Mr. Met: Meet Steve Cohen and Get to Know the Mets’ Real Estate and Finances

Lifelong Mets fan and billionaire hedge fund manager Steve Cohen is — for now —  in line to assume full control of the Queens baseball franchise from the Wilpon and Katz families — led by the team’s chairman and CEO Fred Wilpon and president Saul Katz, the heads of New York real estate investment firm Sterling Equities. Cohen reportedly agreed to a record deal on Sept. 14 that valued the team at a little over $2.4 billion, the most ever paid for a North American pro sports franchise.

Cohen, though, is not home free just yet as he would need 22 “yes” votes from the other 29 Major League Baseball owners in order to complete the deal that would see him own 95 percent of the Amazins — the Wilpon and Katz families would retain a 5 percent ownership stake. While the vote from the owners would be expected to happen in November, during one of a handful of annual owners meetings, Newsday reported on Tuesday that this could be pushed up. 

Sterling Mets LP, the team’s current ownership entity, has held a stake in the Mets since the 1980s, and it took full control of the franchise in 2002, when Fred Wilpon moved to buy out former part owner Nelson Doubleday Jr. for around $391 million. Ten years later, Cohen entered as a limited partner.

Maybe in a clear sign of the current owners’ plan to sell, the New York Post reported in March 2019 that Fred Wilpon had agreed to pay just $180 million to buy out the 12 percent stake that telecom giants Comcast and Charter Communications owned. Forbes reported nearly a year later that it was SportsNet New York (SNY) that offloaded a 16 percent stake to Wilpon and Katz, rather than Comcast and Charter. A Sterling subsidiary has a 65 percent ownership interest in the regional sports network, SNY, while Charter and Comcast have 27 percent and 8 percent stakes, respectively, according to Forbes.

Still, at the more than $2.4 billion valuation for which the team is in line to be traded, Sterling would pocket a pretty penny — more than a 60 percent return — in the Cohen sale as a result of capturing the 12 percent minority interest.

If all things go according to plan — which, as Mets fans understand, is never a definite — Great Neck, N.Y- native Cohen will be the new King of Queens. 

Here are five things to know about the Mets’ would-be owner, the sale, and the state of the team’s real estate at 41 Seaver Way.

Cohen’s business record and wealth

Unlike the Mets’ struggle to capture the limelight in New York, Cohen has almost effortlessly done so in the last decade. But not in a good way.

About a year after he acquired his LP interest in the franchise, Cohen’s popular investment firm SAC Capital Advisors, which he had founded in 1992, became the first-ever hedge fund to admit to insider trading. It agreed to plead guilty to the action and pay $1.8 billion in forfeitures and fines following a sweeping six-year federal investigation led by then-Manhattan U.S. Attorney Preet Bharara.

With the settlement, Cohen — who was not named directly as a defendant in the case and was not criminally charged — and his operation faced multi-year bans from raising outside capital. The firm and its employees were also put under the federal government’s watch and faced a lengthy probation period. In 2014, SAC was shut down and Cohen subsequently launched global investment firm Point72 Asset Management, which has $17.2 billion in assets under management as of the beginning of July, according to its website.

In 2018, Point72 began accepting money from outside investors following the expiration of Cohen’s two-year ban that was handed down following a January 2016 settlement of a civil case brought against him by the Securities and Exchange Commission. The SEC’s civil case alleged Cohen failed to properly supervise two senior employees and traders who were implicated and later convicted in the 2013 insider trading case.

The 64-year-old billionaire businessman and art collector’s net worth is estimated at $14.6 billion as of this month, according to Forbes’ rankings.

Cohen and the franchise go waaay back

Cohen bought an 8 percent limited partnership stake in the team for $40 million in 2012, a decade after Sterling’s buyout of Doubleday Jr. saw the group assume full control of the team.  

Because of this — and the fact that he’s actually a staunch fan of the franchise — Cohen should already have a rather deep, intimate knowledge of the ins and outs of the Mets organization and its balance sheet, which hasn’t looked too promising over the last few years and especially now, as a result of the pandemic. 

