Bet On the Wilpons Surviving and Thriving

I’m ambivalent about the Wilpons settling their part in the Madoff lawsuit.

All along, I was relatively disinterested in the entire episode. The circumstances were what they were and once the trial was completed, then the direction of the Mets would be determined. Because they were so badly hurt by the Madoff Ponzi scheme, the money that was once available to the Mets to pursue players was no longer there; they were forced to scour the bargain bins and deal away veterans Francisco Rodriguez and Carlos Beltran while sitting by haplessly and avoiding any bidding war for big free agent names that, given their on-field state, likely wouldn’t have come to the Mets under any circumstances apart from the Mets being the highest bidder. (See Jason Bay.)

Now that the lawsuit is over (and you can find details of the settlement here on NYTimes.com), it’s become clear that the supposed experts didn’t know any more about the nitty gritty of these types of deals than the media/social media would-be experts who were lending their opinions regarding issues about which they knew nothing.

Yes, the sources and “experts” might have information and insight about the law and the financial world, but that information and insight stemmed from personal experience and not from what they were privy to in terms of information as to what the Wilpons’ strategy was going to be to save themselves.

In the end, the Wilpons chose to settle and for now they’ve bought themselves time with what wound up as, by all accounts, a very favorable deal considering the alternatives.

What we’re presented with from those who provide commentary to the reporters telling the story is something to the tune of factoids that are kindasorta true, but only true from their point-of-view. These are not absolute facts like in a math/science problem that’s been solved; they’re interpretations.

I don’t recall reading or seeing anyone suggesting that the Wilpons were going to be able to settle the case and save themselves. Every outcome ended with them having to sell the franchise because their financial footing was no longer viable.

Look where they are now.

As much as the context is provided that the case was settled and their creditors are off their backs for the time being, there are ongoing doom and gloom revelations about the bonds that funded the building of Citi Field; the loans to the banks due on the club and SNY; and how the Wilpons are still in dire financial straits.

“X loan with Y bank of $400 million comes due on <THIS> day.”

“The bond interest payments must begin late in the year <BLANK>.”

“They’re still going to put a subpar product on the field because they don’t have the money to pay for players.”

Don’t buy it.

The Wilpons didn’t get rich being stupid.

Guilt, innocence or willfull blindness no longer matter because they settled the case and put themselves in a great position to end up retaining control of the franchise.

I said long ago that the Wilpons and Saul Katz had to know what was going on with Madoff, but there might’ve been a “don’t tell me what I don’t want to know” aspect of the gains they were making with the disgraced swindler.

They didn’t ask. Madoff didn’t tell. And everyone rolled merrily along.

Then Madoff got caught and the Mets were in the middle of the cesspool.

What the chroniclers of the case and the Wilpon-bashers have failed to account for is how smart the Wilpons are. They didn’t get rich being dumb or lucky and they’ve hired lawyers whose specialty is extricating their clients from situations just like these and helping them maintain their businesses and positions.

What I find funny (ha-ha and sad) is that a bunch of non-financial, non-lawyerly reporters felt that they were somehow qualified to provide commentary on issues that they probably only had a baseline understanding of and were simply regurgitating what they were told by “experts” and believed everything that was said because they had neither the aptitude nor the education to question what was being offered as what “would” happen in this lawsuit.

The settlement was pragmatic and smart and you can bet that the Wilpons are going to figure a way to keep control of the franchise when the loan payments become onerous by refinancing and extending the timeframe in which they have to pay.

What this means to the Mets and how they’re going to move forward remains to be seen. Will Sandy Alderson stay? Will the Mets examine a contract extension to keep David Wright past 2013? And what’s going to happen if and when all the decisions they made due to financial constraints wind up being seen as a net positive (a term that became familiar during the lawsuit) because the Mets couldn’t continue tossing bad money after bad money in a self-destructive attempt to placate angry fans and overpay for players who weren’t going to help them one way or the other?

They’ve cleared some players they no longer needed and are moving in the direction of paying players what they’re worth rather than giving them a large contract to keep pace with the big spenders in baseball. Letting Jose Reyes leave could eventually be seen as a smart and lucky baseball decision. They’re concentrating on development and giving their own young players a chance to play.

In a few years, we might one day look back at this and say something to the tune of, “The Madoff mess actually led the Mets back to prominence because of the seeds that were planted out of necessity because there was no money to buy ready made players.”

