After a prior failed attempt and months of renegotiation, billionaire hedge fund manager Steve Cohen has signed a new agreement to buy Major League Baseball’s New York Mets, with the revised price valuing the club at more than $2.4bn and again poised to set a new record for the largest transfer of a American pro sports team.
Two weeks after entering exclusive negotiations with current owners Sterling Partners and more than seven months after a previous $2.6bn deal for the Mets collapsed, Cohen is now set to go before MLB team owners in November for formal approval of the deal, with support from 23 of 30 clubs needed to close the deal.
“I am excited to have reached an agreement with the Wilpon and Katz families to purchase the New York Mets,” Cohen said.
Cohen prevailed over a rival bidding group led by from former MLB star and current broadcaster Alex Rodriguez and his fiancé, entertainer Jennifer Lopez, and one from Harris Blitzer Sports & Entertainment.
The sale process, initiated after the demise of the original Cohen bid, was led by investment bank Allen & Co. It does not include SportsNet New York, the club’s regional sports network. The Mets agreement tops the $2.35bn valuation the National Basketball Association’s Brooklyn Nets had last year when Alibaba co-founder Joe Tsai took full control of that franchise.
If the Mets agreement is approved and moves to closing, it could present significant changes in how the team spends and operates. Under the Sterling Partners ownership, the club has often financially hamstrung and currently is estimated to be losing more than $100m per year, despite operating in the United States’ largest media market.
“Major markets generally have an outsized effect on the economics of the game, and I think it’s important for us to be strong in our major markets,” said MLB commissioner Rob Manfred, speaking at a business of baseball virtual event September 14 at Hofstra University. “I think that a change in ownership at the Mets is an opportunity to make that franchise as strong as it can possibly be, and I think over the long haul it’ll be something that will be good for the game.”
The Mets have also not reached the postseason since 2016, have posted just three winning seasons since opening Citi Field in 2009, and continually exist in the long shadow of the crosstown New York Yankees, one of the most popular sports brands on the planet.
The prior Cohen agreement fell apart over control issues with Sterling Partners and an elongated transition time to take control of the franchise. That does not appear to be an issue this time around, with Cohen set to control 95 per cent of the Mets, with Sterling Equities set to retain a minority 5 per cent stake.
Cohen, 64, is already an 8 per cent shareholder in Mets, and with an estimated net worth of more than $14bn, would become MLB’s wealthiest majority team owner if he were to complete the deal.
He now runs a firm called Point72 Asset Management LP, and does come with prior baggage, particularly through an insider trading scandal that saw his former firm, SAC Capital Advisor pay a $1.8bn fine, and a US Securities & Exchange Commission restriction on serving as a supervisor of a registered fund until two years ago, though he did not admit or deny any wrongdoing as part of that settlement.
Cohen’s current firm was also sued by a former female employee alleging discrimination.
But the robust sales price, coming in the midst of the global Covid-19 pandemic and when sports industry revenues have been battered with the loss of most gate revenue this year, still provides another lift to franchise values.
Cohen is set to be the fourth controlling owner in the Mets’ 59-season existence. The current controlling owner, Sterling Partners’ Fred Wilpon, first acquired half of the Mets ownership in 1986 and full control in 2002 in a subsequent deal that at the time valued the franchise at about $400m, roughly one-sixth the size of the latest deal.
Wilpon and partner Saul Katz were ensnared in the Bernie Madoff financial scandal of more than a decade ago, having invested heavily in Madoff’s firm that was found to be a Ponzi scheme. And even after the Mets’ precarious financial state was solidified somewhat, in part through loans from MLB and new minority investors, the team continued to struggle fiscally in recent years.