It’s been reported that while Cohen made efforts to stay personally distanced from the team as a limited partner — even sending an envoy to LP meetings in his place — he is actually quite close with current Mets general manager and former sports agent Brodie Van Wagenen. 

Prior to Cohen’s initial bid for the team falling through earlier this year, the Post reported in January that Van Wagenen actually sought out Cohen’s advice in finding a replacement for  manager Carlos Beltran, who the team had fired following the revelations of the Houston Astros’ sign-stealing scandal. (Beltran had played for the Astros.)

With that, it’s also worth noting that Van Wagenen’s right hand in the front office, Omar Minaya, has been considered a family friend of Cohen and his wife Alexandra going back to when Minaya was in the front office during the years Bobby Valentine managed the team in the late 1990s and early 2000s. Valentine had also developed a relationship with the Cohens, even before Cohen decided to purchase a stake, a source told The New York Daily News in December 2019.

Despite his connections and knowledge of the team, Mets COO Jeff Wilpon reportedly hates Cohen and was vehemently opposed to allowing him to assume control 

Mets COO Jeff Wilpon — the one who’s pulled the levers and overseen the team’s highs and lows over the years — despises Cohen, and his feelings reportedly influenced the snags in the sale, according to an August report from the Post.

“Jeff Wilpon hates Steve Cohen,” according to an anonymous source close to the proceedings who spoke to the Post in August. “He wants A-Rod to come away with the team or make Cohen pay double the nearest offer. This has been a squeeze job for weeks now.”

This animosity might’ve contributed to Cohen in early February backing out of an initial bid for 80 percent of the team pegged at a $2.6 billion valuation — a seemingly more favorable offer than what Sterling ultimately accepted. That deal would’ve allowed the existing majority ownership group to maintain control of the team for the next five years in what would essentially be a phased transition of power to Cohen.

Now, Cohen is set to immediately assume full control and usher in his own management regime should the MLB owners’ vote this fall swing his way. 

In a statement reported on Monday by Sportico, who first reported the news of Cohen’s possible takeover, Cohen simply said he was “excited to have reached an agreement with the Wilpon and Katz families to purchase the New York Mets.” 

The hurdles that the apparent divide between Cohen and Jeff Wilpon tossed up created openings. 

Alex Rodriguez and global entertainment icon Jennifer Lopez, equipped with a group of investors that included professional athletes as well as an arsenal of debt financing from a major investment bank, had seemed like a clear contender for the Amazins before they fell out of the running, with Cohen’s campaign reportedly winning out as early as Aug. 27.

Aside from the group led by Rodriguez and Lopez, private equity titans Josh Harris and David Blitzer, the owners of the Philadelphia 76ers and New Jersey Devils, had been in contention. According to a report by the Post last month, the seasoned duo had purposefully made an offer much lower than both Cohen and the A-Rod and J-Lo consortium after seeing the state of the team’s finances. 

“They will wait to see if Cohen or A-Rod can’t get it done,” the anonymous source told the Post in August. “Those guys won’t overpay, especially now that they’ve seen what they would be getting into.”

Citi Field’s lease and finances, the team’s bleak financial situation and how Cohens’ wealth can bring some security

The Mets are one of North America’s most valuable professional sports teams and are situated in the largest and arguably most attractive sports market in the world. But per 2019 financial figures, the team is one of the least lucrative in MLB.

Sterling Equities, while a mainstay of NYC real estate, suffered from financial entanglements after 2009 because the firm was embroiled in Bernie Madoff’s mammoth $65 billion Ponzi scheme. Sterling reportedly lost around $500 million, not counting the further financial fallout it faced as a result of being entangled in Madoff’s web. Madoff was sentenced in 2009.

Former Mets general manager Sandy Alderson has written that this resulted in severe hits to the team’s payroll in the years leading up to 2015, when it began to rebound. This was also the year the team won the National League East division and reached the World Series.

