Mets vs. Royals is the World Series of Misers and Moochers
Owners who won't invest in their teams but take hundreds of millions in public financing face-off in the Fall Classic.
The World Series, the final best-of-seven series to determine the champion of America's nominal pastime, commences tonight between the New York Mets and Kansas City Royals, two teams who haven't won a championship in 29 and 30 years respectively. Much has been made of the extended suffering endured by both teams' fanbases, but less attention has been paid to the primary cause of said suffering: ownership.
Both the Royals' and Mets' owners are extraordinarily wealthy, yet have consistently put out rosters with low payrolls and reaped hundreds of millions in taxpayer subsidies on the businesses they refuse to personally invest in.
In the case of the American League's entrant, Kansas City Royals owner David Glass was the CEO of Wal-Mart (yes, that Wal-Mart) from 1988 to 2000 and has been notoriously cagey about revealing his personal wealth, though he's been "thought to have a net worth of approximately $1.8 billion dollars," and the team he bought for $96 million 15 years ago is now worth $700MM, according to Forbes.
After years and years of salary cellar-dwelling, Glass has increased payroll over the past few years to about $113MM, placing it in the middle of the pack of MLB's teams and leading to three consecutive winning seasons following 29 years without a postseason appearance. However, as recently as 2012, he was claiming that he needed to keep his payroll "in the $70 million range…for us to break even."
When Edison Volquez takes the mound tonight before a packed crowd at Kansas City's Kauffman Stadium, Royals fans will be celebrating the team's second consecutive World Series appearance in a ballpark they have been helping to subsidize not just with the money spent on tickets, beer, soda, hot dogs and assorted tchotchkes, but through a three-eighths cent county sales tax. Since 2006, local taxpayers have ponied up $225MM to subsidize the home team, which gussied up its stadium with "New concourses, more concession stands and other upgrades made it a fancier — and more expensive — place for fans to visit."
In the case of the National League champion New York Mets, their ownership group led by Fred Wilpon (also the chairman of the real estate consortium Sterling Equities) claimed to have been so devastated by the loss of their investments in Bernie Madoff's Ponzi scheme that they could not be expected to field a team with a payroll representative of the largest media market in the country. Despite being supposedly bound for a pauper's grave, they never considered selling the franchise (valued at $1.35 billion), refused a "white knight" investor when one came available, and remain one of the biggest real estate magnates in New York.
In a very useful recap of the relationship between Mets' ownership and Bernie Madoff, Thomas Kearney at Amazin' Avenue writes:
When Madoff went bust, the Mets' ownership had, according to their eventual settlement, approximately $500 million invested in Madoff accounts. The Wilpons also had used that money as collateral for other loans. The collateral going bust resulted in ownership having to borrow an additional $430 million against the team (now down to $250 million), and $450 million against SNY (now up to over $600 million). Financing these debts, as well as the $43 million annual payment on Citi Field, costs the Mets over $100 million each year, before any of the principal is paid down.
Though their $500 million disappeared, Saul Katz and the Wilpons had been reaping false profits for years. The trustee for the Madoff victims sued to recover those profits, and eventually settled, with the stipulation that the Wilpons and their associates had made $162 million over the years in accounts with Madoff. While Wilpon supporters will try to point to this relatively low settlement figure as proof that the Wilpons were not guilty of wrongdoing or negligence, trial documents indicate that the nature of the final settlement was more of an acknowledgment of the unlikelihood that the trustee would ever collect a large judgment, given the dire financial straits of the Mets group. This is evidenced by the fact that the amount the Wilpons will ultimately pay is significantly less than the amount that the trustee for the Madoff victims had already won from Katz and Fred Wilpon in pre-trial motions.
Somehow, the Wilpons still came out ahead after their dance with Madoff, as they were only obligated to pay $29 million to Madoff's victims, all of whom held assets that couldn't come close to matching that of the Wilpon empire which has relied on eminent domain to clear out small businesses around the Mets' ballpark in order to develop an urban "megamall."
When Game 3 starts this Friday night at 7 year-old Citi Field, an $850MM "retro" stadium whose construction was aided by $450MM in public financing, Mets fans will get to enjoy their first Fall Classic action in 15 years. Named after the "too big to fail" financial services behemoth that took in $476.2 billion in bailout money from U.S. taxpayers following the 2008 economic crisis, Citi Field's corporate namesake will pay the Mets $400MM over 20 years for the right to associate itself with New York's "working class" baseball team.
When the deal for the Mets' stadium naming rights was announced in 2009, CNN reported:
Citigroup, which now does business as Citi, has been the recipient of billions of dollars in taxpayer-funded bailout money over the past year, causing many to question the prudence of $400 million going toward branding Citi Field, especially when Citigroup cut nearly 75,000 jobs in 2008, capped by 50,000 announced in November.
Baseball has a long and rich history of rich guys pleading poverty and easily convincing jock-sniffing sycophants in government to provide taxpayer money for their vanity projects. For more, check out my review of Jon Pessah's seminal history of the business and politics of baseball over the last quarter century, "The Game," and the Top 5 Pointless Congressional Hearings on Baseball.
Watch below for an analogous example of why taxpayers should stay out of the business of subsidizing professional sports teams, no matter the game:
