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"Just how deep in the hole is the troubled franchise of the New York Mets?\nAs owners now shop a 49% stake in the team, it\u2019s been widely reported that the franchise has around $430 million in bank debt. But a potential investor who spoke to Fortune on condition of anonymity points out that the team\u2019s liabilities are closer to $625 million, from a buyer\u2019s perspective.\n\nThe $430 million figure reflects the loans refinanced last year by the team\u2019s main lender, JPMorgan Chase \n\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\t\tJPM\n\t\t\t\t\t\t\n\t\t\t\t\t\n\t\t\t\t\n\t\t\t. But Sterling Equities, the group led by Fred Wilpon and Saul Katz that holds ownership stake in the Mets, has opened its books to interested investors, and those books disclose other financial commitments that give a more complete picture of the Mets\u2019 true obligations beyond bank debt.\nAccording to the source, Mets financial statements disclose another $100 million in what the team calls \u201Ccontingent liabilities.\u201D Much of that is deferred compensation still due to players long gone from the Mets roster. The documents give two examples of these liabilities: Bobby Bonilla, who left the team in 1996 and has $1.2 million per year coming to him for the next 25 years, and Bret Saberhagen, who left in 1995 and is owed $250,000 annually through 2029.\nInvestors were not shown a full list of the contingent liabilities; they were only informed that the figure is $100 million, and that these two particular commitments are examples.\nThe source adds another $70 million to the team\u2019s overall liabilities to cover this year\u2019s losses. The Mets lost $50 million in 2010 and are projected to lose $60 million this season. But they\u2019ve already seen an 11% decline in attendance this year, which makes it likely that the team will lose closer to $70 million. Part of the franchise\u2019s annual obligations is an annual $50 million municipal bond payment for financing Citi Field &amp;#8212; these payments come from Queens Ballpark Company, a \u201Cwholly owned subsidiary of the New York Mets,\u201D according to the Sterling Equities website.\nCombine the $430 million bank debt with the contingent liabilities and expected losses this season, and finally, add the $25 million owed back to the MLB from a loan made to the team in November, and a new owner would own part of a team that\u2019s roughly $625 million in the hole.\nA spokesman for the Mets would not comment on the negotiations or the investor\u2019s information.\nMeanwhile, the owners will have to deal with a pesky lawsuit from Irving Picard, the bankruptcy trustee tasked with recovering money for victims of Bernard Madoff\u2019s Ponzi scheme. The $1 billion lawsuit accuses Wilpon and his partners of being aware of the scam while feeding more money into it. The official statement on the matter from Wilpon, Katz, and the other Sterling Equities partners, as of March 20, reads: \u201CLet us be very clear: we did not know that Madoff was engaged in a fraud. There were no red flags and we received no warnings.\u201DThe team may end up reaching a settlement, which is yet another potential cost a buyer might take into consideration.\nWhat the Mets want now, of course, is to find a Mets fan or a group of fans with pockets deep enough to buy a 49% share of the team for around $200 million. Such a deal wouldn\u2019t solve everything, but it would give the Mets a good start on the right path. Wilpon and Katz could pay back the $25 million loan to the MLB (given by Bud Selig in November, though they didn\u2019t reveal it until February). They\u2019d have funds to help cover this season\u2019s losses. They could set aside a reserve, if they need it, for the Picard lawsuit. And of course, they could continue doling out their $145 million payroll.\nAt the very least, Fred Wilpon, Saul Katz, and Mets fans can feel happy when they compare the dire situation in Queens to a similar, but worse, crunch in Los Angeles. The Dodgers are in about the same level of bank debt, but have additional liabilities at estimated levels much higher than the Mets. And Bud Selig has refused to bail out Dodgers owner Frank McCourt, whose team has been taken over by the MLB, the way that he bailed out the Mets with a $25 million loan back in November.\nFor now, Mets fans will keep watching the field, and hope that the people watching the books keep an eye on the ball.\nMore from Fortune:\n\nBud Selig: Ready to play ball\nJPMorgan sees $4.5 billion legal hit\nWhy Irving Picard deserves a Pulitzer"^^<http://www.w3.org/2001/XMLSchema#string>
<http://fortune.com/2011/04/27/inside-the-new-york-mets-financial-ledger/>