2012 Organizational Rankings: #20 – New York Mets

Dave Cameron laid out the methodology behind the rankings last Friday. Remember that the grading scale for each category is 20-80, with 50 representing league average.

2012 Organizational Rankings

#30 – Baltimore
#29 – Houston
#28 – Oakland
#27 – Pittsburgh
#26 – San Diego
#25 – Minnesota
#24 – Chicago White Sox
#23 – Seattle
#22 – Kansas City
#21 – Cleveland

New York Mets’ 2011 Ranking: #21

2012 Outlook: 36 (26th)

There will be pain. In the short term at least, there will be pain for Mets fans. The pain will look a little like not signing a fan-favorite shortstop to a reasonable deal because it had too many years and zeroes on it. The pain will look like an offseason boasting Scott Hairston, Ronny Cedeno, Frank Francisco and Vinny Rottino as your biggest free agency acquisitions. The pain will contain constant updates about your owner’s involvement in a major Ponzi scheme. The pain will come, most of all, from going into the season knowing that — even with a second wild card — it would take major twists of fortune for your beloved team to sniff the postseason.

Is this current squad the 26th-best in baseball? Probably not. Even with four first basemen in the field — David Wright‘s defense has begun to fail him, Lucas Duda always owned a first baseman’s glove, and it’s unclear if Daniel Murphy can learn to protect his knee on the turn at second, and Ike Davis has the best glove at his position of the bunch — the Mets should boast nine players that can manage an on-base percentage above the league average of .319. If Andres Torres can play to his upside and Ruben Tejada can continue to walk at a league-average rate, they should have a player at each position that can take the base-on-balls. With the fences coming in, they may even have decent power up and down the lineup.

It’s the whole pitching thing that may ultimately bring the most pain this year. Their rotation ended up 27th on the power rankings, and with only Jonathan Niese and R.A. Dickey likely to pitch close to 200 innings at a league-average rate, it makes sense. Johan Santana has been playing well this spring, but his peripherals — once the home run rate is adjusted, which seems important especially now with the fences coming in — were already those of a league-average pitcher before he went down with a shoulder capsule problem in 2010. Now, after having the same surgery that felled Chien-Ming Wang (who has not yet returned to anything like his old form) and missing a full year, Santana is showing velocity that is just a tick below his 2010 average. Even if he’s a better pitcher than Wang, the most ardent Mets fan has to admit that a full season seems like a long-shot. With pitchers like Dillon Gee and Chris Schwinden providing the depth this year, and Mike Pelfrey doing little other than eat innings, there’s not much depth behind their erstwhile ace, either.

They won’t be legendarily bad, since they still have some pieces in the lineup, but there isn’t really a great reason to pencil them in among the revamped Marlins, the building Nationals and Braves, or the veteran Phillies.

2013+ Outlook: 42 (26th)

The whole reason the pain might be worth it is that it seems the current regime has a plan. Trading Carlos Beltran for Zack Wheeler was a window into that plan. Taking toolsy but possibly raw high school outfielder Brandon Nimmo with their first pick in the draft was another. Challenging current Minor Leaguers — up and down the system — to become more patient at the plate was yet another sign that this team is working hard to change.

The plan wasn’t based on paying over-slot on all picks in the draft, which is good because there is now a draft bonus cap. It wasn’t based on making a big splash with international signings, either. That was the previous regime.

Instead it was about hording years of cost-control (see the Andres Torres trade), and focusing on developing a bevy of patient young position players to pair with their emerging arms. With Wheeler and Matt Harvey at the forefront, there are signs it’s going the right way. On the other hand, a 16th-place ranking in Marc Hulet’s MiLB org rankings, a general lack of high-impact position players in the system, and few cost-controlled pre-peak options at the Major League level, there’s still more pain on the way for the blue and orange.

Financial Resources: 54 (11th)

Some of the pain might be (mostly) over. Judge Rakoff made a landmark ruling in the Bernie Madoff clawback case and awarded trustee Irving Picard $160 million. Compared to the numbers that were floated at the peak of the hysteria, this was a win for the Mets’ ownership.

But there are still some discomfort on the way. According to research by Howard Megdal, author of Wilpon’s Folly, that was vetted by Adam Rubin at ESPN, the Mets have some serious debt coming to term in the next few years. Even after minority investors helped the Wilpons pay off a short-term loan from Major League Baseball, as well as some recurring debt payments that the team fell behind on when they lost $40 million in operating revenue this season, there are some whoppers on the way.

