The Rise and Rise of the Wilpon Baseball Empire

The Rise and Rise of the Wilpon Baseball Empire
Over the last 30 years, Fred Wilpon has gone from regular fan, to minority owner, to half owner, to complete owner of the New York Mets.  And it’s going to take more than a run in with Bernard Madoff to unseat him.

Recently, I was reflecting my Mets and this whole Fred Wilpon - Bernie Madoff mess and it occurred to me how many drastic changes have occurred in such a short period of time.  One day, it's a billion dollar lawsuit; the next, the majority of the lawsuit is thrown out by a judge. One week they are entering into a tentative agreement with hedge-fund millionaire David Einhorn to purchase a stake in the team; the next,that deal is no longer on the table.

When his deal fell through with the Mets, Einhorn had some very interesting comments for the media. "I was very surprised to see that many of the provisions of the deal, that were in place since May, had been changed.  A week ago I thought this deal was in great shape and would be done very soon." (link).  In a statement, Einhorn accused the Mets owners of changing the terms of the deal at the last second, saying that the "extensive nature of changes that were proposed to me at the last minute has made a successful transaction impossible." [1]

It goes without saying that those are some pretty serious allegations from Einhorn.  As fans, we may not know what to make of them, because we don’t know too much about the guy.  Were his comments the sour grapes from a spurned partner?  Or could the Wilpons truly have surprised him with the changes they proposed at the last second?
 
Before I go further, it bears mentioning that Fred Wilpon is extremely well-regarded, both personally and professionally.  His acumen in baseball and in real estate, his true career, have never been questioned.  His company, Sterling Equities, is considered a star in the industry (excellent business-side writeup here).  As the New Yorker explained in its brilliant article on Wilpon and Madoff earlier this year:

“But Fred is in the very next group, with the Rudins, the Resnicks, and the Zuckers.” Wilpon’s reputation transcends the extent of his holdings. “Everybody likes Fred, there is tremendous respect for Fred, people listen to what he has to say, and I don’t know of anybody who has ever had an open fight with him,” Spinola said. “They’d all like to beat each other out, but I have never heard a negative thing said about Fred Wilpon.” William Rudin, the chief executive of Rudin Management, said, “Fred’s reputation in the real-estate community is top tier. He couldn’t be more of a gentleman.” (New Yorker)

But for me, I am most interested in the Mets, and in learning more about how Fred Wilpon became the powerful figure that he is today.  The following is some of what I’ve learned, from public sources, about some of the more important occurrences in the history of our franchise.

We’ll never get into that board room and hear the conversations between the Wilpon and Einhorn teams, and we’ll never see the actual term sheets that were proposed, but one thing that lends credence to Einhorn’s claims is an examination of how the Wilpons broke into the sports industry and gained their influence.  Fred Wilpon’s ascent to power has been a consistent and inexorable march. 

In fact, the recent saga with David Einhorn is not even close to being the most interesting ownership saga surrounding the Mets in the last decade.

THE DOUBLEDAY-WILPON SEPARATION
Before blogs were a ubiquitous part of the way we get our sports news – exponentially amplifying the hype and noise and speed with which we get information – the Mets went through a very dramatic ownership drama.  In August of 2002, Fred Wilpon and Nelson Doubleday consummated an agreement whereby Doubleday would sell his share of the Mets to Wilpon and end a bitter, fifteen year relationship as co-owners.  The day the agreement was made public, the Times reported:

Nelson Doubleday and Fred Wilpon ended their public feud over how much the Mets were worth yesterday and agreed to a deal in which Wilpon would purchase Doubleday's half share in the team... The legal dispute between the two men erupted last month when Wilpon filed suit in United States District Court in Islip, N.Y., to force Doubleday to accept the payment terms set out in a $391 million valuation of the Mets. The lawsuit exposed the distrust and acrimony that had simmered between them for years.

Doubleday did not look good at the time.  In the article, Doubleday is referred to as a "blustery scion of publishing wealth" who claimed that Wilpon was "in cahoots" with Major League Baseball.  The article continues on to call Wilpon, the "quieter, self-made real estate developer" who was able to successfully "undermine" Doubleday's arguments.  So long as the New York Times was concerned, there appeared to be a winner in the court of public opinion.

But what really happened there?  Does that incident provide context for what happened with Einhorn?  And how much of it can be explained by the extremely close relationship between Fred Wilpon and MLB Commissioner Bud Selig?

THE HISTORY BETWEEN THE TWO MEN
Nelson Doubleday was, at one time, the majority owner of the New York Mets.  In 1980, Doubleday & Co. purchased the Mets from owner Joan Payson – and a man named Fred Wilpon was allowed to join as a minority partner owning five-percent (check out the fantastic picture of young Wilpon here.)  The dynamic changed drastically, however, in 1986, when Doubleday sold Doubleday & Co.– the entity which officially owned the Mets -- but wanted to keep the team itself.  When this happened, Fred Wilpon took full advantage.  The New York Observer, in an article published 2000, describes how Wilpon made his move:

“In the beginning, Doubleday Publishing owned 95 percent of the team… But around the same time, Mr. Wilpon was outmaneuvering Mr. Doubleday, parlaying his 5 percent stake into half-ownership. At the time, Mr. Doubleday was selling the publishing company that owned the Mets to the German firm Bertelsmann A.G. But Mr. Wilpon had a right of first refusal in the event of any sale of the team, and his lawyers made it clear he was ready to exercise it. In a settlement, the two men agreed to become equal partners, paying Bertelsmann $81 million for the team. It has been said that Mr. Doubleday never forgave Mr. Wilpon.”

