A-Rod, J-Lo and the Mets Ownership Possibilities
At the end of last year, it looked like the Wilpon family might sell the New York Mets to Steven Cohen for around $2.5 billion. The proposed sale was an unusual one. It did not include SNY, the Mets’ regional sports network, which is owned by the Wilpons; the Wilpons were also set to maintain some degree of control of the team for years after the sale. In what didn’t come as much of a surprise given the deal’s unusual nature, things fell apart and the Mets are once again looking for new owners. Enter Alex Rodriguez and Jennifer Lopez.
As reported by Scott Soshnick in Variety, Rodriguez and Lopez have sought help from JPMorgan Chase to raise funds to purchase the team. The piece notes that A-Rod and J-Lo have a combined net worth of around $700 million, which is obviously well short of what is needed to meet a potential purchase price over $2 billion. While that gap might appear insurmountable, an A-Rod/J-Lo owned Mets team isn’t as far-fetched as it may seem. First, consider that any purchase of this type is going to be financed with a considerable amount of debt. As Tom Ley wrote in his analysis of the Cubs’ previous sale — in the Ricketts’ initial plans to purchase the Cubs, there was talk of financing as much as $750 million of a potential $1.15 billion deal, though in the end, they paid $845 million and financed $450 million — teams are bought with significant amounts of financing:
Ted Lerner purchased the Nationals for $450 million in 2006, and the “Debt Primer Presentation” GSP sent to the Ricketts includes the details of that sale as a case study for how a highly leveraged purchase can work. Lerner took on the maximum amount of debt—$360 million—in order to purchase the team. Jim Crane bought the Houston Astros for $615 million in 2011, reportedly by taking on $300 million in debt; the Dodgers ownership group assumed $412 million in debt when they purchased the team in 2012.