David Einhorn, a high-profile Wall Street investor who seeks to find value in underperforming corporations, is negotiating to buy a non-controlling stake in the New York Mets.
Einhorn is a big baseball fan, growing up in Milwaukee and playing ball as a kid. He’s made his mark in the financial world as a hedge-fund manager, both selling stocks short and investing in long-term plays a la Warren Buffett.
The Mets would qualify as a long-term play. The team is on the financial rocks, losing $50 million last season despite the continuing allure of a new ballpark, and this season has even been worse, with attendance down and the team struggling on the field.
Einhorn tends to be a high-profile financial player: on the same day it was announced he would be negotiating for a chunk of the Mets he was making headlines on CNBC after arguing that Steve Ballmer should be replaced because Microsoft lacks a mobile strategy, among other things — an argument resoundingly rejected by Microsoft’s board — and he’s not shy about expressing his opinions on investments, business strategies and more.
Which should make him an interesting addition to the Mets’ ownership group, which tends to defer almost everything to owner Fred Wilpon. Einhorn has agreed to put up $200 million, though the extent of his exact stake in the team remains to be negotiated. (If the franchise is worth $800 million or so, as has been said in baseball circles, his stake would work out to be a quarter of the team. Of course, Einhorn will be expected to argue the team is worth less than $800 million.) It will definitely be a non-controlling stake in the Mets; it does not include any part of SNY, the profitable sports-cable network.
Will Einhorn be happy to sit on the sidelines and not comment on the Mets’ business operations? Maybe. It would be interesting to know if the final sales agreement has some sort of provision giving Einhorn first crack at buying more of the Mets down the road. (We were right: the sales agreement gives Einhorn the chance to increase his stake in the Mets over the next three years to 60 percent.) In that case, it would be behoove him to let things get worse before swooping in as the white knight. We suspect the greatest reward for Einhorn isn’t turning around the Mets — it’s actually owning the Mets.
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