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They were on the brink of losing their team, but now they might come out richer.
A strange turn of events has left New York Mets owners Fred Wilpon and Saul Katz now allied with Irving Picard, the trustee representing the victims of Bernie Madoff’s Ponzi scheme.
If Picard can retrieve the money from the beneficiaries of Madoff’s scam, Wilpon and Katz can claim up to $178 million in losses with help from the settlement reached last week and announced Monday.
The Mets owners now owe $162 million to the trustee to compensate for profits they withdrew from their Madoff accounts between 2002 and 2008, when the Ponzi scheme was discovered. Before the accord was reached under the watchful eye of mediator Mario Cuomo, Wilpon and Katz were facing potential damages of as much as $383 million, but the Mets owners might now be coming back ahead of the game.
Picard initially asked for $1 billion in damages from Wilpon and Katz, which the Mets owners said could have forced them to sell the team, according to news reports. The settlement is awaiting approval from Manhattan Federal Judge Jed Rakoff.
Picard had accused Wilpon and Katz of being “willfully blind” to Madoff’s scheme, which made them $162 million richer, but the settlement allowed the Mets owners to claim they were victims of the fraud.
If successful in retrieving the $178 million they are claiming as losses, they might make $16 million in profit.
According to the settlement, Wilpon and Katz have three years to pay the owed $162 million or else they will have to make two annual payments on what is owed.
But the grass may not be greener for the Mets owners. Wilpon and Katz still possess a club that’s hurting — financially and physically. Serious injuries and pay cuts through last season left the Mets without a playoff run for the fifth straight season.
Within the last two years, the Mets lost as much as $121 million, which included a payroll cut of nearly $50 million and the release of valued shortstop Jose Reyes to save money.
The team recently sold all 12 of its minority stakes for $20 million each and still has millions in debt to pay back between the building of the roughly $600 million Citi Field and roughly $400 million in loans.
In November, the Mets fired front office workers and reduced their payroll by nearly $50 million, according to news reports.
So with or without the Madoff scandal, the Mets’ bases are loaded with debt. What truly stands in the team’s way is their ability to succeed on the field, which could translate directly to their owners’ wallets.
Reach reporter Phil Corso by e-mail at email@example.com or by phone at 718-260-4573.
©2012 Community Newspaper Group
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