There are the yearly $100 million combined in debt payments on the Citi Field and SNY bonds that they’ll have to come up with while putting up an inferior product on the field, which will lead to less gate receipts and more losses like last year’s $40 million. Then there’s a $430 million loan against the team that comes to term in June 2014. And a $450 million loan against Citi Field that comes to term in June 2015. And let’s not forget the $160 million the owners owe Picard, even if there’s a chance they get back more than 50% of that once the dust settles.

So the owners are heavily leveraged. Doesn’t the Dodgers sale have implications for the value of the Mets franchise?

Yes and no. If you count up all the assets that were sold in the Dodgers transaction — the team, the stadium, the land, and the media rights — then the Mets are indeed worth a similar figure. But as you can see from above, each of those entities is heavily leveraged in New York. The Wilpons have close to $900 million in debt, and there’s no major television deal riding in to save them. They own most of SNY as well, and while they’re shifting around the money as much as they can — SNY was counted at least twice in the minority investors that rode to the rescue this year — there still isn’t an SNY-led white horse rescue on the way. Yesterday, sports business consultant Marc Ganis pegged the Mets’ total value at $1.5 billion. That’s not a great debt-to-value ratio.

There’s still a chance that the Wilpons’ personal debts, paired with the servicing on the team, network, and field debts, necessitates a sale in New York. And if Frank McCourt is any guide, the Wilpons would do well in that transaction.

But what about the fans? Will all this debt, both personal and professional, keep the Wilpons from being able to invest in the product on the field? And if so, what’s the use of all the fancy baubles of a big-market team? It’s clear that, in terms of financial resources, the Mets have massive upside and some considerable — if possibly temporary — downside.

Baseball Operations: 48 (16th)

Bringing in the godfather of Moneyball should have been a sign that this pain was on the way, perhaps. It seemed strange to put Sandy Alderson at the helm of a $145 million payroll, but now that the team is paying Major League players less than $90 million (and dropping), it all makes a little more sense.

The new front office, including Paul “3DPO” DePodesta and J.P. Ricciardi, has to get an incomplete for now. They have the reputation, but the results are still forthcoming. They may have a good eye for bench pieces (and enough restraint to avoid Alex Cora situations), and they seem to understand that they need to give every young player a long chance to show their true talent — Ruben Tejada and Lucas Duda come to mind. As hard as letting Jose Reyes go might have been, and as much of a possible bargain as he could have been at his price, it wasn’t the type of risk that a rebuilding team needed to make.

There’s a strong, steady hand at the helm. This former Marine Corps sergeant understands the pain/gain connection, and is practicing it with his own patented brand of humor. That’s worth about an average grade as we wait for results.

Overall: 45 (20th)

So there will be pain. But there might be pleasure after the pain, and Sandy Alderson is the gruff-yet-smiling general to lead the team to the promised land. At some point the finances will be settled and this will be a big market team that’s learned from the small market geniuses along the way — that could be a powerful combination.

And it’s not like this current team doesn’t provide reasons to watch. There’s Dickey and his three knuckleballs, Davis looking to prove his value, and crowd-favorite (and Big Lebowski quote mill) Duda to watch. Listen to the general praise his troops, and you can tell this is ranking is more “#20 with a bullet” than a stamp of doom:

“I think there is an opportunity to develop a core of players who will be here for the next several years. given the talent we have here. In the short term, if these guys develop to their capacity, this is not a long-term proposition. This can be a lot of fun this year.”

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Graphs: Baseball, Roto, Beer, brats (OK, no graphs for that...yet), repeat. Follow him on Twitter @enosarris.

53 Responses to “2012 Organizational Rankings: #20 – New York Mets”

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  1. Dexter Bobo says:

    And let us also not forget the $30 million still owed to Bobby Bonilla.

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    • Colin says:

      I would like my employer to fire me and pay me a similar type of severance. How do I get that to happen?

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      • Eric R says:

        It wasn’t a severance though. They owed him $5.9M whether he played for the team or if they cut him. They essentially deferred the money for 11 years and then spread out that money over 25 years, at 8% interest.

        Figuring in 3% inflation, the PV of the deal works out to like $15.5M, so Bonilla nearly tripled his payment by accepting nothing for 11 years and then getting the PV equivalent of about $600k per year for 25 years.

