Source outlines Mets-David Einhorn deal

Updated: May 29, 2011, 10:27 AM ET
By Adam Rubin | ESPNNewYork.com

NEW YORK -- David Einhorn, who has been selected to join the New York Mets ownership group as a minority partner, has a path to majority ownership, a source familiar with the still-not-finalized terms told ESPNNewYork.com.

Einhorn
Einhorn

Einhorn has agreed in principle to purchase roughly 33 percent of the team for $200 million, which will infuse cash and keep the organization solvent in the immediate future. In three years, according to the source, Einhorn has an option to up his stake to 60 percent, although principal owner Fred Wilpon and his family have an opportunity to block Einhorn from gaining that majority stake.

The source said the Wilpons can stop Einhorn from gaining the majority share essentially by returning Einhorn's initial $200 million investment. In the latest incarnation of the deal, if the $200 million is returned Einhorn's share of the team will be reduced from a third to a sixth. It was originally reported that Einhorn would retain the 33 percent share of the team.

So, in essence, for the opportunity cost and other associated risks of loaning the Wilpons $200 million for three years, Einhorn would get one-sixth of the team.

The Mets on Friday night declined to comment specifically on the matter.

"We have both confidentiality and non-disclosure agreements and will continue to honor both," the team said in a statement.

What do the Wilpons get? In essence, they get to be solvent and continue to pay the money they owe to creditors and for team operations until the resolution of a $1 billion-plus lawsuit brought by the trustee trying to recover funds for the victims of Bernard Madoff's Ponzi scheme.

If the Wilpons lose big to trustee Irving Picard, the Einhorn terms will not matter since they will not have the financial means to retain the team. If there is a favorable lawsuit resolution and the Wilpons are solvent in three years, they can figure out a way to pay back Einhorn and stave off his becoming the majority owner.

Einhorn is shielded from any obligations should the Wilpons have an unfavorable resolution in the Ponzi scheme case, two sources said.

While Einhorn's route to majority ownership could not be corroborated, the source who provided the information correctly identified to ESPN a week ago that Einhorn would become the minority partner, and even said precisely which day an announcement would occur. The source also revealed that Einhorn flew to Milwaukee on Monday to meet with commissioner Bud Selig, which a second source confirmed.

The second source also confirmed the minority ownership percentage as being in the 30 to 35 percent range, and noted different valid figures are floating around because the team's sizable debt has to be counted in that calculation, making it less precise.

The transaction is not expected to be completed until late June, Einhorn said on a conference call Thursday to confirm he was slated to become minority owner. Einhorn, 42, is president of private investment firm Greenlight Capital, Inc.

Einhorn on Thursday would not talk specifically about terms.

"I have no real plans to sell this investment. I expect to hold it for a long, long time," he said. "The financial rewards, they'll take care of themselves over time."

Adam Rubin has covered the Mets since 2003. He's a graduate of Mepham High School on Long Island and the Wharton School of the University of Pennsylvania. He joined ESPNNewYork after spending 10 years at the New York Daily News.
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