According to the Times, Doubleday was actually entirely “unaware of that clause in the contract” allowing Wilpon to make that power-play, and “resented” Wilpon’s status as an equal ever since.  So while Doubleday intended to keep the team even though Doubleday & Co. was being sold, Wilpon’s “right of first refusal” gave him the power to purchase the team before it could be sold to anyone else.   It certainly appears that Fred Wilpon was wise to negotiate that right for himself and then use it to his advantage.  This will be important later on, as will the fact that the Mets were valued (at least by Bertelsmann and the partners) at over $80 million in 1986.

From that day on, by all accounts, the two men shared a difficult and acrimonious partnership.  The Observer explained in 2000:

About the only thing the Mets co-owners share these days, it seems, is their barely concealed distaste for one another. Since they became equal partners in 1986-in a hostile takeover of sorts by Mr. Wilpon-the two men have been engaged in an on-again, off-again struggle for power over the team, dividing the front office into warring camps and fighting proxy battles over hirings, firings and trades.

By the time that late 2001 rolled around, Wilpon and Doubleday were reportedly closing in on a deal for Wilpon to purchase Doubleday's share of the team.  According to sources, Wilpon had already previously scuttled a deal whereby Doubleday and Wilpon would have sold 80% of the team to Cablevision in a deal valuing the Mets at $500 million [2].  However, Wilpon wanted to retain control of the team and talks continued.

When the possible sale of the team to Cablevision was being negotiated two years ago, the price was said to be $400 million for 80 percent ownership, with Wilpon and Doubleday each retaining a 10 percent share. Two months ago, Forbes magazine valued the Mets at $454 million. The potential deal with Cablevision fell through because Wilpon decided he wanted to retain control of the club and eventually turn it over to his son, Jeff.  Times, June 22, 2001

With no resolution in sight, Doubleday chose to invoke a clause in his contract requiring Fred Wilpon to buy out Doubleday’s half of the team [3].  The price for said buyout would be determined not by the Cablevision offer, or the Forbes valuation, or by the market, but by a neutral arbitrator -- and that, as they say, is where the plot thickens. 

THE APPRAISAL, THE LAWSUITS, AND THE FINGERPRINTS
The arbitrator appointed to decide the value of the Mets franchise was a man named Robert Starkey (no relation, as far as I can tell to Richard Starkey, a.k.a Ringo Starr).  Mr. Starkey’s valuation did not please Doubleday:

Doubleday initiated the process that sent the sale to an appraiser, but when that appraiser, Bob Starkey, came back with his supposedly binding decision that the club was worth $391 million, Doubleday was furious. Last month he threatened to sue, suggesting that Major League Baseball and Wilpon had conspired to deflate the value of the club.  (Daily News, July 25, 2002)

Under that appraisal, after team debt was factored in, Doubleday stood to receive only $137.9 million for his entire stake in the team, which was lower than forecasts in the media which expected Doubleday’s take to be around $200 million. When Doubleday balked at the price, Fred Wilpon sued him to compel him sell his share of the team in accordance with the terms of the contract.  I’ll let the New York Times, in an article published at the time, explain:

''Now that the appraisal has been performed, Doubleday, unhappy with the result, seeks to renege on his contractual obligation,'' Wilpon's seven-page complaint contends, ''and has indicated his intention not to abide by the appraisal and not to transfer his interest in the team.'' (NY Times, July 12, 2002)

Doubleday counter-sued, challenging the independence of the appraiser and calling the entire process a "sham."

As an observer reading this in 2011, there should be no surprise that Bud Selig's was an important figure in this deal. Today, Fred Wilpon has been called "Selig's closest friend among the baseball owners," no surprise to anyone who has followed the Mets over the last few years (Daily News, Feb. 5, 2011).  But back in 2002, a potential conflict was not quite so clear. Remember, of course, that Doubleday's complaint is that the valuation provided by the "independent" arbitrator, Richard Starkey, was over $100 million too low.  With that in mind, the Times continues:

Doubleday contends that the appraisal by Starkey, who is under contract to Major League Baseball and has done work for the Minnesota Twins and the Milwaukee Brewers, deflated the Mets' value with faulty methodology.  He has indicated to others that Starkey's independence was suspect because of his ties to Commissioner Bud Selig, the former owner of the Brewers. It was Selig who recommended Starkey for the job.

Interesting, of course, but not conclusive of anything.  However, when viewed in light of the economic climate at the time – and the competing goals of all the people involved – there becomes a much clearer picture.  The New York Post, of all news organizations, may have connected all the dots for us back on August 7, 2002, when they took a look at what the Wilpon v. Doubleday suit could do to Bud Selig and to baseball, which was currently in the midst of a labor dispute.  In their abstract [5] they explain:

If the court rules in favor of Doubleday, [Bud Selig]'s credibility will be shot from coast to coast... Many in baseball shook their heads in disbelief that Doubleday agreed to [MLB mediator Richard] Starkey, knowing his relationship with Selig and knowing that in the year of labor strife, Doubleday was playing with fire...

Why would Selig want the Mets undervalued, besides wanting to cozy up to Wilpon and assuring his support on all labor matters? Well, for one thing, the lower the value of franchises – as established by an “independent” accountant -- the more leverage that the Commissioner’s Office would have in arguing that player salaries need to be suppressed.

THE VALUE OF THE NEW YORK METS FRANCHISE
It appears that Nelson Doubleday was right about the Mets' valuation being too low.

According to most, the definitive source for franchise valuations in the last twenty years has been the yearly list published by Forbes Magazine.  Each year, Forbes releases a list of Franchise Values, a comprehensive valuation of each team which looks at factors such as location, fan loyalty, and capital investments (ex. stadiums). 

