The Motivation Behind The Wealthiest Owner In Baseball

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Friends,

I had something else teed up for today, but then Steve Cohen entered the chat.

In case you missed it, the hedge fund titan has signed an agreement to purchase a 95% controlling interest in the New York Mets, at a US professional sports franchise record $2.475 billion valuation.

When it comes to Steve Cohen personally, we could spend days talking through his upbringing, success in financial markets, legal investigations, current investments, and more.

I’ll do that in the coming weeks, but for today, let’s stick to what the record sale means for Cohen, the Mets, and baseball in general.

The Deal

The deal shouldn’t be shocking to anyone - Steve Cohen entered into exclusive negotiations to buy the Mets last year, only to have the offer fall apart in February.

But let’s not be naive.

When the Mets broke off previous negotiations, and opened the bidding to other parties, Cohen was always going to have the best offer when it came to a valuation perspective.

Cohen is wealthy, like really wealthy.

According to Forbes, Steve Cohen is the 36th wealthiest man in America - with a $14.5 billion net worth.

For context, here were the 5 wealthiest owners in US professional sports prior to Cohen purchasing the Mets (Source):

• Steve Balmer (LA Clippers) - $69 Billion Net Worth

• Dietrich Mateschitz (NY Red Bulls) - $16.5 Billion Net Worth

• Hasso Plattner & Family (San Jose Sharks) - $12.4 Billion Net Worth

• David Tepper (Carolina Panthers) - $12 Billion Net Worth

• Philip Anschutz (LA Kings & Galaxy) - $11 Billion Net Worth

Now that we’ve established his financial ability to buy the team, how about some motivation?

Steve Cohen grew up on Long Island, New York. He’s been a Mets fan his entire life, loves sports, and already owned a 8% stake in the team. If the team was going up for sale, and Steve Cohen wanted it, he was always going to buy it.

Which is exactly what he did, delivering current Mets ownership $2.35 billion in cash (95% of team) to make his childhood dream of owning the Mets come true.

Closing The Deal

Steve Cohen still has one final hurdle to clear. Cohen needs ownership approval from 23 of the 30 MLB owners to officially take over the team.

But will his previous insider trading scandal, and subsequent record $1.8 billion fine, put ownership approval in jeopardy?

In my opinion, there’s not a chance that happens.

Sure, some MLB owners might not want Cohen in the league, whether they admit it or not. Cohen is going to spend on players, that much is obvious, and some owners might not think it’s great from a franchise cash flow perspective.

But ultimately, the benefit of Cohen buying the Mets at a record price, and subsequently increasing the valuation of all other MLB teams, is what will get the deal done.

Here’s a list of current valuations for all MLB teams (Source):

1. New York Yankees, $5 billion

2. Los Angeles Dodgers, $3.4 billion

3. Boston Red Sox, $3.3 billion

4. Chicago Cubs, $3.2 billion

5. San Francisco Giants, $3.1 billion

6. New York Mets, $2.4 billion

7. St. Louis Cardinals, $2.2 billion

8. Philadelphia Phillies, $2.0 billion

9. Los Angeles Angels, $1.975 billion

10. Washington Nationals, $1.9 billion

11. Houston Astros, $1.85 billion

12. Atlanta Braves, $1.8 billion

13. Texas Rangers, $1.75 billion

14. Chicago White Sox, $1.65 billion

15. Toronto Blue Jays, $1.625 billion

16. Seattle Mariners, $1.6 billion

17. San Diego Padres, $1.45 billion

18. Baltimore Orioles, $1.4 billion

19. Minnesota Twins, $1.3 billion

20. Arizona Diamondbacks, $1.29 billion

21. Colorado Rockies, $1.275 billion

22. Pittsburgh Pirates, $1.26 billion

23. Detroit Tigers, $1.25 billion

24. Milwaukee Brewers, $1.2 billion

25. Cleveland Indians, $1.15 billion

26. Oakland Athletics, $1.1 billion

27. Cincinnati Reds, $1.075 billion

28. Tampa Bay Rays, $1.05 billion

29. Kansas City Royals, $1.025 billion

30. Miami Marlins, $980 million

Competitive Advantage

Outside of a new management structure, Steve Cohen offers Mets fans a significant competitive advantage - the ability to outspend any team in the league.

If the deal is approved, Cohen instantly becomes the wealthiest owner in MLB. His $14.5 billion net worth will be more than double the net worth of any other owner.

In addition to having the money, the MLB doesn’t have a salary cap, Cohen is super competitive and he’s emotionally incentivized as a lifelong Mets fan. That’s a dangerous combination.

In a league where almost half the teams don’t financially commit to seriously attempting to win the World Series, the Mets will be at an advantage with an owner like Cohen.

For instance, take a look at the 2019 opening day payrolls for all 30 MLB teams. The Mets went into the season spending the 9th most money, a respectable $168M, but will be expected to move within the top 5 in coming years.

Outside of that, 15 of the 30 MLB teams didn’t spend enough to cross the $150M threshold (Source).

Ultimately, the addition of Steve Cohen to the MLB ownership ranks should be a welcome sight for all baseball fans.

He’ll spend more money, potentially hurting your team in the long run, but over time his deep pockets and incentivized interest in team valuations will be a welcome addition to the league - both competitively and financially.

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Extra Credit

If you’re a Mets fan, or just want to read more about Cohen’s background in finance, I highly recommend reading the book “Black Edge”.

Black Edge details the career of Steve Cohen, “one of the greatest traders who ever lived”, and his hedge fund SAC Capital, which became the target of a seven-year government investigation (Source).

Amazon link here.

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