous amount of scrutiny. Also if you mention the Cyclones stadium (whatever they are calling it these days) you are severly mistaken because the capacity of that stadium is not near major league standards and the parking over there does not have the capacity to handle a major league team.

While I am not delusional enough to think that maybe the Mets have thought about a possible scam to make money this one seems a bit far fetched. All in all your article was well put together and it looks like you put a lot of work into it. However, your article in simplistic terms is “Mets got the land for “free”, Montreal has no team and they sold out exhibition games but totally over look the lack of attendence they had when the Expos still played there, Minaya worked for the Expos, Selig is a crook, Wilpon is a crook, new team in Brooklyn” – far fetched.

Jumbo June 17, 2014

Interesting article but a far-fetched premise. There is no way MLB owners would approve a move of a team out of the top media market in the sport. Redevelopment of the other side of 126th Street has been talked about for years, in fact there was talk of the Islanders building an arena there before they decided to move to Barclays Center; I think CowCrusher is spot on with his comments regarding poor drainage and possible soil contamination as obstacles to redevelopment of the site, otherwise those ugly car “repair” (i.e. chop) shops would have been wiped out years ago. It would be great though if there could be decent places near Citi Field to hang out before and after games like Boston, Baltimore, Chicago North Side, etc.

Clyde June 17, 2014

Nothing like a juicy conspiracy, and a scummy Wilpon one at that!

However, some sticking points include: 1) the land in question is seriously in question, as the Wilpons don’t exactly have their evil hands on it yet, 2) the secret MLB bridge loans were repaid during the first round of bank loan refinances a couple winters back, 3) Omar Minaya was not a stranger to the Mets after being the Expos GM. His first front office job after a career in scouting was as an assistant GM to Steve Phillips, 4) Sandy Alderson is no child of Moneyball, nor non-blood grand uncle or any relation of the sort as his clueless reign of the Mets clearly indicates. The mentioning of Billy Beane as some sort of Sandy protege in baseball lore is a taint on the talents of Beane, and 5) Jeff WIlpon’s being drafted out of some Florida CC by the Expos in the 800th round is hardly a “favor owed” to the City of Montreal. Perhaps a little more digging needs be done to exactly what the Fred WIlpon connection was to anybody in the Expos organization at the time, though we all know the owners are quite the chummy clique, so what other reason need there be?

Finally, another juicy tidbit you forgot to weave into the tale was how Selig conspired with his pal, Fred Wilpon, to undervalue and defraud Nelson Doubleday in the sale of his half of the Mets.

Lou June 17, 2014

Interesting conspiracy theory, but I have a tough time buying it for two main reasons. 1. I can’t see the Wilpons investing all the money they did into Citi Field just to knock it down. And much more importantly, 2. Why would anyone buy the Mets from Fred in order to move them to Montreal? Whoever bought them would have to pay for the value of the franchise in NYC, which is probably somewhere in the neighborhood of $2 billion right now. So once that’s completed, they’re going to move the team to a much smaller market and slash that value in half? Makes no sense financially for the purchaser. Much more likely Montreal gets an expansion team eventually. Especially since baseball need two more teams desperately right now so we can do away with this constant interleague play nonsense.

JE Sved June 17, 2014

Thanks to everyone for the overwhelming response to this article. The most interesting response I”ve had has been the outpouring of disbelief that MLB would permit a major sports franchise to leave a major market, despite the fact that it’s happened before. Twice. NYC lost both the Dodgers AND the Giants, all with the approval of the owners’ club. Both Senators teams left DC for smaller markets. The Athletics have left almost every market as they have meandered across the nation, but they first left Philadelphia. It happens in football, too. The most visible shift from a major market to a more moderate one was when the Rams left Los Angeles for St. Louis. Don’t, for a second, think it couldn’t happen again, or that the owners wouldn’t leave a major market. On one blog site where this article was being discussed, a gentleman suggested that Fred Wilpon was something of a scrooge, intent on breaking the hearts of this generation of New York National League baseball fans the way his heart was broken by the Dodgers. I had more than a few disparaging remarks from people about Montreal. I have chosen to omit them here. Montreal did nothing wrong to lose the Expos, and Montreal is a great baseball town with a rich history terrifically loyal fans and, of course, Youppi. Jeff Loria, the same guy who is currently making a mockery of the Miami Marlins franchise all but deserted the Expos – while he still owned them. In some years, they didn’t even have a tv and radio contract, and yet, MLB owners not only allowed him to destroy the Montreal franchise, they purchased the team so Loria could then buy a second team, the Marlins. It defies a logic that can only be compared to the “club” of being in the US Congress. But what did Bid Selig and the owners have in mind by bending over to accommodate Loria and Wilpon, while ushering Frank McCort out of baseball? None of them are the most liked human beings on the planet, but there is no way to look at those three owners, in particular, without arriving at the conclusion that Selig and the owners have some sort of a vested agenda. Selig is the man who wanted so badly to bring baseball back to Milwaukee after the Braves left for Atlanta, that he first tried to buy the White Sox, then settled on the Seattle Pilots using the exact same exhibition game tactic as this year’s games in Montreal, to convince the commissioner’s office that a team in Milwaukee was again viable. How can anyone argue that as commissioner, Selig’s moving of the Milwaukee franchise from the AL to the NL was anything but self-serving? It created an unbalanced schedule which led to interleague play, which Selig later rectified, in part, by then moving he Astros to the AL. Why swap the Brewers and the Astros from league to league? Because it restored Bud’s dream of the rivalry between the Cubs and Milwaukee, pure and simple. The Commissioner of baseball is a shady, shady man, a convicted felon who was found guilty of collusion. To assume that he isn’t up to something would be naive. Lastly, if you think that a major league franchise wouldn’t leave a relatively new stadium for a better deal, then see the vacated stadium demolished in favor of a mixed use development, think again, because that is exactly what is happening in Atlanta. The Braves are leaving Atlanta proper, and the 17 year old Turner Field for a new ballpark in Cobb County, Georgia. The Mayor of Atlanta has already decided that Turner Field will be demolished in favor of a major development initiative.