This past year, the Mets were valued at $747 million,a sum which was reduced in light of the Mets struggles both on and off the field in the last two seasons.  The Mets value – even excluding the enormously valuable SNY -- was $912 million back in 2009.  But what does this have to do with Nelson Doubleday?
At first glance, the $391 million valuation that Starkey arrived at for the Mets may not have appeared to have been enormously out of line.    Compared to other baseball franchise sales in the early 2000's, the Mets valuation fit in nicely.

2002: Mets $391 million

2002: Red Sox $700 million (*included 80% stake in NESN)

2002: Marlins $158 million

2002: Expos $120 million (purchased by Major League Baseball)

(source, UPenn Wharton Research)

Add to this the very commonly held notion in the media at the time that baseball was in decline, and with league wide attendance generally stagnant despite the addition of four new franchises (COL, FLA, ARI, TB), and you can see why speculators might not be betting on baseball franchise values. (source)  In light of baseball’s perceived struggled, an outside observer may be able to understand why franchise values were lower than what you might otherwise expect.

Even so, back in 2002, the Mets were valued by Forbes at a healthy $482 million, about a hundred million dollars more than the figure suggested by Starkey.  It is also almost identical to the the figure suggested by Doubleday and allegedly offered by Cablevision to purchase the team.  The Mets had been valued at $249 million in 1999, but appreciated a whopping 29% in one season. (link).  Skewing those numbers even further is that the late 90's were a strange time for these kinds of franchise valuations.  In fact, a look at the top five franchises that year, the New York Yankees, Cleveland Indians, Atlanta Braves, Baltimore Orioles, and Colorado Rockies -- indicates that there was a healthy hysteria about revenue sharing.  If the value Forbes came up with for the Mets was wrong, the odds are that it was too low in light of these concerns. 

Wilpon, of course, supported the Starkey’s number -- but his view of the value of the franchise today is much more bullish.  In the now-infamous article written by Jeffrey Toobin for the New Yorker (the one in which he said Wright was “not a superstar,” among other things), Wilpon had the following to say about the value of his franchise:

Today, as Wilpon negotiates with possible investors, he says it’s clear that the team is worth more than a billion dollars. “There’s one National League franchise in New York,” he said. “Fifty years from now, there’s going to be one National League franchise in New York. That’s a very valuable thing.”  New Yorker, May 30, 2011 

One person who would certainly agree that the Mets are healthy and valuable would be Fred Wilpon’s close friend Bud Selig.  But it doesn’t require too thorough of an examination to appreciate how drastically both men’s characterizations as to the financial health of the franchise has changed over the last decade, even in the face of a nation-wide recession

LABOR STRIFE AFFECTED THE SALE OF THE METS
As mentioned above, back in 2001 when Wilpon and Doubleday were in the midst of their ownership battle, there were some questions about the financial strength of the league.  You may recall that in the winter of 2001, baseball owners voted in favor of contracting two teams from the league.  That decision initiated a firestorm, both in baseball and in politics in general.  Thereafter Selig was entangled in hearings in front of Congress, subpoenaed by Attorneys General, and MLB was the subject of a slew of legal injunctions.
It was Selig’s contention at that time – as baseball’s labor agreement was expiring --  that baseball was broke.  Flat broke.  Selig was specific, too, saying in 2002:

Commissioner Bud Selig recently told the Los Angeles Times that without major changes in Major League Baseball's economic structure, "I would say six to eight [teams] can't exist another year, another year and a half. We're talking about the immediate future. There's a lot of clubs that simply can't survive the status quo."  (Source: ESPN)

It was a number that was absurd in 2002.  It is even more absurd today. 

But not everyone agreed with Selig’s assessment of the league.  Doug Pappas, the chairman of SABR’s Business of Baseball Committee [6] and writer for Baseball Prospectus had this to say in an article published in December of 2001:

According to the commissioner, MLB somehow managed to lose $519 million in 2001 despite record revenues of more than $3.5 billion. This claim was met with derision by virtually all independent observers. They note that franchise values have not fallen, and that even the owners of "failing" teams like the Expos and Marlins won't sell out unless they can remain in baseball with some other team.

Pappas continues, in April of 2002, in outlining the inexplicable gap between Selig’s valuations and the ones developed by Forbes.

Add Forbes to the ever-growing list of those who don't believe MLB's cries of poverty… While MLB claims operating losses of $232 million in 2001, Forbes estimates that the 30 teams turned a collective profit of $76.7 million. That's a difference of more than $10 million per team… All told, the difference between Selig's valuations and Forbes's is about $1.5 billion--$50 million per team, or an additional $600 million of debt which would be allowed if MLB used the Forbes numbers instead of its own arbitrary "values."

This bears repeating: an independent expert analyst, with no stake in the results of its analysis, concluded that MLB's 2001 operating profits were $300 million higher than reported by Commissioner Selig, and that MLB's franchises are worth a collective $1.5 billion more than suggested by the Commissioner's valuation formula.  (Baseball Prospectus, April 3, 2002)
 

If you are interested in the details, I definitely recommend that you click through and read the archive that Baseball Prospectus’s made public on the topic.  But the point made by Pappas, Forbes, Congress and others at the time is crystal clear – baseball was MUCH healthier than Selig and the rest of the Commissioner’s Office was letting on. 

Perhaps Nelson Doubleday’s claims that baseball conspired with Starkey to “manufacture phantom operating losses” and that the Commissioner’s office was “in cahoots” with Wilpon were not so far off after all.

