A Solution From A Discouraged Mets Fan

Despite the recent favorable New York Mets-Madoff victims settlement (and the claim by some that it lifts a dark cloud from the team), the image, in my opinion, of the entire Mets organization is as cloudy as it has ever been.

“Now I guess I can smile, maybe take the day off,” co-owner Fred Wilpon was quoted as saying following the decision. Mr. Wilpon is kidding himself. He will only smile if he also believes he is living in Never-Never land.

Rather than $1 billion, which the trustee originally sued for, Fred Wilpon and Saul Katz, co-owners, came out owing only $162 million to Madoff victims, and because of various clauses, may end up paying much less than that.

There is only one out. The current leadership must sell the team to clean up its image — unless the team goes on a 50-game winning streak, which is about as likely as my flying self-propelled to the top of the Empire State Building. Because of the Wilpon-Katz financial mismanagement, the team has had to let go of several of its major stars, has experienced the biggest drop in payroll from year to year of any team in baseball history, has been dormant in the off-season in any attempt to bring in new talent and last year had the lowest attendance since 2004.

While the Mets have sold 12 shares in the team worth $240 million, which will help pay off debts, it is my observation that cash is tight and it will take years to “right” the situation. In addition, the ownership has just been through a year plus of bad publicity questioning the integrity of Wilpon-Katz. Huge sums were made in recessionary years…which would make any investor raise an eyebrow.

One example was the “exclusive” opportunity that Wilpon-Katz offered only to a select group of friends of theirs who were willing to invest millions, blind. The rule was that invitees could not be told who would manage the money or what instruments the money would be invested in. These guys were “Madoff-Ponzi Scheme” friends if ever there were ones.

The other day I got an offer in the mail saying that if I buy a ticket to the opening game, I will get a free ticket to the following Saturday and Sunday games free. Clearly, desperation is setting in.

How do New Yorkers turn their heads and look the other way? They don’t and they won’t. The Mets are in trouble. No major New York institution (or one in any city) can survive and prosper when there are morality questions at the top.

Beating a Stigma

I will never forget this sight: a forlorn professional man, out of work and looking a bit desperate, telling his story. He was not a close friend; his wife knew mine. He explained to me that he had worked for Bernard Madoff, the Ponzi scheme artist who scammed investors out of an estimated $65 billion and now was in jail. But this well-groomed professional had worked on the legitimate side of Madoff’s securities business, in a senior capacity. The whole business got tarred; most people did not know there was a legitimate side. The Madoff stigma was haunting him with every potential employer he met. Naturally, they distrusted him. At best, all he could get was temporary work. What did I think he ought to do? he asked.

My answer was swift. He said that there were approximately 30 employees who worked on the legitimate side of the business – all branded by the scandal as they met with potential employers. So I reminded him that, as we all know, there is strength in numbers. Why not gather all of these employees, all unfairly tainted, and approach The New York Times, which might seriously consider doing a story on this unique group, focusing on their travails, their hopes and personal experiences? Such a story might clear the air – and help all concerned achieve gainful employment. Moreover, a reprint of the story could be appended to every resume distributed. This is indeed a case where a powerful publication could have a meaningful impact on the lives of many.

That happened a year ago. I never saw the story. A couple of weeks ago, I received what appeared to be a mass email from that same individual. He said he was out of work — but never said why and, in fact, never acknowledged any link with Madoff. He may have thought it would further stigmatize him. Maybe it was a cry for help … or he was just in denial. But, by raising more questions than it answered, his email definitely did him a disservice. It was just not enough, I felt. Even now, it is not too late to take the action I suggested.

REPUTATION ON THE EDGE

Here is another example of how rough stories in the media can wreck the reputation of a leading institution and the man at the helm. I am not blaming the press; I am blaming the actions of the man at the helm, who inspired the negative coverage. The story this time is about the New York Mets — one of New York's two baseball teams — and its owner, Fred Wilpon.

What happened? Years ago, Fred Wilpon selected record-setting Ponzi-scheme ace, Bernard Madoff (who, about a year ago, was sentenced to life in prison), to manage the lion's share of his and the Met's investments.

Wilpon claims he was victimized like many others, but Irving Piccard, the trustee attempting to recover funds for the real victims of this fraud, is suing Wilpon for $300 million in fictitious profits and other items that could bring the total to $1 billion. Why is Wilpon a target? Because, as a power-player, the Mets owner had the ability to influence other high-profile individuals with deep pockets to invest with Madoff as well, increasing Madoff's pool of money and the size of Wilpon's own returns. The Mets owner even started a "private club," inviting only certain wealthy individuals to become Madoff investors, as long as all investments were made through Wilpon's company, Sterling Equities, and the actual investors promised they would have no contact with Madoff directly. I'd call this a red flag, wouldn't you?

In his defense, Wilpon has said, “We lost over half a billion dollars… We put in money — I personally put in money within three weeks of [Madoff’s] going under. I know, you look at me like I have a third head, but I’m not stupid. I wouldn’t do that, I wouldn’t risk my family’s money if I thought there was anything wrong.”

Yet there were several other red flags. Leaders in the Mets organization marveled at Wilpon's returns from Madoff and wondered how he did it.

Word has it that Wilpon tried to settle with Piccard out of court, but when the two men could not agree, it hit the press. As I see it, once it hit the press, the Wilpons were doomed. The headlines have been ragged and accusatory -- with good reason. If the Wilpons try to fight this in court, the case will go on for years, totally sullying the reputation of the team, which has already been badly hurt. If they give in to Piccard's demands, they will be financially finished and devoid of any credibility. They are already seeking a 25 percent buyer of the Mets to help sustain their ownership. And despite Wilpon's protestations that this will not affect the business of the team, the Mets have been quiet in the off-season, with no major player acquisitions of note. And indeed there are needs.

Bottom line? There is a very dark cloud over the team. No matter what the Wilpon family does, they are dead meat. New York cannot afford to have a tainted owner of one of its flagship institutions — the fan base will not allow it — and Wilpon is tainted no matter how this turns out. I predict that the Wilpons will be forced to sell the team in order to rev up the organization's credibility... which is the only way it can sustain itself in New York.