Citi Field was opened the same year Madoff was sentenced. The ballpark’s revenues fell for the third straight year in 2019, per financial documents reviewed by Forbes, and while net income from operations climbed more than 19 percent, to $65.1 million, in 2019, that’s still down from $96.6 million in 2017. 

MLB teams are usually very stable in times of economic distress. Even though the team’s valuation climbed 4 percent to $2.4 billion on the year as of April 2020, it tallied just $7 million in operating income in 2019, which is next to last in the league, just ahead of the Miami Marlins, a team that recorded a loss of $5.9 million in operating income, according to Forbes. The Mets’ revenue on the year — $362 million — was good for 12th in the league, and the team has roughly $360 million in debt. 

The $2.42 billion valuation under the reported sale agreement suggests that despite the team’s rather weak financial position and heap of debt, Cohen is undeterred by its financial situation. 

Queens Ballpark Co. LLC [QBC] operates Citi Field as a subsidiary of the Mets’ ownership entity Sterling Mets LP. Under a long-term agreement, the team — via QBC — leases the stadium from the New York City Industrial Development Agency, a division of the city’s Economic Development Corporation, which owns the ballpark, according to information from S&P Global Ratings.

Citi Field and the land it’s on in Flushing are valued at just under $762.7 million, according to a payment-in-lieu-of-taxes (PILOT) tax levy valuation reported by S&P Global Ratings in early June, when it deemed the ballpark’s PILOT bonds below investment grade — ‘BB+,’ lowering its rating from ‘BBB.’

Under QBC’s operating agreement, all stadium revenues except for “retained rights revenue”— coming from luxury suite premiums, specific seats, concessions, merchandise, signage, advertising, naming rights and specific parking revenue, per S&P — flow to Sterling Mets LP. QBC uses the retained rights revenue to fund its installment purchase and debt and rent payments, but, without fans and with a grim outlook for when the league might normalize, some of these revenue streams are useless.

S&P wrote in its early June ratings analysis, prior to the league’s restart on July 23, that its ratings action “reflects our view that QBC’s current revenue and liquidity profile no longer supports investment-grade ratings. With the 2020 season delayed because of the COVID-19 pandemic, QBC may need to tap its debt service reserve to make a December debt service payment, unless it receives team support.” 

S&P estimated that QBC’s cash on hand and $66 million debt service reserve balance could “cover operations and maintenance and debt service obligations … if the entire 2020 season is canceled, and, if this occurred, would be sufficient to support the first of two debt service obligations in 2021,” but the ratings agency estimates that the league might not be able to fully regain its footing and stabilize until 2022, a potential strike year since MLB’s collective bargaining agreement with players ends in 2021. S&P indicated that unless the team received “favorable pre-payments from vendors and/or premium seat holders, a capital call or other sponsor support, the [debt service reserve] could be required to support the $22 million December payment.”

Cohen’s ownership would likely satisfy most, if not all, of these financial concerns. 

While Cohen is taking on an obviously tough financial situation with the team and the ballpark in Flushing, Willets Point is a bright spot

As of Monday, Sterling Equities will still develop Willets Point, and Cohen will be getting a sliver of the property, according to a report from the Wall Street Journal, which cited a source familiar with the proceedings. 

Willets Point is the 61-acre site around Citi Field considered one of the largest and most attractive development opportunities in New York City. And according to a report by the Post in December 2019, Cohen could be heavily involved in its planned development.

In 2018, Mayor Bill de Blasio struck a deal with Sterling that would see 1,100 affordable housing units and a public school rise at the site by 2022. Stephen Ross’ Related Companies was said to be in line to co-develop it. Willets Point construction, though, is not yet fully off the ground. Once it is,  it’s hard to imagine Cohen will not be involved as part of his campaign with the Mets.

And, to give an indication as to the interest in the site, the Post cited an anonymous source in a July report who said Las Vegas Sands Corp. CEO Sheldon Adelson — a Trump mega-donor — was interested in building a casino and hotel in Willets Point. The Post wrote that Adelson was a part of the Harris and Blitzer ownership group that lost out on the Mets. Adelson denied his involvement.