THE HEALTH OF MLB TODAY
If you’re not convinced by the above independent appraisals, how about Fred Wilpon’s position that the Mets are a BILLION dollar franchise today?  And don’t just take my word or Fred Wilpon’s word for it – but how about Bud Selig, the same man who tried to convince the world that baseball was bankrupt?
When asked right before Game 7 of the World Series the other night about MLB’s $25 million loan to the Mets, he made some very optimistic comments.  When asked whether he was concerned about the loan – which is now a few days short of being a year old – Selig said that “I do have a lot of concerns but I am happy to say that the Mets aren’t one of them.”[7]

As for the health of baseball in general, Selig said “the game has never been more popular.  There isn’t any doubt about that, any criteria you want to use, it’s more popular than ever.  But it’s impact is great than it’s ever been and there is no question about that.”  [New York Post, October 29, 2011]

According to Forbes, baseball is financially stronger than ever.  In the preface to their most recent list of Most Valuable Teams, they wrote:

Baseball has emerged from the recession with a big bang.  The average MLB franchise is now worth $523 million, an all-time high and 7% more than last year. All of the league’s teams rose in value except for three… Strong attendance and local television ratings boosted the values for [many] teams … [while] 73 million fans showed up at the ballpark last summer, which was the sixth highest total of all-time and down just 0.4% from [the year before].

The only threat, financially, to baseball at the current time seems to be with our very own New York Mets.  In fact, between the problems of the Mets and the Dodgers, baseball’s revenue sharing pool dropped for the first time since the current system was put in place in 2002.  In what should come as no surprise, however, Selig does not view the Mets a “concern”. [8]

THE FUTURE OF METS’ OWNERSHIP
So long as Bud Selig is commissioner of baseball, it is appears that the Wilpon family will remain in full control of the Mets for as long as they want to be.  How else can we explain the Mets spurning David Einhorn as a minority investor?  The fact that they get interest-free loans without a maturity date has to help:

Selig approved a $25 million emergency loan to the Mets and has supported the team’s efforts to attract a capital infusion from a minority investor. Wilpon was appointed by Selig to baseball’s executive council and Peter Stamos, a partner of the owner in the Sterling Stamos Capital Management hedge fund, is chairman of the MLB Investment Advisory Board. (Bloomberg)

This is particularly interesting in light of the hard-line Selig has taken with Frank McCourt and the Dodgers, to whom Selig would not even approve a new television deal which may have saved the Dodgers from bankruptcy.  The Wall Street Journal characterized it similarly, opining that Selig “pulled nearly every lever within his power to force” McCourt to sell the organization.

As part of the ongoing Dodger saga, Selig installed a monitor to oversee the team’s operations and, in June, it was reported, he refused to approve a new TV contract that would have given McCourt enough cash to likely keep the franchise.   The Dodgers filed for Chapter 11 protection on June 27, and Frank McCourt agreed in late October to sell the team at auction.  In an article called “Selig Bends Rules to Fit”, Marc Ganis puts it in a nutshell for us: “MLB gave so much power to Selig that some perceive a system with a lot of subjectivity and playing favorites.” (Bloomberg)

As far as our Mets go, the Wilpons must be confident, as the recent news out of Mets camp is that they are seeking a new kind of minority investor.  The Mets have been seeking multiple, smaller, minority investors to purchase chunks of $20 to $30 million to try and replace the $200 million investment that they shunned from Einhorn.  However, the investment comes with significant strings attached:

Mets chief operating officer Jeff Wilpon told Adam Rubin of ESPN New York on Monday that the process of selling minority blocks was “going very well.” However, since there is no path to ownership, this latest development is an indication that potential investors need more incentive than owning a tiny piece of the team for vanity purposes. (Hardball Talk at NBC)

If there NO PATH TO OWNERSHIP from these investments, why would someone invest?  Well, according to reports, the Mets are offering 3% interest.  That’s right, 3% interest (or the option of retaining your 2% to 3% stake[9]).  The Mets, in exchange for a ton of your money, without offering you any ability to grow your ownership stake in the team, will provide you with nothing more than a nominal amount of interest.  For reference, a ten-year municipal bond returns around 2%, tax-free.  Yet the Wilpons believe that someone would prefer to buy what is essentially a bond from an organization whose financial troubles have been front-and-center in the news media for a year.

Ultimately, the story of the Wilpon ascent to power as owners of the New York Mets franchise has been a long and twisting one.  With some shrewd negotiation, some legal wrangling, and some significant help from his great friend Bud Selig, Fred Wilpon has taken an investment of a few million dollars and turned it into a billion-dollar empire, all while Nelson Doubleday’s equivalent investment of $40.5 million in 1986 returned him only approximately $150 million over 15 years.  I'm sure one of my great MBA-possessing friends will correct me, but my back-of-the-envelope calculations indicates a yearly return of around $7.3 million per year for Doubleday, and in the neighborhood of $32 million per year for Wilpon.

I know this is long, but if you are interested in some additional reading, it is alleged that the Madoff-Wilpon relationship extended beyond simply the returns on their investments.  According to an interesting article by the New York Times in March of this year (NY Times)it is alleged in the Madoff Lawsuit that Madoff may have actually loaned the Wilpons the money they needed when making large capital investments in the early 2000’s.  Or even if the loans never took place, that a close relationship with a hedge fund such as Madoff’s allowed the Wilpons the leverage they needed to obtain favorable terms on their commercial debt.  It is an interesting additional twist to all that we already know of the scheme's impact.

