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Archive for Wednesday, August 7, 2002

Mets owner accuses Selig of ‘phantom losses’

August 7, 2002

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— A co-owner of the New York Mets accused baseball commissioner Bud Selig of conspiring with a former Arthur Andersen accountant to "manufacture phantom operating losses" in the sport's books.

Nelson Doubleday, in papers filed Tuesday in federal court in New York, said the commissioner's office was "in cahoots" with Fred Wilpon, his co-owner, to put an artificially low value on the team. Wilpon is attempting to buy out Doubleday under the provisions of an agreement they made when they bought the team in 1986.

"MLB orchestrated a sham process that not only mistreated Doubleday and betrayed his trust; it actively favored Wilpon and engineered a result that served MLB's other and conflicting interests," Doubleday's lawyers said.

Last month, the 14 former limited partners of the Montreal Expos sued Selig under federal racketeering laws, claiming he conspired to dilute their investments.

Selig isn't a defendant in the Doubleday suit, but he was accused of trying to inflate losses as part of his strategy in labor talks with the players' association. Selig claims the 30 teams had $232 million in operating losses last year and that the sport needs widespread changes in its next contract.

Bob DuPuy, baseball's chief operating officer, called Doubleday's accusations "nonsense and a complete fabrication."

Wilpon sued Doubleday last month to force him to accept a buyout based on a $391 million evaluation made in April by Robert Starkey, a former Arthur Andersen partner who left in 1999 to form his own company, one that is a consultant to major league baseball.

Selig did not return a telephone call seeking comment, and Starkey refused comment.

Wilpon spokesman Richard Auletta called Doubleday's accusations "unfounded" and "irresponsible."

"He and his lawyers and financial advisers actively participated in every step of the process with full knowledge of the appraiser's relationship with major league baseball," Auletta said.

"Because he didn't like the results of the appraisal, he suddenly decided that he would not fulfill his legal obligations under the terms of the binding agreement."

The suit accused Starkey of not disclosing to Doubleday the extent of his work for baseball and of not disclosing until March the scope of work done on the appraisal by Dean Polenz, then of Arthur Andersen. DuPuy and Auletta denied that.

The papers referred to a March 7 letter to baseball owners from Selig saying baseball would start to enforce its 60-40 rule, which requires each team to have at least 60 percent of its value in assets and no more than 40 percent in liabilities.

Doubleday said Starkey worked with Selig and baseball labor lawyer Rob Manfred on the letter, which said a team's value would be set at twice its 2001 revenue.

In 2001, the Mets had revenue of $182 million. Under the method outlined in the letter, the Boston Red Sox would be evaluated at $321 million, less than half the $660 million the team was sold for this year, and the Expos would be valued at $68 million, nearly half of the $120 million the other 29 clubs paid to purchase the Expos this year.

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