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Friday, February 04, 2011

The Wilpons must be made to sell -- all of it
Posted by Jill | 5:27 AM

In case you're wondering why I haven't written about the situation in Egypt, it's because it's really difficult to work 15-hour days and have enough left of your brain at the end of the day (or in the morning, for that matter) to do cogent analysis of something that isn't my area of expertise. There are any number of people, some of them right here, who can do a far better job than I can of covering a complex situation that requires more analysis than I can do at a bleary-eyed 5 AM. If you're looking for a single source of information in Blogtopia (™ Skippy), you could do worse than checking out Juan Cole, for whom the Middle East IS his area of expertise.

So go ahead, tell me I'm fiddling while Rome burns, but YOU try having 100% accountability for a project with about 30% of the control and 0% of the authority and see if YOU can handle it and then come home and talk intelligently about the future of Egypt.

What I can talk about at this ungodly hour is baseball, particularly the giant flushing sound going on at $iti Field, where the involvement of the Wilpon family in the Bernie Madoff mess becomes uglier every day:
Elyse S. Goldweber, the widow of a former employee of Wilpon’s and Katz’s corporate holding company, Sterling Equities Associates, has charged in a federal lawsuit in New York that the company, Wilpon and two other officers breached their fiduciary duties by offering employees the chance to invest their 401(k) plan with Madoff. By the time Madoff’s scam had been uncovered, about 92 percent of the 401(k) plan had been invested with his fraudulent firm, all of it lost. Goldweber had $280,420 invested in her husband’s 401(k), and it was wiped out, the lawsuit says.

The lawsuit says that Sterling officers, as overseers of the retirement plan, were required to use “care, skill, prudence and diligence” in administering it, and to diversify investments “to minimize the risk of large losses, unless under the circumstances it is clearly prudent not to do so.” But Goldweber’s lawsuit contends that the officers — two of whom, the suit noted, were certified public accountants — fell far short of honoring that obligation.

The lawsuit, which was filed last summer and covers about an eight-year period starting in 2000, cites example after example of instances in which other individuals and institutions over the years raised alarms about Madoff and his firm, Bernard L. Madoff Investment Securities, LLC.

Moreover, the Goldweber lawsuit noted that Madoff and his wife were investors in Wilpon’s and Katz’s real estate business at the same time Sterling Equities was offering his firm as an option in the retirement plan — something the suit says was never disclosed to employees.

“These reciprocal investments, and the close personal relationship between” the Madoffs “and the Wilpons created a conflict of interest so great that investing with Madoff should never have been an option for a 401(k) participant and likely caused defendants to purposely turn a blind eye to these red flags,” the lawsuit contends.


The lawsuit contended that Sterling officers were not only negligent, but also conflicted. Madoff was an investor with Wilpon and Katz, as was his wife, Ruth. Over the years, Madoff and his wife have put millions of dollars into various Sterling entities. The lawsuit said that according to Picard, the trustee in the Madoff case, from the end of 2002 to the end of 2006, for example, funds from Madoff’s firm were used to invest more than $2.3 million in those entities for Ruth Madoff’s personal benefit.

Major League Baseball is a kind of screwy hybrid of private enterprise and public trust. MLB has approval rights over transfers of team ownership, about where and whether clubs can relocate, and a score of other rules. The MLB has essentially a monopoly over professional baseball at the major league level as a result of its antitrust exemption, but there's also this aura of poetry and heritage that always hovers over the sport, for all that other sports seem to have eclipsed it in the public's interest.

But Bud Selig had to have been thinking during his meeting with the Wilpons recently, about the impact on The Business for a franchise in the biggest media market in the country, even the also-ran franchise, to be in this kind of financial mess. Baseball hasn't even recovered yet from the steroid scandal, and now this.

I wrote earlier this week that Fred Wilpon is looking more every day like the Hosni Mubarak of baseball, in that he refuses to leave, he insists that the Mets be HIS family legacy and that the hapless scion Jeff, whose meddling brought the club to its currently appalling state, be the heir, and that Wilpon grandchildren inherit, lo unto millenia. That is why Wilpon, backed into a corner, is making an offer any smart investor would refuse: 25% of the team, none of the profitable SNY network, and absolutely NO say into how the club is run.

Now one could argue that with Sandy Alderson in the front office, the use of the Mets as a shiny toy by a spoiled rich boy is going to be less prevalent than it was during the Omar Minaya years. But there's some question as to whether Alderson was even aware of how bad things were when he took the job, and I have some questions about whether Alderson was sent in to be Bud Selig's Trojan Horse to try to get in there, look at the books, and see just how bad the situation is.

On paper at least, there are the glimmerings of at the very least a fun little ballclub brewing in Flushing. Anthony DiComa of Mets Cetera projects an opening day lineup that looks like this:
C - Josh Thole
1B - Ike Davis
2B - Brad Emaus
SS - Jose Reyes
3B - David Wright
OF - Jason Bay
OF - Carlos Beltran
OF - Angel Pagan
Bench - Chin-lung Hu
Bench - Daniel Murphy
Bench - Scott Hairston
Bench - Willie Harris
Bench - Mike Nickeas

SP - Mike Pelfrey
SP - R.A. Dickey
SP - Jon Niese
SP - Chris Young
SP - Chris Capuano
RP - Francisco Rodriguez
RP - Bobby Parnell
RP - D.J. Carrasco
RP - Taylor Tankersley
RP - Taylor Buchholz
RP - Manny Acosta
RP - Pedro Beato

The pitching is questionable at best -- a top three that can be either brilliant or appalling, depending on which Mike Pelfrey we see, whether R.A. Dickey can repeat his success of last year, and if Jon Niese is ready for the responsibilities of a #3 starter; and a bullpen consisting of maybes (Bobby Parnell), a head case (Francisco Rodriguez), and a bunch of warm bodies.

The team is saddled with Jason Bay for another few years, but if Carlos Beltran can be traded and there's someone in AAA who can move up, you're looking at a young team that at least is going to play hard and not just go through the motions. It's at BEST a third-place team, more likely a fourth, but I'll settle for Positive Signs over the wreckage of the last few years.

But when you have an organization that invested staffers' and players' 401(k) money with a scam artist like Bernie Madoff, and that apparently ignored all signals that something wasn't quite on the up-and-up about him, what kind of free agents are ever going to want to sign with this team? I'm not a fan of assembling a team full of overpaid guys on the down side of their careers anyway, but successful clubs are a mix of young talent and proven veterans who can mentor the kids along. That's what made the Mets of the 1980's successful (until they decided to trade everyone who didn't get along with Gregg Jefferies before realizing it was Jefferies who was the problem).

The Wilpon family may be the stuff of Shakespearean tragedy at this point -- a self-made man in the person of Fred Wilpon whose fatal flaw was trusting his old friend -- et tu Bruté indeed. But the fact of the matter is that the Wilpons will forever be wearing the Scarlet M of Madoff. And it is against the interests of Major League Baseball for them to continue to own a franchise. A 25% sale isn't enough. The entire organization must change hands.

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Anonymous Anonymous said...
angel pagan ? i used to see him at Holman Stadium in Vero Beach, FL when he would be playing against the baby Dodgers. those days are long gone since the Dodgers now train in Arizona. no idea what they are doing with Dodgertown now . . . . .

mrs. jp