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The Mets hired CRG Turnaround consultants over the winter. They claimed it was for internal reasons, but a source familiar with the situation sees it differently. So what were they doing?
As difficult as the current season may seem, the Mets have seen positive developments on and off the field this year. The young pitching looks exciting, and their owners settled their Bernie Madoff clawback suit. There are glimmers of hope on the horizon.
Take the story borne of one of the darkest moments of the year for the Mets -- the hiring of CRG turnaround consultants. At the time, Madoff trustee Irving Picard was breathing fire down the Wilpons' necks, the team had just lost money and suffered another year of declining attendance, and the fan base was unimpressed with the offseason crop of bargain-bin free agents. It looked like bankruptcy could, indeed, be part of the future, and so when the Mets claimed that CRG was just performing in-house streamlining, it was natural to question their motives.
And now the same source familiar with the situation that broke the news to me claims that CRG finished their work before the season -- and submitted an audit of the team to banks. Though this seems to fly in the face of the team's twitter-based claims, it's actually probably good news for the long-term financial viability of the team and the current ownership. It might be knowledge of the results of this audit that even fueled commissioner Bud Selig to offer his vote of confidence for the Wilpons and the finances of the Mets.
Companies in crisis often follow this sort of blueprint: Call in a heavy-hitting consultancy firm to come in from the outside; Perform an audit of the current state of business; Compare their information to internal systems; Incorporate their suggestions where necessary. It's fairly standard, and the hiring of CRG, and subsequent insistence that CRG was there for internal reasons -- those facts are consistent with such a turnaround plan.
What complicated matters was the current state of affairs in Queens and the past work of CRG. Things looked so dire because of the large numbers that the Wilpons supposedly owed in the Madoff case, and the fact that CRG had last performed the autopsy on the Rangers before helping with the bankruptcy sale there. It made sense to expect the worst.
But this tidbit from my source suggests that the information in the audit was deemed good enough to submit to banks. Once the audit is performed, the organization is free to use it as they see fit. Using the audits to begin the work on refinancing the loans that are due in the next few years could be a decision that the Mets made as an organization once they saw the results. Bankruptcy expert Douglas Furth agreed that "certainly, things look better for the ownership and the team these days."
But Furth counseled that it's hard to make any concrete assumptions from this. The process for refinancing and restructuring can be too similar. There's much we don't know.
My source acknowledged as much and added that CRG did not receive all the information it requested from the Wilpons about their personal finances. The most difficult aspect of this ongoing story has been separating the owners from their team situation -- owners are often expected to be able to support the team in lean times with their own infusions of cash, and even in a post-settlement world, the Wilpons have had to turn to outside investors to bridge gaps. Even though they settled with Picard and will even have some of their own clawback money coming back, they still owe him $162 million as of now, and that fact, along with the 12 minority shares that the team sold this year, suggests that the owners are not yet on solid financial footing themselves.
We know that the Mets lost $70 million in 2011. We know that attendance was down further in 2012. We know that we don't know the state of the owners' finances any better now than we did in March after Picard submitted his report. But now it looks like we know that, at least on some level, it's business as usual on the ground in Queens. They have debt coming to term, they've submitted an audit to banks, and it wouldn't be surprising to hear, sometime this offseason, that the team has refinanced their $430 million loan (now probably $320 million after a payment) that is due to come to term in 2014.
However you feel about current ownership, getting the team on solid financial footing has to be seen as a positive going forward. Add a couple well-timed free agents to this rapidly-developing rotation, and the Mets' fortunes could change quickly.