Not everyone is optimistic about the Wilpons’ fortunes moving forward.  One of my favorite Mets writers, Howard Megdal, outlines some of the hard realities:

[The Mets] still owe $430 million against the team, with the principal of that loan due in June 2014, and another $450 million against SNY, with the principal of that loan due in June 2015 [in addition to the Madoff lawsuit] . . . [further], the Mets have a revenue-sharing payment due to Major League Baseball by the end of November of between $15-20 million, and owe around $26 million in their twice-annual debt payments on Citi Field to the city of New York on December 15. (Capital New York, November 2011).

However, despite all of the above troubles, I wouldn’t bet on the Wilpons ceding control of the franchise any time soon.  They were smart enough to gain control of the Mets in the first place, they have a very good friend in the highest of places, and – if their negotiations with potential investors are any indication – they are confident about their financial situation.  With Fred’s long stated goal being turning over the team to his son, Jeff, I expect that we will not be seeing any wholesale changes for a long time.

  
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Brian Mangan is an attorney who lives in New York.  He is a lifelong Mets fan and a former (and hopefully future) Mets season ticket holder. 

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[1]  It's worth noting that Einhorn, though spurned by the Mets, still has baseball on his mind.  Courtesy of the The Wall Street Journal:

"Baseball was clearly still on Mr. Einhorn's mind on Monday, when he joked that he missed watching one of his favorite teams, the Milwaukee Brewers, take on the St. Louis Cardinals for the National League Championship to work on his presentation on "the other kind of brewers," Green Mountain.  "The bulls believe the Green Mountain growth story is still in the early innings," he said, noting investors' confidence in the company's surging revenues."

[2]  Last year, Mr. Doubleday was ready to sell 80 percent of the team to Cablevision for $400 million-a deal that could have shielded his children, who are uninvolved in the Mets’ affairs, from huge estate taxes. But Mr. Wilpon scuttled the deal, out of a concern that, as a minority partner once again, there would be no assurance that he would still run the team.  (New York Observer, October 30, 2000)

[3] Source:  Daily News

[4]  Two of the people who talked about Wilpon's pending purchase said Wilpon was expected to pay Doubleday about $200 million and would give him an additional $25 million if the Mets moved into a new stadium. Times, June 22, 2001 

  

[5] Full access to the article is not available for free.  Link. 

[6] Tragically, Mr. Pappas passed away in 2004 at the age of 42.  

[7]  Another of Selig’s contentions is that baseball, aside from being broke, was a broken system because

"During the past decade, Baseball has experienced a terribly disturbing trend. To put it simply, an increasing number of our Clubs have become unable to successfully compete for their respective Division Championships -- thereby making post-season appearances -- let alone post-season success -- an impossibility."  In November 2000, Commissioner Bud Selig solemnly advised Congress, "At the start of spring training, there no longer exists hope and faith for the fans of more than half of our 30 clubs."

(Congressional testimony, 11/21/00)  Unfortunately, that fact is no less true today than when he first stated it. (Chart here)

[8]  There is one entity, aside from MLB itself, over whom no controvery exists as to whether they are succeeding or failing:  Bud Selig.  I did not know this until I looked up the numbers over at Cot’s Contracts, but over the last twenty years that he has been Commissioner, Bud Selig has seen his own personal salary skyrocket.  From a lofty and generous salary of $1 million back in 1993, to an outsized yet perhaps justifiable $2.5 million in 1998, Bud Selig’s salary in the last publicly available season was $17.5 million dollars.  That’s a number that, although absurd on its face, also dwarfs those of the commissioners of other major sports (link: http://www.sportsbusinessdaily.com/Journal/Issues/2009/02/20090202/This-Weeks-News/Seligs-Pay-Climbs-Past-$18-Million.aspx). Baseball is healthy indeed.  (source: Cot's Contracts)

The Kids Are Alright

One of the best -- and also most frustrating -- things about baseball, is that over time, things always end up like they should. In that way, baseball is like life.

Over the course of 162 grueling games, the best teams will win, the Albert Pujolses will break out of their slumps, the and the Justin Turners will no longer hit .500 with runners in scoring position. It is not like football, where you only need to get through 16 games and can find a Maurice Jones-Drew out of nowhere. It's not like basketball or hockey where half the teams make the postseason. In baseball, six months will usually allow the best teams to prevail and for just enough time for magical fairy dust to wear off.

This is particularly poignant at this moment, as our Mets crash and burn in spectacular fashion (though personally I prefer this scenario to a late season collapse).


The other night, we all watched Dillon Gee struggle epically in his start against the Phillies. Gee was a great story for a while, but for those of us who were more than causal observers, we knew that he wasn't just an extraordinary kind of "gamer" or that he hadn't figured out "how to win" better than the next major league pitcher. Ultimately, you knew that he was going to gravitate toward his actual talent level. Perhaps, Gee will be quite good in the majors. Perhaps Gee has grown over time to become a better pitcher than he was in the minor leagues. But right now, he's sporting a 4.37 ERA, which is a lot closer to what you'd expect for Gee than the 3.32 ERA he had on July 1st. Most likely, he will become, to paraphrase Dennis Green, "who we thought he was."

