It looks like the New York Mets will indeed be sold to Steve Cohen. The hedge-fund billionaire started as a Mets’ part-owner in 2012, buying four percent of the team then for $20 million, and his stake’s currently at 8 percent. Scott Soshnick of Sportico broke the news Monday that Cohen has now reached an agreement to increase his stake to 95 percent, with Tim Healey of Newsday reporting that the deal values the team at $2.475 billion.
The deal doesn’t include the current majority owners (the Wilpon and Katz families)’ controlling stake in SportsNet New York, but that could come in a separate deal later. This does still require approval from 23 of 29 MLB owners, but Cohen seems likely to get that, perhaps as early as November. Here’s the Mets’ confirmation of the deal for the team:
Sterling Partners sign agreement with Steve Cohen. #Mets pic.twitter.com/ogzUcLFkeQ
— New York Mets (@Mets) September 14, 2020
Cohen has been pursuing control of the Mets for quite a while, and the team even announced last December that he would be “increasing his investment” over five years. That deal fell through in February, though, and that led to an open bidding process for the team, with Alex Rodriguez and Jennifer Lopez trying to put together a competing bid (leading to a whole lot of on-air criticisms of the MLBPA from Rodriguez, perhaps in an attempt to get MLB’s owners to favor his bid). But that bid didn’t get too far; it was reportedly dead at one point in May, was revived in July, but then died again late in August, with Cohen entering “exclusive negotiations” to buy the team.
Cohen was reportedly “almost done” buying the team late last week, and reportedly had assurances then that MLB’s owners would approve his purchase. But the deal at that point looked to still be for an 80 percent stake, the same as Cohen’s over-time deal last December. So it’s interesting that the deal is now at 95 percent.
And it’s also notable that the valuation set here is not much less than the $2.6 billion valuation for the team in Cohen’s pre-pandemic deal last December. This deal seems more favorable to Cohen on other fronts than last December’s deal, though. It doesn’t look like this agreement will involve the five-year wait to take over full control of the team that the previous deal had, and this arrangement also gets his stake to 95 percent rather than 80 percent. So even though he’s still spending a lot of money, and buying a team amidst the uncertainty of a pandemic, and doing so almost a year after his last attempt to buy the team, he looks to be getting a better deal this time around.
This deal is amongst the largest ever for a North American professional sports franchise. The previous MLB record came from Guggenheim Partners’ purchase of the Los Angeles Dodgers, Dodger Stadium, and 130 acres of surrounding land from Frank McCourt in 2012 in a deal valued at $2.3 billion (with a cash transfer of $2.15 billion). Other recent large deals include Tilman J. Fertitta buying the NBA’s Houston Rockets for a reported $2.2 billion in 2017, and David Tepper buying the Carolina Panthers for a reported $2.275 billion last year.
Whether Cohen’s deal is larger than those other deals depends on how it’s calculated. The valuation is higher than those other cases, but the amount of money actually changing hands looks to be only $2.153 billion. That’s because Cohen only needs to buy 87 percent of the team here (he already owned eight percent of the team, and is only buying up to 95 percent).
This also doesn’t mean that the Mets are MLB’s most valuable club. Forbes’ annual list, published in April this year, put the Mets sixth (with a valuation of $2.4 billion, almost exactly what they were eventually valued at here), behind the Yankees ($5 billion), Dodgers ($3.4 billion), Red Sox ($3.3 billion), Cubs ($3.2 billion), and Giants ($3.1 billion). And they’re not even the most valuable by recent actual appraisal, as a 2019 sale of a less than 5 percent stake of the Dodgers was at a franchise valuation of $2.56 billion. But this is still a huge deal, and one that confirms that the Mets are one of MLB’s most valuable teams.
Another element of this is what it might mean for SportsNet New York. SNY’s Wikipedia page lists its ownership breakdown as 65 percent from “the Mets,” with Charter holding 27 percent and Comcast holding eight percent. Presuming that that’s accurate, that means that the Wilpon and Katz families are likely to keep the controlling stake of SNY for at least the time being; it’s unclear if they’ll hold the full 65 percent or if parts of that will be spun off to the Mets’ current minority stakeholders (including Cohen).
In any case, changes to SNY as a result of this particular deal may not last long. Fox Business’ Charles Gasparino reported Monday evening that Cohen is likely to enter separate conversations about buying majority control of SNY after his deal for the team is approved:
More @Mets and Steve Cohen — Discussions about his possible purchase of @SNYtv will likely occur after the owners vote in November
— Charles Gasparino (@CGasparino) September 14, 2020
It appears to make some sense to have those discussions (which are just about a “possible purchase” at this point, not an agreement) after the rest of this deal is approved. A SNY purchase is going to be complicated, especially with growing uncertainty about the future of regional sports networks. That was the case even before the COVID-19 pandemic, but has grown further since then thanks to those networks’ challenges this year with less delivered games.
If Cohen is eager to get control of the team and have MLB owners sign off on that, there’s seemingly some logic to doing that part of the deal now and figuring out a SNY transfer later, if at all. And that transfer may not come; Josh Kosman and Thornton McEnery of The New York Post reported in April that the Wilpon and Katz families didn’t want to sell their stake in SNY, and that they get a reported $90 million annual dividend from their holdings there (to say nothing of its value appreciation). So there could be a good case for them just hanging onto it.
In any case, SNY will still be linked to the Mets regardless of who owns it. As per a 2011 report from Forbes‘ Mike Ozanian, the Mets’ rights (and locked-in below-market values for those rights) are with SNY for “at least the next 20 years.” And that April Post report bolstered that with “approximately 10 years” remaining on the deal. So Mets’ games aren’t going anywhere. But there will be someone new running the team.
[Sportico]
