According to a source close to the negotiations, Einhorn is structuring the deal so that he is in effect assuming the $100 million in debt as a protection in the event of a judgment against the Mets' owners in the hotly contested Madoff litigation. His investment, therefore, would not be subject to a claim of assets by the bankruptcy trustee, Irving Picard, although if the Wilpons do end up with a favorable ruling in the Picard case, Einhorn's $100million in debt will then become equity. The other $100 million is expected to go toward repaying a $25 million loan to Major League Baseball and to cover an estimated $70 million in operating losses for the team this year, which will allow the Mets to restructure debt to help cover operating costs.
"If this had been an ordinary transaction (Einhorn) would have merely written the Wilpons a check for $200 million," a source familiar with the terms of the deal told the Daily News. "But as we all know, it's not a normal situation. The Madoff thing is hanging out there and (Einhorn) had to be protected."
If Einhorn does exercise his option to increase his investment to a majority share - believed to come into effect in about five years unless a Madoff judgment would come sooner - Wilpon and Katz can block him and retain control of the team they have owned for three-plus decades by buying out Einhorn, at which point his one-third percentage in the team would be decreased by nearly half, or about 16%-17%. The source described the buyout as being at "an unfavorable price to the Wilpons and Katz (conceivably close to the $200 million investment)."
