New York Mets Owners Gained Unfair Advantage from Bernie Madoff

The owners of the New York Mets, Fred Wilpon and Saul Katz, invested heavily in Bernie Madoff's massive ponzi scheme fraud. Those "investments" gave the Mets owners unfair advantages over their competitors using other people's life savings.

How Mets Owners Gained Unfair Advantage from Bernie Madoff

Here is what the Mets did. They took their cash flow from operations and invested that money with Bernie Madoff.

If the Mets had $100 million dollars of yearly cash flow, money they had taken in but did not yet have to pay out (including deferred payments to players and employees), they gave that money to Madoff and earned around 18% yearly in fictitious returns. That's $18 million a year. Now compare that to other teams in baseball.

Let's be generous and say other teams earned 5% on a yearly basis on their cash flow over the same time frame. If they also had $100 million in cash flow, they would make $5 million a year. That gave the Mets a $13 million dollar advantage over other teams in baseball.

Mets More Free Cash Flow for Baseball Operations then Other Teams Thanks to Bernie Madoff

That's $13 million more a year the Mets had to spend on free agents, improve their farm system and pay prospects, and hire front office people than their competitors had. Money the Mets also used to build a new ballpark, Citi Field in Flushing Meadows, New York.

How Fred Wilpon and Saul Katz Benefited with Their Real Estate Holdings

The Mets owners, Wilpon and Katz, also own real estate assets. Again let's say they had $100 million in yearly cash flow from their real estate ventures. They "invested" that cash flow with Madoff and "earned" $18 million a year in returns.

I own a small commercial building in the New York area. I keep my cash flow in a liquid bank account where I've earned minimal returns over the years. Maybe 2% annually. If I had $100 million in cash flow and earned $2 million in interest, the Mets owners would be $16 million ahead of me in terms of yearly earning power.

That is a huge difference. The Mets owners could use that extra $16 million to undercut me in rents, to make renovations and repairs I cannot afford, and to use that money to buy up more properties I cannot compete with. Bernie Madoff's fictitious returns to the Mets owners gave them unfair advantages over their competitors.

Mets Owners Gained Advantage Using Other People's Money

And all of that $16 million dollars was someone else's money. The Mets owners were using other people's life savings to gain an unfair advantage over their competitors. They claim they didn't know the money was someone else's. So what. What difference does that make? Once you find out you were using other people's life savings to unfairly gain advantage over your competitors what do you do?

Just Return the Stolen Money

If you are decent and honorable people you return that money to its rightful owners as soon as you can. If that means liquidating your assets, including selling the Mets, so be it. That is what decent and honorable people would do. It's not what the Mets owners are doing.

They keep crying they are victims here too. No they are not. They gained unfair advantage over their competitors for over 20 years by using other people's life savings as if it was their own money.

Over $10 Billion Madoff Ponzi Money Already Returned

Many other people who "invested" with Bernie Madoff have returned their ill-gotten gains. Barbara Picower, the widow of Jeffry Picower, who benefited massively from Madoff's ponzi scheme, has already returned $7.2 billion dollars to trustee Irving Picard and federal authorities.

Carl Shapiro, a Boston philanthropist who also greatly benefited from Madoff's ponzi scheme, returned $625 million in fictitious profits.

Other beneficiaries have returned roughly another $2.2 billion, bringing the total money returned so far by those who benefited from the ponzi scheme to $10 billion dollars.

Mets Owners Wilpon and Katz Have Returned Nothing

The New York Mets owners have returned nothing to date. They have been sued by Irving Picard on behalf of Madoff's victims for as much as $1 billion dollars.

Mets Owners Not Victims

Fred Wilpon and Saul Katz continue to claim in court they were victims, but they clearly benefited by using fictitious inflated returns from Bernie Madoff that were generated from other people's life savings for over 20 years.

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