        On the other hand, had he taken the $5.9M and used it to buy all AAPL stock, that the time of his first $1.2M payment, he would have had about $79M in stock. If he then took out his first $1.2M ‘payment’ from that and kept the rest in AAPL stock, that stock would be worth $140M now… so he definitely could have done better :)

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      • 3D says:

        The comment below you should be auto-pasted below any uninformed criticism of the Bonilla deal. It’s a perfectly standard deferred contract, in sports and all of business.

        Are you a contracted worker owed millions of dollars? If not, perhaps that’s why you haven’t been offered one of these yet.

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      • AYell says:

        There was a good Deadspin piece by Barry Petchesky talking about how the Madoff relationship (and its guaranteed returns) influenced the Bonilla contract deferment — http://deadspin.com/5886867/how-bernie-madoffs-money-ran-the-mets

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      • L.UZR says:

        Bonilla also could have asked the Wilpons how he should invest his 5.9M, and the WIlpons could have referred him to Madoff, who could have taken his money and returned nothing, and a dispondent Bonilla could have become a D-flight pro wrestler and wrestled Jose Canseco and won $500.00 then bought a Mega Millions lottery ticket and won 500M this week and now would be much better off than had he deferred his salary.

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      • Colin says:

        @3D, wow man, you really don’t have a clue when to take comments seriously and when not to do you?

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      • Dexter Bobo says:

        @3D: Jokes – get them.

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  2. Colin says:

    11th in financial resources?? I don’t care how big their market is, they are poorly run and in financial trouble. They are finding a way to lose money in that market.

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    • Schu says:

      I’ve noticed that only the very poor, and the very rich, run their lives on revolving credit transferring balances from one to the next and never paying anything off. The difference between the working class that has no real choice, and people like the Wilpons or McCourts, is simply that the latter have a higher credit limit.

      It’s time to take out the trash.

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    • Will says:

      Yeah, that seems like a huge stretch. Read the financial resources section without looking at the score and you’d think they ranked 31st out of 30!

      I thought Dave Cameron said earlier that these rankings were supposed to be looking at the state of the franchise over the next 4-5 years. In that case, the Mets’ financial situation over that same period looks EXTREMELY bleak.

      Sure, in 15-20 years, this will probably just be a minor blip on the radar, but for the next half-decade, the Mets are going to struggle quite a bit with their payroll, and that’s precisely what these rankings are supposed to measure- the short to mid term – not a ranking of organizations over the next 10 to 20 years. That would be a pointless exercise.

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  3. Ben says:

    Is anyone else as tired/bored of this segment as me?

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  4. Badger says:

    The Picard thing was a settlement and not a judgement, was it not?

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  5. DRuss says:

    Marine “Corps” not “Core”

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  6. Matt says:

    I think you meant 26th BEST.

    Also, 16th as a rank for the front office seems a bit low.

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  7. chuckb says:

    Is it just me, or did that first paragraph read like James Earl Jones ought to be reading it. “There will be pain, Ray. There most definitely will be pain.”

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  8. Jesse says:

    26th on the 2013+ seems pretty low to me. Why? well, prospect wise, i don’t think they should really be that low, but secondly, their albatross contracts, sanatana and bay are over next year.

    in 2014, this team has 8 million committed, which is bottom five of the league. They’ll still have team control over valuable players like davis, murphy, duda, niese. I’m pretty sure they can get their spending capabilities back in the 140 million dollar range. Remember that they’ve never gotten the full benefits of citi field as a cash generator. if they make the playoffs again and aren’t such a disgrace, they can get back to big spending and have a cheap workable core to build around. As long as they don’t pick too many duds along the way, i think the future could be quite bright. Just wish those criminals weren’t still at the helm.

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  9. caseyB says:

    Eno, I think this was a pretty fair placement given the ginormous amount of negative publicity and bashing — much of it gratuitous — that the franchise got over the last year regarding its financial issues. I have a few issues issues though:

    –There is no longer a good chance that the current Mets owners will have to sell anytime in the near future, contrary to Megdal’s year-long incessant and windy diatribe against them. The settlement, which greatly favored the Mets, helps ensure that. (This was not a “landmark” ruling from Rakoff, but rather a settlement, though I agree Rakoff’s expressed sentiments during the trial favored the Mets owners and may have pushed Picard to capitulate.)

    –McCourt was heavily leveraged and in debt, yet that didn’t hinder the price he got. So it is unlikely to greatly hinder the valuation of the Mets. It’s been widely reported that the current debt on the team can be easily refinanced (especially in light of the increased valuation of the team on the heels of the Dodgers sale).