The Wilpons survived mostly because they, their lawyers and advisers are smarter than you.

Don’t think they’re not preparing to get their other financial ducks in a row, because they are.

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Logic, Reality And Madness

Let’s say you’ve got a friend who claims to have a foolproof system to win at blackjack. He’s got other people involved with him who are giving him money to play at the table, he’ll take a small percentage of the winnings and you don’t have to do anything other that front him to the money with which to play.

You give him, say, $100.

He takes that $100, plays blackjack, doesn’t appear any more skillful at the game than any of the other hacks sitting around the table and the dealer has a 20. Everyone loses. This continues for most of the night; he wins some hands; loses some; doesn’t appear to be doing any better than anyone else. There’s no pile of chips in front of him at any point.

But your friend comes to you at the end of the night and hands you $175. You got your money back plus an extra $75.

“How?” you ask. “I saw you losing.”

“Don’t worry about it,” he replies. “I got a system.” Then with a wink and a knowing smirk, he walks away.

You shrug, don’t ask questions and continue giving him money to play with. Hey, you’re making money; why ask questions?

Logically, shouldn’t you know that something shady is going on? That maybe he’s not “winning” at all; that maybe he’s giving you money he got from someone else and is playing and playing and playing and playing with other people’s cash, accumulating volume without any realistic profits? A false gain?

You probably would know if you have any common sense at all, but given the nature of the situation, that you’re not hurting anyone directly and you don’t have implicit knowledge of his scam, what’s the difference? But you’re complicit. You’re benefiting. And you’re leaving yourself wide open for consequences if the well runs dry and he can’t find people to continue fronting him cash.

Sounds like Bernie Madoff, doesn’t it?

Let’s try another, baseball-related analogy that has to do with ridiculous gains during tough times—a hallmark of the Madoff scheme and his “always win” results.

Tony La Russa is a true baseball innovator; as close to being a genius as there is in a manager. That said, he’s taken advantage of his reputation for knowing what he’s doing to try things that might get another manager fired. If the inexperienced Don Mattingly comes up with some basis for batting the pitcher anywhere but ninth, his bosses are going to scream, “What the hell are you doing?!?” La Russa does it, and it’s an innovation based on research. He gets away with it because he can.

It was the same thing with his conscious decision to compartmentalize his bullpen and have defined roles for his pitchers. While it’s been suggested that La Russa was the originator of the concept that the closer only pitches the ninth inning (inaccurately), it was his alteration of the way bullpens are used that spun into the Jeff Torborg-type of manager who became an automaton with no room for nuance, thought or differing viewpoints.

But La Russa has made his mistakes—some of them of the gigantic variety.

Rick Ankiel is one such mistake.

Starting the then-21-year-old phenom in the opening game of the 2000 NLDS may have been a good idea on paper, but it showed a lack of judgment on the part of the manager. Could La Russa, experienced baseball man that he was, have sensed that Ankiel was so tightly wound that he was eventually going to implode from the pressure? Pressure placed on him by the manager in starting him in a game of that magnitude—the opening game of a playoff series?

Maybe.

But the mistake was made, Ankiel blew up and lost any and all command of where the ball was going and his career as a pitcher collapsed into dust under the weight of expectations, demands and pressure.

It didn’t happen all at once.

Ankiel made it back as an everyday player and has been useful. He has power; speed; and, naturally, a great arm in the outfield. He won’t ever be a commensurately gifted hitter as he could’ve been as a pitcher; there won’t be any MVP candidacy; but had he maintained his composure as a pitcher, he was a Cy Young Award candidate.

He’s built a career for himself where there wouldn’t have been one had he not been able to hit.

And it took seven years for him to make it back to the majors as a hitter. He didn’t give up pitching until 2005; didn’t get back to the big leagues as a hitter until 2007.

Equating this to the Madoff scam, in a best case scenario and considering the gains his investors made, it was as if Ankiel failed as a pitcher in game 1 of the 2000 NLDS and the Cardinals made him into a hitter in time for him to bash his way through the NLCS two weeks later.

As seamless transitions and fantasy stories go, it’s wonderful; but use your intelligence. Does it make sense? Would you believe it if someone suggested it to be possible? Casual baseball fan or not, you know about the history of the game and how difficult it would be to make such an early-career switch. It’s transferable to any career whether it’s sports, financial or whatever.