The reason for this lengthy introduction is because as the Mets play out the string here in late August and September, most fans, myself included, begin to have their thoughts turn to the 2012 season. Thoughts of stars returning from injuries, discussions about free agents, and analysis of minor league prospects will ensue as we assess the strengths and weaknesses of our organization. We here at Fonzie Forever have always consistently stressed that the most important thing that an organization needs to do before making a plan for the next year is to make an honest assessment of there they are TODAY.
As an example, we all remember the Winter and Spring before the 2010 season. For a few months, the Mets maintained the status quo -- they acted for months as if they thought they had a shot to make the playoffs in 2010 and that all they needed to do was patch the holes. They signed Jason Bay to a large, lucrative contract -- one which I at the time predicted would cost Omar Minaya his job. They signed or acquired players such as Alex Cora, Elmer Dessens, Henry Blanco, Gary Mathews Jr., Frank Catalanotto, and Rod Barajas. Those players were, for the most part, players that you might acquire if you THINK you can contend and you need to fill out your bench, bullpen, or Triple-A roster. However, for the 2010 Mets, each and every one of those acquisitions ranged from mistake to disaster. The Mets behavior that offseason wasn't anchored in reality at all, and we here at Fonzie Forever said it every step of the way:

With the health of Carlos Beltran, Johan Santana, and Jose Reyes all uncertain, there was no way a coherent plan could have been developed for the 2010 season. Under any set of circumstances, they were unlikely to succeed. Even if Santana, Beltran, and Reyes all came back strong, the Mets would also need David Wright to return to form, Mike Pelfrey to continue his growth, and for other players to step up.

The Mets, as we've said here before, were very fortunate in 2010. Out of nowhere, we discovered a quality major league center fielder in Angel Pagan; a high quality starter in RA Dickey; David Wright returned to form as an all-star caliber third baseman; Ike Davis had a wildly successful rookie year; and Carlos Beltran returned from his surgery and showed that he had a chance to contribute in 2011.

The 2011 edition of our Mets has been similarly successful, though their successes have been subtle, or modest, or in far away cities such as Binghamton or Port St. Lucie. Leaving aside any discussion of Madoff and the Wilpon's financial trouble -- about which no independent blogger can truly say make any predictions -- the Mets organization as a whole is in a much stronger place today than it was at this time last season.

Obviously, the major league roster now is not as talented as the one we fielded in April -- Davis and Reyes are hurt, while Beltran and K-Rod have been traded -- and not every prospect has advanced his standing. However, from the low minors to the major leagues, there have been a great deal of successes.

Below, I am going to take a look at some of the players who have made significant gains or significantly improved their stock in the last year. Undoubtedly, some of these names will be familiar to casual fans -- and others only to statheads. For space reasons, I'm not going to be able to go over everyone in the low minors, but limit myself to those players already on the major league roster or in the higher minor leagues.

I am proud to report that, for the first time in a while, I am very happy about the strength of the organization in general. An organization does not need to consistently produce super stars in order to be useful -- and in fact, in New York, it is even less important that they do -- because the development of useful, cheap, cost-controlled young players allows you the financial flexibility to make moves elsewhere. Now, on to the players:

Stock Up

Lucas Duda: You can count me as one of the many observers who did not think that Duda would amount to too much in the majors. Before 2010, Duda was a defensively-challenged corner outfielder who at the age of 23 posted an 808 OPS in Double-A. Then, something clicked. People have speculated that Duda had gotten over an injury, but since the bell rung in 2010 -- over 800 at-bats later -- he's been a very, very good hitter. He put up a 999 OPS in Triple-A last year, a 1011 OPS in Triple-A this year, and has hit .275/.345/.464 in the majors this year. In the last 45 games -- a decent proxy for since he's gotten regular playing time -- he's hit .300/.376/.531, which is outstanding.

Nobody is going to project Duda to post a 900 OPS over the course of a full season, but it's pretty clear now that Duda can hit, and that I was wrong about him. It remains to be seen whether Duda's glove will be good enough for the outfield (fangraphs has his career UZR/150 in the outfield at an atrocious -32.9 over a small sample size), but it is clear that Duda's stock is WAY WAY up and that he is a major leaguer.

Kirk Nieuwenhuis: Another player who took his enormous strides of 2010 and solidified them in 2011 was Captain Kirk Nieuwenhuis. Considered an overachiever by many, Kirk was not highly regarded even after posting an 847 OPS in Double-A at the age of 22. Scouting Book called him a fourth outfielder, while Keith Law, who strongly weighs scouting and tools in his ranking, did not place Kirk in his Mets Top 10 before the 2010 season.

The Captain, however, improved on his great 2010 season with a stellar 2011 season before going down with an injury. In 53 games, he batted .298/.403/.505 -- a batting line that will play anywhere, but is fabulous for a 23 year old center fielder. He underwent labrum surgery on his non-throwing shoulder in midseason, and there are substantial questions about how he will recover, but he has shown that, if healthy, he has a bright future.

The Big Three Pitching Prospects -- Matt Harvey, Jeurys Familia, Zack Wheeler: Much virtual ink has been spilled already on these three, so I will be brief, but suffice to say that each of these three have taken big steps forward this year. All three have good "stuff" according to scouts, and have backed it up with their performance on the field.

Harvey, my favorite of the three, has struck out 59 batters in 51 innings in Double-A, including 7 shutout innings yesterday. He's been a little unlucky with balls in play, but with a strikeout to walk ratio of 59-15, he is having one of the best pitching prospect seasons I've seen. Familia may have been even better, with 63 strikeouts in 48 innings and an 11 inning shutout streak of his own in Double-A. Finally, Wheeler, the project of the three, is also striking out more than a batter per inning for the Single-A St. Lucie Mets. Toby Hyde was very impressed with his last start:

His fastball sat 94-96 mph with a few 93 mixed in later and one 97 as well early. He showed both the ability to throw it down with run and sink and throw it shoulder-height to change batters’ eye-level and produce swings and misses. Early on, his curveball was 77 mph with bite, by the end of his outing he was throwing it in the low 80s. It was nasty.