    –I hardly think the Reyes contract is a “reasonable deal” especially considering his injury history which you neglect to mention. Perhaps the pain this year will be more limited to Reyes upon his next injury and to Marlins fans and their front office when that annual event occurs. (P.S. Reyes is a slow healer.)

    The Mets will surely be challenged this year to be competitive, but I also see potentially serious issues with the Braves and Phillies which might bring them back to the pack and make the division much more wide open.

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    • Eno Sarris says:

      I disagree with a lot of your points, even if we agree this is a fair place for them.

      – Rakoff pushed the two to settle. I can edit the wording, but he pushed them to this point, and it wasn’t some sort of equally-agreed upon settlement that the parties came to on their own.

      – The Wilpons still owe $160 m minus whatever they get, down the line, from the $170 they lost (which might be more than 50% but almost certainly will not be 100%). They owe almost $900 m against a generous $1.5b assessment that came after the Dodgers sale. That’s not a lot of room for refinancing. I don’t think it’s fair to call that ‘easily refinanceable.’

      – You can take 30+ games out of each season and age Reyes .5 wins off his peak and the contract is worth it. It’s not a deal the Mets should have signed, but it’s not a terrible deal for the Marlins. it only turns terrible if he misses half-seasons — and multiple half-seasons at that.

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      • caseyB says:

        If you want to call Rakoff, expressing overt “skepticism” in the plaintiff’s case on the eve of the trial, as pushing “the two to settle” then OK, I agree. Picard saw the handwriting on the wall and he is the one who gave in the most. Though bottom line is that both sides had to agree to a settlement which was brokered by Cuomo (not Rakoff).

        I believe that already approximately 50% of the amount representing the loss of principal by Madoff net losers has already been recovered (but not distributed). Chances are at least another 25% can be recovered in the 3-5 years before the Mets owners have to pay any money. Best estimates are that they will end up owing roughly 25% at most — and possibly much less or nothing.

        The $900 million represents multiple debts, and I read in various places that it is easily refinanced. McCourt had over $500 million in debt at the time his team was sold and it didn’t put a dent in the sale price.

        I will bet that over the next 3 years, Reyes misses much more than 30 games a season. Personally I don’t think that contract is worth it. Well, it was worthwhile to Loria because he is desperate to prove he can make MLB viable in south Florida. But it was not worthwhile to the Mets. And apparently no other teams besides the Mets and Miami were even interested in bidding close to that amount. So I don’t know how one can call that contract reasonable. Only if you view it in the context of other bad contracts such as Crawford’s can you call Reyes’ contract reasonable. Is that how Alderson should operate?

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      • acerimusdux says:

        All judges push parties to settle. The settlement is still going to be equally agreed on by both sides.

        As for the Ganis estimate, he’s not counting SNY in that, so it doesn’t make sense to count the SNY debt against it. He says:

        “If the Mets had the same (bankruptcy) thing, had they rejected the SNY contract and there could have been a fresh broadcasting deal, I suspect the Mets would have went for more than the $2 billion the Dodgers went for. If they kept the SNY deal, probably $1.5 billion or so would be the value.”

        The team debt was $450M, but that was before the recent investments which allowed them to pay off about $140M. Per the NY Times:

        Not only that, more than a week earlier, they had ended their yearlong effort to raise cash for the financially fragile Mets when they raised $240 million by completing the sale of 12 minority shares of the team. Days before the settlement, the money was quickly used to repay an overdue $25 million loan to Major League Baseball and a $40 million loan to Bank of America, which was taken out last fall for the team’s swelling losses.

        The team also repaid about $75 million to a syndicate of banks that was owed about $400 million. The banks had been told that the sale of the minority shares would be completed by March 1, said a person briefed on the timing of the loan repayments.

        This would leave the team with a debt of only about $325M, and while I don’t buy the Ganis estimate, I do think a value of about $1.1B might be reasonable. That would leave them with a pretty reasonable debt to equity.

        This doesn’t count the stadium though, which technically shows up on the Mets books only as an operating lease. They don’t actually owe any of the debt, or own the asset. The preferred treatment here though should really be a capital lease, and new accounting rules are likely to require this within the next couple of years. This would require adding about another $650M both as an asset and liability.

        So adding back the stadium, assuming a team value of $1.1B, would leave a debt to equity of about 0.56, still a bit high. MLB generally requires a ratio of 0.40, but has an exception for teams with recently built ballparks. I assume they include the stadium in their calculation.

