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Mets Hire Turnaround Consultants, Put Bankruptcy On Table?

A source familiar with the situation has said that the Mets have hired CRG Partners — the turnaround consultants that handled the Rangers' bankruptcy sale — and that a team sale with or without bankruptcy is on the table. The Mets have confirmed the hiring, stating that they have "engaged CRG Partners to provide services in connection with financial reporting and budgeting processes."

Hiring turnaround consultants doesn't necessarily mean that the team is specifically preparing for bankruptcy and a sale — consultants like these are brought in to figure out how a struggling business can become profitable — but it further underscores the Mets' moribund financial situation. Also, a turnaround company typically gets only a modest fee if it comes in and merely makes recommendations; it has a considerable economic incentive to push for a huge sale when a sizable commission is in the offing.

Paired with the recent report that the Mets are dissolving their Gulf Coast League team in St. Lucie, and the lack of any big-ticket player acquisitions in the offseason, even a casual observer might reasonably conclude that the team is slimming down for a potential sale.

The ongoing financial morass for Mets ownership also looms large — their difficulty in finding minority investors suggests that their personal Madoff-related financial problems may have colored the perception of the team, its viability, and its availability. If Irving Picard, who represents the victims of the Bernie Madoff Ponzi scheme, gets the full $386 million he seeks from the Wilpons, they may be forced to sell the team in order to recover that money. If you're a prospective investor, why settle for a small piece of the pie when you can bide your time and scoop up the whole team later?

Mets fans would be understandably excited about the prospect of a bankruptcy situation considering how well the Rangers' situation panned out. However, bankruptcies have a lot of moving parts and the Devil, as they say, is in the details. Every bankruptcy sale has three parties: the ownership group that is in debt, the creditors, and the buyers. If this process is indeed in the Mets' future, it could be a long and difficult one with no shortage of delays and acrimony to come. William Snyder, the CRG consultant who led the Rangers' bankruptcy sale, made many enemies along the way — including new Rangers owner Chuck Greenberg, who said that he'd "met some duplicitous people in my life, but [Snyder] set a new standard." But part of the reason that the sale worked was because the bidding process upped the price and brought in more money for the team's creditors.

Plenty of billionaires will be interested in owning some or all of the Mets, particularly given the strength of their home market and the value and reputation of SNY, but there are still some key differences between their situation and that of the Rangers.

For one, there's the question of upside. When the Rangers were sold, the prospective buyers had an enormous carrot dangling in front of them: a potential television extension that was awaiting signature from the new owner. That extension, signed by the new group in 2010, was worth $3 billion over 20 years and helped fuel much of the reinvestment in the team. Some thought it signaled the end of the regional sports network, and the Mets' inability to count future bids for their TV rights as a team asset in today's situation seems to point in the same direction.

Maury Brown of the Biz of Baseball says that juxtaposing the Rangers' and the Mets' situations amounts to an "apples to oranges comparison." He pointed out that not only was there the prospect of a television deal with the Rangers, but that the team was also "horribly underutilized as the season ticket base was very small." This year the Rangers' attendance was up around 20%, their ALDS with the Rays was the second-most attended division series of all time, and World Series ticket prices hit astonishing highs. It seems the new ownership group has righted that ship. The Mets have similar upside overall, but their season ticket base may not have the same underutilization built in.

The particulars of the owners' situations are also very different. Former owner Tom Hicks's holding company for the Rangers was bankrupt, and it had a buyer in place. CRG Partners was called in to manage the turnaround, and on behalf of the creditors, they created the bidding process in order to push the asking price higher. Even though the same MLB-favored Greenberg-Ryan group that first had a deal in place eventually bought the team in the end, they wound up paying more after the bidding process than they would have otherwise.

Could the two situations become more comparable? There's still the potentially crippling Bernie Madoff clawback lawsuit hanging over the Wilpons' heads in New York, and despite Bud Selig's confidence in a positive resolution, its specter continues to negatively affect the team. In the past when the Mets needed money, the Wilpons could just inject cash of their own. That's no longer a realistic option, and if the Wilpons themselves go bankrupt this process will start to look a little more like the Rangers' sale.

The Mets did hire Steve Greenberg to assist in finding minority owners to help the team and the owners stay afloat, but that was back in January 2011. Subsequent dalliances with prospective owners like David Einhorn then suggested that the Wilpons are difficult to work with and don't want to sell anything close to a majority stake. Even extending the search to family members — and adding "perks" like exclusive events with Mr. Met — hasn't resulted in a workable solution for the Wilpons. They clearly don't have a buyer in place like the Rangers did.

But possibly hiring the 2010 Turnaround Consultants of the Year would signify a change of heart. They might be ready to listen to offers.

Perhaps things have become so dire that even the Wilpons can't see an elegant way out. The team has yet to repay last season's $25 million loan from Major League Baseball, and paired with a more recent $40 bridge loan, that outstanding debt still pales in comparison to the loans on the team and SNY that come to term over the next three years. Our own Dan Lewis did a great job outlining all of the particulars of the team's finances, but add it all up and the ledger shows a lot of debt — maybe even more than the $427 million reported before this season.

But it's not all doom and gloom for the Mets. This is a team in a large market with a new stadium and a regional sports network. If the Wilpons are really willing to sell the team, they'll be sure to have enthusiastic bidders lining up.