I try not to engage in hyperbole, but this is the best crop of Mets pitching prospects that I can recall seeing. All of them, in my opinion, compare favorably to Pelfrey (who, in his own right, was an impressive minor leaguer) and even to Jon Niese (who I was a big fan of from even the beginning).

Josh Satin: Although he doesn't profile to be an impact player any time soon, Satin has transformed himself from a non-factor into a player who can contribute on a major league team. After a relatively unremarkable minor league career, where he posted good-not-great numbers at each minor league level while being a little old for each level, Satin has exploded at the dish this year. He posted a 962 OPS at Double-A before his promotion to Triple-A. While with Buffalo, he's put up a respectable OPS of 808. That mark includes a .392 on-base percentage.

Zach Lutz: Similarly, organizational soldier Lutz made it to Triple-A and has posted an OPS of 933. It was just two seasons ago that Lutz was a non-factor, posting an 822 OPS in High-A. He's been quite good in Buffalo this year, and may find a way to be a useful major leaguer.

Chris Schwinden: Although Schwinden is not as good as his stats would indicate this season, he's taken a big step forward this season for Triple-A Buffalo. Schwinden last season posted a 5.56 ERA in Double-A, and the year before spent the majority of the season in Low-A Savannah. This year, however, Schwinden has handled his promotion to Triple-A with aplomb, posting a 3.60 ERA, 1.22 WHIP, and striking out 8.2 batters per nine innings -- all of which are career bests. The former 22nd Round draft pick may make good.

Jordany Valdespin: The 23 year old Valdespin was featured here a year and a half ago where we said:

There are a lot of reasons to like Valdespin. Obviously, his Savannah performance was good. More importantly, being rated the "best athlete" in the system...ahead of the likes of Wilmer Flores, Jefry Marte, Kirk Nieuwenheis and others says a lot about his tools...In addition, he had a very strong Winter League performance...All of these things point to a bright future for Jordany. Although it could be seen as an indictment of his talent that he has not yet reached High-A ball entering his age 22 season, his physical abilities and variety of talents (speed and defense) make him an intriguing prospect.

Jordany is a project, but this year has taken a huge stride forward. After ending the 2010 season with a poor 698 OPS between Single-A and Double-A, he hit a robust .297/.341/.483 for Double-A Binghamton earlier this year. I think that the talk of Valdespin as a potential major leaguer next season is premature, but he is still only 23 and may still have room to grow.

Reese Havens: Back in 2009, when Reese Havens and Ike Davis were coming off their first full seasons in the minor leagues, we here at Fonzie Forever could not understand why Davis was being held in higher regard than Havens. We pointed out here that they were picked only four selections apart in the 2008 draft, both had hit well in the minors, and Havens had the positional adjustment advantage (second base versus first base). However, Havens has been plagued by injuries since then, and his stock -- through early this year -- had dropped substantially.

However, I am glad to report that Havens has come back strong in the last two months, and has upped his batting line in Double-A to .287/.370/.420. Even better, he's gained momentum as the year has gone on, posting a line of .323/.402/.430 since the All-Star Break. Granted, he will have to prove that his injury problems will not derail his once promising career, but Havens stock has certainly risen since April. He's a second baseman capable of posting an OPS of 800 or better, and those are exceedingly rare.

Justin Turner: Although by no stretch would I ever want Justin Turner starting on my contending team, my man @redturn2 has finally gotten the opportunity to show that he deserves to be in the major leagues. Turner hasn't hit a lick since his third week in the majors and his OPS is now down to 678 -- however, he plays decent defense and is fun to be around and can be a piece on a winner. ZiPS projected Turner for a 697 OPS in preseason, which is on the money as usual, but that is fine for organizational depth.

Stock Down

As I mentioned, not everyone in the Mets organization has been all puppies and rainbows in 2011. It's been a tough year for Fernando Martinez, while we watched Jenrry Mejia undergo Tommy John surgery. Stephen Matz, the Mets first pick (second round) of the 2009 draft has had some soreness in his recovery from his own Tommy John. I still believe that these players have a chance to contribute (particularly Mejia, who observers believe can still be a big impact pitcher) but their fortunes have dimmed somewhat since this time last year.

But in general?

A hallmark of a good organization is not just in the superstars at the major league level or super prospects in the minors, but in the depth of the rosters at each level. If you trade a Beltran, do you have a Duda to fill in? If Davis gets hurt, do you have a Daniel Murphy to take his space or do you need to pay a Mike Jacobs?

In that sense, it's been a very, very strong year for the organization. Aside from the one big question mark surrounding the Mets' financial situation, this is a team that could probably start making some noise as early as next year. Provided that the majority of players come back reasonably healthy, this is what the Mets squad could look like next year without a single addition from free agency.

1B Davis
2B Murphy
SS Reyes
3B Wright
LF Bay
CF Pagan
RF Duda
C Thole/Paulino

SP Santana, Niese, Dickey, Pelfrey, Capuano
RP Parnell, Beato, ...

The team as constituted above is not going to win the National League East. The Mets still have significant weaknesses when it comes to the starting rotation and the bullpen, and the Jason Bay contract will haunt the organization for another two years, but given average health that team will not be terrible. And more importantly, it's not constituted so poorly that it makes me want to run to the Mets offices at Citi Field and say "Are you mad?! Trade everything that's not nailed down!! You guys are crazy for keeping up this charade!"

Generally speaking, the players mentioned above have shown that the Mets are going to be less likely to suffer should they be befallen by a major injury. The days of Alex Cora and Miguel Cairo seem to be past, for now. And even better, the above guys, if we need them to play, are going to be making the minimum salary. That is why Angel Pagan and RA Dickey have been the most valuable Mets over the last couple of years -- they are providing value and barely costing anything.

