First off, ignore all the the articles you’re reading today saying that Fred Wilpon actually made money from their relationship with Bernie Madoff. Technically, he did — records show that the family deposited a total of $523 million, and withdrew $571. So leaving it at that, they actually turned a $48 million profit.
But that’s nonsense. Imagine if you had a significant portion of your life savings in a bank, and the bank called you one day and said it was all gone. Think about what that would do to your day-to-day spending, your retirement, etc. Wilpon is lucky to have taken out as much as he did, but it’s still more than likely that he lost a ton here.
So the question remains, how much? This filing that came out could actually give us some hints. I’m not sure what Madoff charged in fees, but let’s say it was 2 and 20 (2% of assets, 20% of gains). Let’s try to come up with a high-end estimate. We’ll also assume 12% returns every year, which is what Madoff was so famous for faux-delivering. If Wilpon put his money in twenty years ago, and left it in until the day before Madoff was arrested, he would have had $2.26 billion invested. Subtract the $571M that we know he withdrew, and you get $1.69 billion. Think of this as an absolute cap; it would have been almost impossible for Wilpon to have lost more than that number.
Now let’s come up with an absolute low-end figure. Assume Wilpon put the money in ten years ago, and the returns were only 10% per year. We’ll also assume to withdrew the $571 million equally over that ten-year period. In that case, he would have lost about $170 million.
If we split the difference, we get about $900 million. The original press reports had it at about $700 million, so I’m willing to guess it’s somewhere between those numbers.
Whatever the number, it’s a devastating loss, and it’s a pretty good bet that the Mets now account for a significant majority of Wilpon’s net worth. And the fact that he made a paper profit off of it may end up costing him even more money, since part of those “earnings” will likely be clawed back and spread around to the other victims. Whether he’ll eventually have to sell part of the team is anybody’s guess. But it definitely wouldn’t shock me.
Feedback? Write a comment, or e-mail the author at shawn(AT)squawkingbaseball.com