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Monday, May 30, 2011

Einhorn - Majority Owner in Three Years?

I heard this during the radio broadcast on WFAN during yesterday's game.  If I heard this correctly, and if this information they reported turns out to be accurate - it sounds like Einhorn made himself quite a good deal.

The deal requires the Mets to be solvent in the next three years.  If the Mets are not solvent, Einhorn has the right of first refusal to buy a controlling stake in the team.  If they are solvent, the Wilpons will pay him back his $200MM and Einhorn retains his minority ownership stake.

If this is correct, to translate into oversimplified terms - Einhorn is floating the Wilpons a $200MM loan.  Instead of charging interest on the loan, he's repaid by getting a stake in the team.  One of the covenants of the deal is that the team is solvent.  If they're not solvent - the "default" is that he has the first right to take over control.

It's a winning situation for Einhorn.  If the Mets turn things around financially in three years, he gets his $200MM back and he's got a stake in a profitable enterprise.  If the Wilpons don't get their act together, he gets to take over the team and run it the way he wants to.

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