Steve Cohen broke the agreement he signed to buy the New York Mets and it is now an open question whether he would be allowed to buy a team again, two sources said.
The hedge fund billionaire months ago signed a non-binding deal to buy the Mets, called a term sheet, in which Cohen would gain more than half of the team’s equity immediately but leave Fred Wilpon as the Mets control person for five years running the club, two sources said.
Major League Baseball recognizes a single control person for each team, and that person is expected to make all the decisions, sources said.
“There is no such thing as a fake control person. You can’t run things that way,” a source said.
Major League Baseball’s constitution says, “Each Major League Club shall have a Control Person who is accountable to Major League Baseball for the operation of the Club and for the Club’s compliance with the rules and regulations of Major League Baseball, and is the single individual with ultimate authority and responsibility for making all Club decisions.”
When he realized Wilpon was going to really be in control for five years while Cohen owned a majority of the team’s equity, Cohen got uncomfortable with the deal and worked on changing the terms.
“Steve thought he would be controlling the shots. He would be the power behind the throne. Baseball balked at that,” a source said.
He either did not understand what he signed in the term sheet, or thought that once he had the deal, he could significantly alter the terms, a source said.
Since he was buying a majority share in the franchise up front, sources say, Cohen was indeed operating under the assumption that he would have input on how the Mets were run, including front office and player personnel. It was made clear to the Wilpons going into the final lap that Cohen would not put pen to paper on any kind of binding agreement without language that granted him gradual control of the team in the five-year window.
“Why would anyone put up $2.6 billion and not have any say in the operations of the business he was buying?,” a source close to Cohen told The Post. “That doesn’t make any sense. Anyone who tells you any different isn’t credible.
“The governance issues always had to be worked out and they just never got there.”
As The Post reported Thursday, when both parties sat down to hammer out the final details on the five-year transition period, it became immediately apparent the Wilpons wanted Cohen to honor the broad terms of the agreement and pay more than a billion dollars for the right to wait and watch Jeff Wilpon run the franchise without any input from Cohen.
Things turned toxic from there. The timeline of the fallout is murky, with sources giving conflicting versions of which came first, but it is clear Cohen attempted to at least change the payment schedule of his $2.6 billion purchase over five years, proposing to dole out smaller sums up front. Some sources claim Cohen proposed lowering the total $2.6 billion sum.
It is also confirmed by multiple sources that the Wilpons moved to codify Jeff’s role within the Mets, demanding he stay on as COO for at least the five-year window. They also wanted language included that would give Jeff gradual but sizable pay raises every year for the five years and maintain the level of perks to which he had become accustomed as owner and COO.
Considering the Mets’ notoriously precarious financial picture, those demands were seen as outlandish.
Nevertheless, the Mets and MLB believe Cohen acted in bad faith, and that, coupled with his record as a controversial hedge fund manager who was suspended from managing outside money, means he may not get the support from owners to buy a team again.
“It would be in question,” a source close to the owners said.
The Mets and Cohen officially terminated their deal Thursday.
If it had gone forward, they would have signed a purchase and sale agreement and MLB would have started studying Cohen and his financials to see whether they would approve him as an owner.
“There could have still been approval issues,” the source close to the owners said.
The Mets are now planning to start a new sales process.
Cohen and the Mets both declined to comment, honoring what appears to be an ironclad nondisclosure agreement.