These kids are alright. Luckily, all the trading of stars and doom and gloom at the major league level hasn't done anything to dampen the future prospects of our minor leaguers. Granted, reinforcements would have been nice in 2009, or 2008, but once again, that's part of the beauty of baseball.

Prospects, or major leaguers, or injuries, or luck, don't develop because you NEED them to at that moment. That's one of the beautiful things about baseball. Tragically, Daniel Murphy got injured again this year, just when we needed him. The Mets made silly moves in advance of 2010 because they thought they needed to compete, and damn the fact that the roster just wasn't good enough at that point. Where are we on the success cycle?

These kids are alright. The ones above -- and many others, who I did not get a chance to mention -- had a good year this year. I am excited to watch our boys play out the string here in late August and September, and hopefully, they'll be here contributing to the major league team very soon.

But not because we need them to. Because they are ready.

Walter Reed and Confirmation Bias

A quick aside, if I may, on the whole Walter Reed Medical Hospital issue.

It is fitting that the three players who missed the event were Carlos Beltran, Oliver Perez, and Luis Castillo, three of the most universally disliked Mets. Public opinion of these guys ranges from indifferent (for Beltran) to reviled (the others). So how wonderful for the headline writers, that it happened to be those three.

Andy Martino over at the Daily News had an interesting blog the other day where he pointed out what a perfect storm this situation has been for those who would try to sell newspapers or try to run those player out of town. As he mentions, it brings up issues of conformity, the military, performance, and ethnicity.

I have said this before and I will say it many more times - baseball provides an incredible window for us as a society, and individuals, in so many ways. Baseball provides an amazing opportunity for us to view experimentation. To instantly observe the impact of our decisions. To be able to evaluate, immediately and with mathematical precision, the inputs and outcomes surrounding every move. If you're interested in that, these is a phenomenal blog called Management By Baseball, which is one of my favorites, which discusses that kind of thing in every post.

In this case, however, baseball allows us an incredible opportunity to view the phenomenon known as confirmation bias. A quick definition, per wikipedia:

Confirmation bias (also called confirmatory bias or myside bias) is a tendency for people to favor information that confirms their preconceptions or hypotheses regardless of whether the information is true.[Note 1][1] As a result, people gather evidence and recall information from memory selectively, and interpret it in a biased way. The biases appear in particular for emotionally significant issues and for established beliefs

When you first heard that Beltran, Castillo, and Perez were the only Mets to miss the trip to Walter Reed, what did you think? What was the FIRST thing you thought? And would it have been the same thing you would have thought if it was David Wright, Mike Pelfrey, and Jeff Francoeur? What if it was a mixed bag of heroes and villians? What if the group was Jon Niese, Francisco Rodriguez, and Josh Thole?

My guess is that your reactions to each of those were drastically different. Even as a guy who openly admits to loving Carlos Beltran, and thinking Oliver Perez is not a super-villian, my first thoughts were not friendly ones. I did not immediately think that maybe they had good reasons for missing it -- but I did, upon hearing it, think "man, there is no way this story is as bad as it sounds, right?"

It turns out, of course, that it is not. But it is the kind of thing that someone - if they were lazy, or uncritical - could use to confirm what they already believe. Others, of course, may simply enjoy an opportunity to take their frustration at those players ineffectiveness on the ballfield and turn it into something personal, something which would allow them to focus their anger.

One more interesting take on this whole debacle before I go. I did not realize that this gentleman was a veteran before now, but a writer named Dave Singer over at NY Sports Dog had a very thoughtful take on things:

The fact of the matter is that this wasn't a visit to the zoo, it wasn't some mandatory fun, it was a visit to Walter Reed to pay tribute to fighting men. Why on Earth should someone be forced to do it? If it was voluntary, then why make a fuss over anyone who didn't attend?
* * *
Here's something you may or may not care about--those guys at Walter Reed get visits all the time. It's not like this was a once in a lifetime opportunity to meet their hero.

He's absolutely right. As always, it is instructive to get the opinion of someone way, way, way closer to the situation before jumping to conclusions. I appreciate the opinion of a veteran on this, the same way that I would value the opinion of a doctor or construction worker in their particular field, and the same way that I am annoyed by non-lawyers who make gross and stupid assumptions about the practice of law.

But baseball is a great sport, in the multitude of ways in which is parallels life. It happens every day, it requires determination as much as talent, sometimes it is slow, sometimes it is fast, and sometimes it's better to be lucky than good. And only baseball can teach things in this special way.

Next time, let's try not to have a knee-jerk reaction to news like this. Let's be aware of the fact that we may be trying to confirm a bias which already exists. Let's realize that there are dozens upon dozens of explanations and factors and influences operating behind the scenes that we have no idea about. And perhaps, next time, if we do all of this, those same people won't have been made to feel like jerks because they jumped to conclusions.

As They Say On the Internet .... This

Via Amazin Avenue:

Professional baseball players are not my drinking buddies. I don't know them personally. Cui gives a s**t that Frenchy tells a good knock-knock joke if he's batting .230? If a Met does well to help the team win, I will most likely be a fan. If said player stinks, I will probably not rally around him. It sounds cold but it's reality. I'm emotionally invested in the Mets, but not to the point where I think I'm on a first name basis with the players, or whatever. Angel Pagan isn't coming out to the bar to play Buck Hunter and dominate the jukebox with me this weekend. He'll be on teevee at the bar, hopefully hitting homers and making great catches, leading to much rejoicing.