The National League Division Series begins in Los Angeles, and the New York Mets’ pitcher Jaob deGrom will take the mound for the first game. This Mets team is the best in roughly a decade, and has the most homegrown talent of any team in the Major League Baseball playoffs. While the players, coaches, and owners will likely thank good training, teamwork, and naturally endowed athleticism for their success, they should also thank an unlikely name: Bernie Madoff.
The Mets suffered losses at the hands of the Ponzi schemer and fans may be furious at the notion that his actions benefited their team, but it’s the truth. While Madoff cost the team big bucks and caused lawsuits, the end result forced the team to, “abandon their penchant for high-priced superstars in favor of cheap, young talent,” which may be the biggest factor in their success. In fact, spectators have used, “the front-office austerity to explain why the Mets hadn’t won very much,” at the start of the season.
Steve Kettmann, the author of, “Baseball Maverick: How Sandy Alderson Revolutionized Baseball and Revived the Mets,” explained, “The Mets wouldn’t have done it if they weren’t forced to do it. The Bernie Madoff scandal was, in the end, probably a net positive for the Mets.”
Before the scheme was revealed and news broke, the Mets believed they had $500 million in accounts with Madoff—who was a season ticket holder at the time. The Mets also had loans with institutions and unknowingly used those fake funds as collateral. To repair the damage, Bud Selig, who was the acting baseball commissioner, pushed the Mets’ owner Fred Wilpon to hire Sandy Alderson. Wilpon took the advice and hired Alderson, and promised to let him run the team free from interference from its owners.
Alderson cut players’ salaries almost immediately. The team had been spending $127 million on salaries and was the sixth highest paying team in the league. In 2014, that number was reduced to $85 million and their rank fell to 25th in MLB. This year’s payroll of $101 million is lower than 20 of the 30 MLB teams. In fact, the Met’s playoff starting pitchers—DeGrom, Snydergaard, and Harvey—are underpaid by baseball standards. The three were paid a combined $1.6 million this season and will start by facing a Dodgers trio of pitchers that earned a combined $68 million.
The budget cuts forced the team to change the way it prepared and played the game. Peter J. Schwartz, who specializes in sports team valuations explains, “It forced them to evaluate player talent differently.” Overall, the Met’s newfound commitment to prospects—not stars—is important and remarkable. “While the Mets managed to survive and thrive in the aftermath of the Madoff scandal, the team is still paying off a $162 million settlement over profits it had collected with Madoff.”
While the Mets still have lingering problems from Madoff—like that Bobby Bonilla contract buyout—the new and improved management is clearly paying off. If anything, the Mets are an example of how shrewd and practical money management can help repair terrible financial decisions. If you’re looking for help in solving your own financial woes, contact an advisor at Apex Financial Advisors today!