JE Sved June 17, 2014

Hold the conspiracy phone – Forbes Magazine published an article in 2011, calling for the dissolution of the Mets, allowing the Dodgers to return home to NY, to take up residence in Citi Field. http://www.forbes.com/sites/tomvanriper/2011/04/21/move-the-dodgers-back-to-brooklyn/

FrankieB June 18, 2014

JE, interesting thoughts and I do find your analysis of the real estate surrounding CitiFIELD to be interesting. I do think an article talking about what is going on — I have walked past those chop-shops weekly for the last 15 years — would be of interest to Mets fans. It is absolutely ridiculous that cleaning up that area has been talked about for decades, and yet there is STILL nothing near CitiFIELD, just like there was nothing near Shea Stadium. Retail shops, restaurants — give us something. I’m tired of walking past potholes filled with dirty water.

However, there is one fatal flaw in your analysis. The real value in the Mets is not the adjoining real estate (totally speculative) nor the ballpark or even the ball club but the cable network, SNY. This is the real cash cow, if the Mets can ever develop a following like the Yankees have the last 20 years. There is NO WAY you trade in the NY metropolitan market for Montreal or any other city. Montreal has a population of 1.7 million, with just under 4 million in the metro area. The Mets have NYC with 8 million people and a metro area of just under 20 million. The Wilpons would be nuts to trade those wealthy, lucrative ticket-buyers — and cable TV viewers — for the less-afluent whose true love is for Les Habs of the NHL.

At least Walter O’Malley traded NY for LA and was just making a financial decision based on ticket sales, with media (TV/radio) and advertising largely marginal to the value of the franchise. SNY (like YES) might be worth 50-70% of the total value of the 3 combined entities (the ball team, the ball field, the cable network). You’re not trading a city/metro area for one that is 25% of your current size. Forget the effect on ticket sales and suites, the destruction to the value of the future cash flows for SNY would be suicidal.

If you want to do a more meaningful article, I suggest asking what happened to all the money the Wilpons made from the Mets from 2005-2009. The Mets drew almost 4 million in both 2007 and 2008. They had to have made at least $40 million each of those years. Plus, all the earlier years….plus the SNY windfalls….plus the money from the opening of CitiFIELD. Yet the Mets/CitiFIELD/SNY are all debt-laden and the Wilpons are acting like they’re broke. It doesn’t make sense.

Did the Wilpons real estate business suffer some unreported problems in 2008-09 ? What have they done with all their holdings ? Why are the Mets being run as if they can’t lose any money — and might even be needed to generate a profit for the Wilpons ? Is this why the payroll is $85 million ? Even if the Yankees had a few lousy years of attendance and poor play, there is no way that an asset value (the team + the ballpark + YES) could not sustain a loss of $20-$30 million for a year or two when you are worth billions. So what’s up with the Mets ?

Why are SNY, CitiFIELD, and the ballclub all laden with debt ? Where did that money go ? Did the Wilpons extract equity to invest with Madoff ? Did they use it to prop up other losing businesses ? Fred was rumored to have gotten many friends (like Sandy Koufax) and family to invest with Madoff — is he facing litigation on this ? Or has he decided to voluntarily reimburse these people….$3 million here…..$7 million here….$15 million here. It could add up, no ?

The Wilpons have totally disappeared and nobody is asking them any pertinent questions. Instead of worrying about a relocation to Montreal or real estate ventures 10 years out, let’s find out what the Mets did with their mid-2000′s financial windfall and why that and the Wilpons vast financial and real estate empire haven’t been able to tide us over with a higher payroll and better players the last few years.

JE Sved June 18, 2014

Thanks for your well written comments, FrankieB. However, there is a hole in YOUR theory. In 1960, the population of NYC was 7,781,984. By comparison, the population of greater Los Angeles that year was 2,479,015. The current population of Montreal (2014) is 3,824,221. Meanwhile, greater St. Louis has a population of 2,801,056, and they have no problems filling the seats for the Cardinals. So, too, a team in Montreal represents not just Montreal, but also Quebec and pretty much half of Canada. From a marketing and merchandising perspective, Montreal offers a lot of opportunity. The television rights to a team in Montreal, in the current media climate, could be in the tens of millions of viewers. This article was my supposition, given the odd and unusual facts surrounding the situation with the Mets, the Wilpons, SNY, Citi Field, Willets Point, Madoff, Selig, Bloomberg, and the rest. It is an opinion article. When I look at the big picture, this is what I come up with. Nevertheless, and you raised some excellent points, the fact remains that there are a lot of unanswered questions here.

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