Einhorn could end up in control of Mets
David Einhorn's $200 million agreement with the New York Mets to buy a minority stake in the team is essentially a loan that, after three years, could allow the hedge-fund titan to acquire a controlling interest in the team, a person involved with the sales process said Saturday.
Under the terms of the deal, Einhorn, the president and co-founder of Greenlight Capital, would receive 33 percent of the team for $200 million. Because the team is carrying about $425 million in debt, the value of the team is roughly $1 billion, according to the person. In three years, Einhorn would have the right to acquire an additional 27 percent of the team based on the $1 billion valuation, a move that would make him the team's majority owner.
Wilpon can turn down that offer, but if he does, he must pay Einhorn back his $200 million investment and allow him to keep his one-third share in the Mets. Under this scenario, Einhorn would earn the equivalent of more than $130 million in interest on a three-year loan of $200 million.
The person said Mets owners Fred Wilpon and Saul Katz were forced to include these unusual terms in the deal because bidders for the minority stake, including Einhorn, were resistant to make a deal without getting a piece of the cable network SportsNet New York (SNY) and without obtaining a legal opinion from Wilpon's lawyer that the deal would stand even if Wilpon received an adverse judgment in the Bernard Madoff bankruptcy lawsuit.
The trustee in the Madoff case is suing Wilpon and his associates for $1 billion, alleging they received fictitious profits and also knew or should have known Madoff was a fraud.
In a statement Saturday, the Mets characterized reports about the terms of a deal with Einhorn as "uninformed speculation" and said details of the negotiations are "strictly confidential."
The deal must still be approved by Major League Baseball.