In the Bernard Malamud book, The Natural, it took Roy Hobbs years to make it back to baseball after being shot. He couldn’t pitch anymore because of his wounds and came back as an outfielder. The book was a nihilistic morality play on how fate can touch the most gifted of us.

The savviest scouts don’t nail every prospect; the best manager makes mistakes; the “genius” GMs gaffe in a bunch of trades.

No one hits on everything he does.

They don’t.

The Wilpons had to know what was going on with Bernie Madoff.

There’s no other explanation for people who are seemingly so smart that they were able to amass these fine fortunes to have been taken in by a clear swindler.

It was unrealistic (at best) to think that during economic downturns the profits would keep on coming in regardless of markets and failure. Sometimes prospects, like Ankiel, don’t make it for one reason or another. It’s the same thing in the stock market. There could be a terrific idea that, for one reason or another, fails.

How could those investing and profiting from Madoff not realize what was happening? Even the most obtuse and hands-off among us would’ve spotted the oddity of his consistent success.

No one is right 100% of the time.

Do you mean to tell me that Fred Wilpon and Saul Katz—the Mets current owners and we don’t know for how much longer—didn’t smell something fishy?

Really?

Whether they were directly complicit in the scheme is beside the point. I don’t know if they were or weren’t; but like Madoff’s family claimed to not have a clue that what they were doing was a giant Ponzi scheme, use your common sense. Simply because they didn’t “know-know” doesn’t absolve them of responsibility.

If an advantage is being taken and they adhere to the old standby of “it’s not hurting anyone” and “we’re all profiting”, they’re still part of the plot by indulging and accepting benefit.

I’m not a financial person and I’m a pragmatist. There’s no moral high ground with me. There wasn’t much for those who were making money with Madoff to do aside from pulling their assets from his operation and who in their right mind is going to do that while they’re making more and more money year-after-year?

Blowing the whistle wouldn’t have done any good. With the intricate way the Madoff scam had wormed its way around the entire world and the people involved, nothing would’ve been done to stop it.

They understandably turned a blind eye and stayed silent. But the truth came out and the “money” that wasn’t actual currency is gone. What has to be understood is that when someone is called a “billionaire”, they most likely don’t have a billion dollars in the bank; what they have is assets and credit. It’s elusive and floating in the air and, as the Madoff case proved, it sometimes doesn’t exist as anything other than a whisper in limbo uttered by a ghost.

The Mets are trying to sell a share of the club.

They’re saying it’s 25% without a controlling interest so the Wilpons can maintain their command. A cash infusion is needed. The media and fans are in an uproar over having been misled or “lied” to by the Mets owners who said that the Madoff mess would not affect club operations; the estimate of how much is being sought in the government’s recovery lawsuit—for the Wilpons who gained in the scam—is said to be in the area of as much as a billion dollars.

Now the sportswriters and commentators are questioning why anyone would pay the nearly $200 million pricetag to have no voice in club operations for a quarter of the franchise. Without any knowledge of this process, I would think that some wealthy person would be interested in a deal to purchase part of the Mets with either a chance to buy out the Wilpons by a fixed date or to sell out and earn a percentage markup of what they put in.

That could be worked out in some way to make it attractive to a potential investor.

This is neither here nor there.

For a long time, it’s been suggested that the Mets owners were damaged severely by the collapse of the Madoff house of lies. This too is irrelevant in the context of worldwide damage.

They had to know subconsciously that something was wrong. Any denial is just as unbelievable as the above analogies.

Certain fantasies have no place in objectivity; any normal-thinking person who can examine a series of insane tales and spot their sheer unlikeliness; unprecedented success is unprecedented for a reason. Whether they’re willing to admit it to themselves or not, they had to know.

Was it due to greed? Ignorance? A silent contract between a schemer and his beneficiaries?

Does it matter?

The end result is the same. The Mets are a financial morass right now in part because of Bernie Madoff; and in part because the red flags of his crimes were shrugged off because everyone was “winning”.

The Mets are not winning anymore on or off the field and the madness is spiraling.

The Mets are for sale because the Wilpons don’t appear to have a choice. They’re paying the price for their involvement with Madoff, directly or otherwise.

This is the only way it could end.

It’s unavoidable.

The inevitable is becoming reality.

As it always does.