Mets are out up to $83M in Madoff scheme; could be much, much more
The Mets have to fork over all the profits they made in the Bernie Madoff Ponzi scheme - and could end up paying out $300 million more at trial.
U.S. District Court Judge Jed Rakoff Monday ordered the owners of the Mets to pay up to $83 million to the trustee in the Madoff case for their involvement in the infamous scheme that was exposed in 2008, and the owners must either settle or go to trial and risk their original investment: an additional $300 million,.
How much of the $83 million the owners, led by majority owner and CEO Fred Wilpon, must pay to the trustee, Irving Picard, will be determined at a subsequent ruling by the Rakoff.
The move could eventually force a settlement in the suit, experts said, but barring any such deal, a big verdict against Wilpon and minority owner Saul Katz in their March 19 trial could force Major League Baseball to take over the financially stressed team.
"Without being privy to the actual [documents], I think that this ruling is a serious blow to the continuous ownership of the team by the Wilpons," said Ira Stolzenberg, assistant professor of sports management at Farmingdale State College.
Professor John C. Coffee, Jr., of Columbia Law School added that if the owners don't settle and lose at trial then "Major League Baseball has to take over the Mets."
If there's a silver lining for the team in yesterday's ruling, it's that Rakoff said he was "skeptical" that the owners turned a blind eye to the Madoff fraud, as Picard has argued, said Maury Brown, a sports business analyst of BizofBaseball.com. He added that players likely won't be affected for the time being.
But for fans, the entire predicament may have already dealt irreversible damage.
"The bottom line is it's just a very sad and pathetic situation," said Adam Garnett of Mets blog RisingApple.com.
"Morale has never been lower, ever, because the bad financial news just keeps coming," Garnett added. "We're at rock bottom ... and the only way it picks up is if Fred and [his son] Jeff [Wilpon] and Saul leave the team."
In a statement, Sterling Partners said they are "preparing for trial," and that they "look forward to demonstrating that we were not willfully blind to the Madoff fraud."
Picard originally sought $1 billion from the team's owners, the Wilpons, Saul Katz and their partners in Sterling Equities, but last year Rakoff ruled that Picard could reap a maximum of $386 million.
Follow reporter Tim Herrera on Twitter: @tim_herrera