Steven A. Cohen, Founder and CEO of SAC Capital.
Rhonda Churchill | Bloomberg | Getty Images
Major League Baseball just couldn’t help itself. It needed to be a part of this week’s sports action that commenced on Sunday night after the Kansas City Chiefs won their first Super Bowl in 50 years.
On Tuesday evening, baseball fans took to social media to chatter about the first of two significant moves this offseason.
The first bit of MLB news dropped when CNBC’s David Faber confirmed a New York Post story that billionaire Steve Cohen backed out a $2.6 billion deal to purchase a majority stake in the Mets from the Wilpon family.
According to the Post’s report, Fred Wilpon, chairman and co-founder of Sterling, wanted to include additional language in the transaction that would give the family, including his son Jeff, who serves as current Mets COO, more years running the team. Fred Wilpon would stay on as CEO, past the original five-year agreement that was reported when the sale was first revealed last December.
Also, Wilpon would serve as control person for the Mets, which calls for Wilpon to be accountable to the MLB for the operation of the Mets and to ensure the team is complying with league rules. The deal also included unfavorable language when it came to the Mets’ regional sports network, SNY.
After changes to the deal, Cohen decided against the move to purchase 80% of the franchise. Both parties could not comment due to a non-disclosure agreement, the Mets said in a statement.
If Cohen’s deal to purchase the Mets is dead, it would be yet another blow to a franchise that recently cut ties with manager Carlos Beltran, in the wake of the Houston Astros electric sign-stealing scandal. The team replaced Beltran with Luis Rojas.
The Astros’ investigation officially ended last month, and also saw the removal of Boston Red Sox manager Alex Cora.
Red Sox trim payroll with megadeal
And speaking of the Red Sox, the team added to baseball’s wild night when it shipped franchise superstar Mookie Betts and pitcher David Price to the Los Angeles Dodgers as part of a three-team deal that involved the Minnesota Twins, according to the Boston Globe.
Betts, the 2018 American League MVP and four-time All-Star, just settled on a $27 million deal with the Red Sox last month to avoid arbitration, while Price will be entering the fifth of a seven-year, $217 million contract he signed in 2016.
Once the blockbuster deal becomes official pending medical records, the Red Sox will receive outfielder Alex Verdugo, while the Twins will ship right-handed pitcher Brusdar Graterol to the Red Sox and get back pitcher Kenta Maeda from the Dodgers.
While the move gives the Dodgers the edge as favorites to advance to the World Series, the Red Sox eliminate salary to avoid paying a Competitive Balance Tax – the MLB’s version of a luxury tax.
According to league rules, if a club exceeds the tax — which will be $208 million for the 2020 season, a $2 million increase from last year — first-time offenders are charged 20% for every dollar over. That number increases to 30% for second-time offenders and 50% if teams exceed the tax for three or more seasons.
Also, teams that are $20 million to $40 million over the luxury tax would pay a 12% surtax. If payrolls exceed $40 million, a 42.5% surtax is applied for the first offense, while a 45% hit will occur for additional years operating $40 million above the cap.
Last season, the Red Sox had MLB’s highest payroll at roughly $229 million and nearly $240 million for the 2018 season. With Betts and Price out the door, the team’s payroll now drops to $178 million, according to Spotrac; hence, the Red Sox are out of the luxury tax.
Rockets spark NBA trade deadline week
And luxury tax bills are contributing to the National Basketball Association roster moves, too.
The Houston Rockets finally made a move, shipping center Clint Capela to the Atlanta Hawks as part of a four-team deal that included 12 players, according to various reports.
In the transaction, which included the Denver Nuggets and Minnesota Timberwolves, the Rockets get back small forward Robert Covington and big man Jordan Bell. Meanwhile, the Hawks receive Capela, who is in the second of a five-year, $90 million deal he signed in 2018, and center Nene Hilario.
The Timberwolves received guard Malik Beasley, forward Juan Hernangomez from the Nuggets, who took on the contracts of Shabazz Napier, Gerald Green, and forwards Noah Vonleh and Keita Bates-Diop. The Timberwolves also landed Evan Turner from the Hawks and Jarred Vanderbilt from the Nuggets.
And the Rockets are still working the phones ahead of Thursday’s NBA trade deadline. General manager Daryl Morey has been granted the freedom to improve the team with no financial restrictions from Rockets owner Tilman Fertitta, who is said to be upset at the team’s current fifth-place standing in the Western Conference.
Earlier this week, CNBC reported Fertitta was looking to shed salary to avoid luxury tax penalties, based on conversations with rival league executives. Rockets officials refuted that notion, adding Fertitta is dedicated to winning now with superstars James Harden and Russell Westbrook on the roster.