Inside the New York Mets' financial ledger

April 27, 2011: 2:21 PM ET

The Mets' money woes have been widely known for months, but estimates of the team's debt don't give a full picture of the franchise's obligations.

By Daniel Roberts, reporter

FORTUNE -- Just how deep in the hole is the troubled franchise of the New York Mets?

As owners now shop a 49% stake in the team, it's 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's liabilities are closer to $625 million, from a buyer's perspective.

Bret Saberhagen

Bret Saberhagen left the Mets in 1995, but he'll be paid until 2029.

The $430 million figure reflects the loans refinanced last year by the team's main lender, JPMorgan Chase (JPM). 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' true obligations beyond bank debt.

According to the source, Mets financial statements disclose another $100 million in what the team calls "contingent liabilities." 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.

Investors 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.

The source adds another $70 million to the team's overall liabilities to cover this year's losses. The Mets lost $50 million in 2010 and are projected to lose $60 million this season. But they've 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's annual obligations is an annual $50 million municipal bond payment for financing Citi Field -- these payments come from Queens Ballpark Company, a "wholly owned subsidiary of the New York Mets," according to the Sterling Equities website.

Combine 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's roughly $625 million in the hole.

A spokesman for the Mets would not comment on the negotiations or the investor's information.

Meanwhile, 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's 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: "Let 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." The team may end up reaching a settlement, which is yet another potential cost a buyer might take into consideration.

What 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't 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't reveal it until February). They'd have funds to help cover this season's 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.

At 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.

For now, Mets fans will keep watching the field, and hope that the people watching the books keep an eye on the ball.

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