Monday, March 21, 2011

New York Mets Eat Cash Despite Being Broke

Over the past week the New York Mets released both second baseman Luis Castillo and pitcher Oliver Perez. Not shocking moves considering that both players were struggling with numerous injuries and were both having awful spring trainings.  What is shocking is that by releasing these two players the Mets will have to eat $18 million worth of salary this season. 

Why is that so shocking you might ask?  Its shocking because as of February of this year the Mets were reported to be $430 million in debt and taking $25 million loans from MLB just to stay afloat.  Its also shocking because Mets owner Fred Wilpon is currently being sued by the victims of the Bernie Madoff ponzi scheme for the reported amount of $1 billion (no that was not a type that's $1,000,000,000).

Before going over the financials of the team let's look at these moves from strictly a baseball perspective.  Quite frankly they were moves that needed to be made and in the case of Perez they should have been made a long time ago. 

In 2009 Perez signed a three-year $36 million contract with the Mets after coming off back to back winning seasons where he led the major in fewest walks allowed and posted a decent ERA.  There were signs that he was struggling a bit as his velocity was down from 2008 to 2009 but at the time Mets management thought they could fix it and Perez would be a solid #2 behind staff ace Johan Santana.  Then the wheels fell off as after signing that contract Perez went 3-9 with an ERA of roughly 6.81.  He had lost his velocity as well as his command and had been moved from being in the starting rotation to the bullpen where he was a middle reliever.

Coming into Spring Training this year reports were that Perez was optimistic he could earn a spot in the rotation again.  Unfortunately for Perez however he got his world rocked posting an ERA of 8.83 in just 9 2/3 innings of work.  The final straw came on Saturday when he gave up back to back home runs to minor leaguers.  After that the writing was on the wall he was released on Monday.

Mets General Manager Sandy Alderson had this to say to Sports Illustrated about the decision to cut Perez, "I think it was additional evidence that from his standpoint the velocity was not there, the command was not there.  It wasn't going to work in a starting role. It didn't appear as if it were going to work in a relief role at least any time soon. We are getting down toward the end of spring training so we felt it was time to make a decision."

As for Castillo he was nearing the end of his four-year $25 million contract and was struggling just to stay on the field as he was constantly battling a variety of injuries.  Since joining the Mets in 2007 Castillo only cracked 87 games once and was constantly on the disable list.  When healthy he is a serviceable player who makes solid contact and can steal bases but at 35 years old and with a history of foot/ankle injuries he was no longer needed by the Mets. 

Releasing Perez and Castillo was the right thing to do from a baseball standpoint.  Aside from being hurt and ineffective both were not well liked by Mets fans.  Perez was hated by Mets fans for his apparent apathy towards the game as he never seemed to care if the Mets were winning or if he had just given up a huge home run.  He came to the ballpark, pitched and got his money.  Castillo on the other hand was hated for the infamous error he made against the hated Yankees when he dropped an easy pop fly that would have ended the game but instead allowed 2 runs to score to give the Yanks the win.

So now the Mets are walking away from both of these players and are willing to pay Perez $12 million and Castillo $6 million not to play for them this season despite the fact that their owner is being sued for $1 billion and the team has hundreds of millions of dollars worth of debt.

The financial situation for the Mets has gotten dire.  Due to the massive amount of debt and the possible billion dollar lawsuit Mets owner Fred Wilpon has been actively seeking what he calls a "strategic partner" to buy a percentage of the team, a percentage that at first was reported to be roughly 25 percent but has jumped up to now 49 percent. 

It was reported by the New York Post that Wilpon has already received 12 bids from potential suitors (despite numerous reports mark Cuban is not one of them) and will accepting bids until the end of March at which point he will make a decision.  And making that decision quickly will be of the utmost importance as the Mets are financially strapped and need to make payments.  They have already tapped out their line of credit with MLB which is a reported $75 million and can no longer borrow money from their lender JPMorgan as they have tapped out that line of credit as well.

The timing of the lawsuit combined with the losses form last year ($50 million in losses after paying off interest on the initial loan as well as bonds to New York City for the recently built Citi Field) is what is really hurting Wilpn and the Mets right now.  They need a new investor and they need it as soon as possible if they want to keep paying the players salaries and keeping the lights on at Citi Field.

I have always found it fascinating when a team cuts a player knowing they will have to eat their salary.  Its a public admission of failure but 99% of the team its necessary because the player is often injured/ineffective or in some cases the player can be a symbol for the old regime that is being dismantled by new owners/general managers.  When Sandy Alderson took over as General Manager from Omar Minaya he saw players like Perez and Castillo as symbols of the failure of the old regime and so now he is cleaning house.

This makes complete sense and I think you would struggle to find a Mets fan that didn't agree with Alderson's decision.  I just am baffled at how a team can cut two players and eat $18 million worth of contracts while they are fighting to stay financially afloat and getting loans from anyone that will give them one and are actively looking for someone to buy a 49 percent stake in the team, which by the way at the moment just seems like the investment opportunity of a lifetime.

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1 comment:

Anonymous said...

Couldnt agree more with that, very attractive article