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      • Eno Sarris says:

        Whoah Acers– how does the team alone get to $1.5b without the stadium or a possible media deal coming? Guess I missed that. Now that $1.5b seems like a stretch to me. How much of the Dodgers’ value was tied up in the stadium, real estate, and media deal? I think it’s a lot more than $500m.

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      • acerimusdux says:

        For the Dodgers, the stadium itself was built in 1962, so it doesn’t have huge value, it’s more comparable to Shea than to Citi Field. There’s a separate real estate parcel around the stadium, including some of the parking lots, but that wasn’t included in the $2.15B bid. Instead, the new owners are only getting a 50% share in that real estate, in a separate transaction for $150M.

        So the big difference really is the potential for a new cable deal. It’s hard to say what that difference is worth though, as I don’t think anyone really knows the details of the Mets current cable deal. It has been reported that the Mets annual broadcast revenues will go up to $83M in 2015. But I don’t know where it goes from there. Apparently they do have some kind of agreement that extends for at least 20 years, but I don’t think it’s ever been made public how much they will be paid.

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      • acerimusdux says:

        By the way, Forbes remember recently put the Mets value at only $719M. I think Forbes is a little low; it just seems their values historically swing a little too much with current results. Four years ago, they had them at over $900M, and I doubt the value has really fallen, not when other franchise values are clearly increasing.

        Yes, the Mets were pretty badly managed in that time, and manged to lose themselves some money as a result. But for most of the reasons already mentioned here, I don’t really think they’ve impaired their long term value much.

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    • Curtis says:

      Agree with caseyB on the Reyes contract. It wasn’t outrageous, especially considering how back-loaded it is, but it was well beyond reasonable.

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      • Curtis says:

        acerimusdux, shouldn’t the $240 million the minority stockholders invested be carried as a contingent liability? Essentially it represents convertible bonds with a 3% annual rate of return, unless I’m misunderstanding.

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  10. Ben says:

    Sorry, I don’t mean to discredit the article or work. It is very well done, I am just in full fledge baseball mode, and would like to read more articles about what is happening now. This piece, to me, seemed perfect for the off-season. I apologize if I offended anyone…

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    • caseyB says:

      In order to adequately assess a team’s current ranking, it should be done close to the start of the season so they can include in their analysis all trades, signings, injury trends and what not. If they did it last winter (say January), it would be largely out of date by now.

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    • placidity says:

      It’s still off-season for the 19 teams who have yet to show up on this list. So, perfect timing I’d say.

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    • Baltar says:

      Oh, because the A’s and Mariners have played a couple of games, it’s no longer the offseason?
      The timing for this series of articles was perfect except for the unforseeable $2.15B purchase of the Dodgers, which probably would have affected some of the voting.

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  11. Madoff Withurmoni says:

    “In the short term at least, there will be pain for Mets fans.”

    By short term, you mean ever since a ground ball went through a certain player’s legs 26 years ago? And if anyone points to the playoff appearances since, I answer: Mike Soscia, Kenny Rogers, the Yankees, and Adam Wainright’s curveball.

    I’ve never heard him referred to 3DPO before. I swear you just made that up.

    And I get it now. Sandy, the Marine, is torturing Met fans on purpose to see if we’re worthy. That’s why he didn’t even negotiate with Reyes.

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  12. Dunston says:

    With all due respect to Vinny Rottino, Jon Rauch was a bigger (and taller) free agency acquisition this year.

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  13. papasmurf says:

    At least the Mess seem to have a plan in place now, which is more than you could say when Minaya and Phillips was in place.

    If the Wilpons will sell the team, I would feel 100% positive about the team’s future even if they will stink for a few years.

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    • Curtis says:

      They never were going to sell unless forced, and now there’s no force. The Wilpons are right where they want to be, so why would they sell?

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  14. Ben Hall says:

    I think one of the baseball operations numbers is wrong. If they have a 54 rating, they would be ranked higher than 16th. Eno, could you check those?

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  15. Will H. says:

    Eno –

    Nice job – seems as fair an assessment as any could be. Just one thing you mentioned not to do with their ranking: you said that “the plan wasn’t based on paying over-slot on all picks in the draft, which is good because there is now a draft bonus cap.” I see what you are saying, in that if their success was largely dependent on said strategy into the future they’d be screwed, but that didn’t make it a good idea to ignore taking advantage when they still could. Rizzo, for example, made a whole lot of sense, in my opinion, when he talked about how — knowing the new CBA coming up would take away this strategy — that for the three years they could still over-slot in a big way they would do so very, very aggressively… and then change gears after that.

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