World Series 2015: New York Mets' Championship Run Could End Payroll Restrictions

The New York Mets’ return to the World Series on Tuesday isn’t just an overdue relief to their long-suffering fan base. It could signal the end to the financial woes the team has endured ever since owner Fred Wilpon lost millions in Bernie Madoff’s Ponzi scheme. With a unexpected windfall generated by their championship run, the Mets will no longer have to operate on a small-town budget in a big-city market.

The 2015 season proved to be the culmination of general manager Sandy Alderson’s patient, often-painfully deliberate approach to rebuilding a sagging franchise with a limited budget. The Mets planned to rely on a homegrown group of dominant young pitchers like Jacob deGrom and key veterans like David Wright to remain competitive with a middling $100 million payroll, but still expected to operate at a loss of about $10 million for the year. Instead, the team caught fire in the season’s second half, won their division and ran roughshod over the National League en route to a clash with the Kansas City Royals in the World Series, which starts tonight in Kansas City.

The Mets are expected to earn an extra $45 million in revenue thanks to their championship run, with attendance projected to increase from 2.6 million this season to 3.1 million in 2016, the New York Post reported. The surprise windfall should make it much easier for Wilpon and fellow owner Saul Katz to pay the estimated $60 million they still owe victims of Madoff’s scheme who sued to recover losses. And the increased season-ticket sales and new sponsors brought on by the Mets’ World Series berth will allow ownership to significantly increase payroll for the first time since 2008 – a crucial development as playoff heroes Daniel Murphy and Yoenis Cespedes enter free agency.

“Now that the team itself is back in the black, it can be operated a little bit more like a regular baseball team, where you’re taking revenue from the money you’re making and putting a portion of it back into the team,” said Robert Boland, a professor of sports administration at Ohio University.

New York baseball fans have rarely seen their hometown teams limited by budgetary concerns. Even in lean years, the New York Yankees’ payroll typically ranks among the top five teams in the league, surpassing $200 million in 2015. Historically, the Mets were never far behind, with top five Opening Day payrolls every year from 2003 to 2011.

But several factors – some avoidable, some unforeseeable – led the Mets to experience financial problems in the late 2000s. Underperforming, overpaid veterans like left-fielder Jason Bay bloated the team’s payroll, while sagging on-field performance caused attendance to plummet just as the franchise opened its new and expensive stadium, Citi Field, in 2009.

The team’s debt ballooned to an estimated $625 million, in the form of annual bond payments for Citi Field, deferred compensation to ex-players and outstanding loans to banks and Major League Baseball, according to Fortune. The Mets operated at a $70 million loss in 2011, which all but crippled ownership’s ability to sign better players.

Mets ownership’s involvement in Madoff’s Ponzi scheme only compounded the team’s financial struggles. Wilpon and Katz agreed to repay victims of the scheme after a trustee accused them of being aware of Madoff's illegal activity. Operating under budget limits that cut payroll down to roughly $100 million, the Mets endured six consecutive losing seasons from 2009 through 2014.

That all changed in 2015, when Alderson’s long-term plan to rebuild the Mets came to fruition. Young starting pitchers like deGrom, Matt Harvey and Noah Syndergaard combined to earn less than $3 million this season while shutting down opposes lineups, while cost-effective veterans like Murphy, outfielder Curtis Granderson and first baseman Lucas Duda carried the offense. Sensing an opportunity, Alderson acquired Cespedes at the trade deadline last July. The Cuban export’s 22 home runs and 54 RBI’s fueled the Mets’ race toward the postseason and generated some most valuable player buzz.

Mets fans responded to the on-field success by turning out to Citi Field in droves, especially during the playoffs. Attendance jumped by more than 400,000 in 2015, and that number will only rise now that New York is back in the World Series.

“The fans scramble for seats in October and they’re not pleased with the secondary market pricing or the seat availability,” said Vince Gennaro, president of the Society of American Baseball Research and a consultant for multiple MLB teams. “That tends to trigger a very healthy increase in season ticket sales for the following year.”

Ticket sales and prices will jump by “at least 10 percent each,” said Victor Matheson, a sports economist at the College of the Holy Cross in Worcester, Massachusetts.

“If you put those together, that means you could easily have a 25 percent bump in revenues next year, especially if you’re a team that had any spare capacity to begin with,” Matheson added.

The Royals experienced a similar financial boost after reaching the World Series last season. Team revenue jumped 30 percent, from $178 million in 2014 to an estimated $231 million this year, according to Forbes.

The Mets will lose about a third of their financial windfall to Major League Baseball’s revenue-sharing model. But increased revenue through ticket sales, team sponsors and viewership on regional sports network SNY, in which the team has a majority stake, will allow for increased payroll. The team uses its $65 million annual income from SNY to cover its $44 annual Citi Field bond payment, but a championship appearance could push that income figure slightly higher.

“They’ll certainly spend more – though probably will not be so foolish as to duplicate the [Los Angeles Dodgers’ $300 million payroll] or Yankees' spending habits,” said Stephen Walters, a professor of economics at Loyola University in Maryland. “I’d expect a return to those $150 million-$160 million levels.”

Alderson will need to make use of that newfound financial flexibility soon enough. Cespedes is expected to command up to $20 million per season on the free agent market this offseason, while Murphy will have plenty of suitors after his record-setting offensive tear this postseason. The Mets’ young arms are still a few years away from free agency, but deGrom, Harvey, Syndergaard and young lefty Stephen Matz are all in line for lucrative contract extensions if they continue their current level of production.

The Wilpons still have to pay Madoff victims $60 million, split between two payments in 2016 and 2017, though that number could fall as low as $29 million based on how the lawsuit progresses, Fortune reported. With those payments looming, ownership may still be wary of increased expenses.

“There’s going to be more resources, financially. What they do with that is a different question,” said Gennaro.

Fans will have to wait for the offseason to know whether the Wilpons are ready to return to their freewheeling ways. The Mets still have a World Series to play and a three-decade championship drought to end.