Wall Street’s GameStop saga costing Mets’ owner Steve Cohen

The New York Mets were spending big money this offseason under new owner Steve Cohen, but the Gamestop stock story might hamper that initiative.

Wall Street’s GameStop chaos has dominated the headlines over the past few days, with everyone trying to make sense of why the video game retailer’s stock has skyrocketed recently. 

If you’re not involved in Wall Street, but you’re a fan of the New York Mets, this stock market rally from GameStop may have a negative financial impact on the Mets and their coveted new owner, Steve Cohen.

Cohen, 64, who bought the Mets in November for about $2.4 billion, runs the hedge fund Point72. According to the New York Times, Point72 has lost roughly 15 percent this year. Point72 has a large investment in Melvin Capital Management, which had a large bet against GameStop. The Wall Street Journal is reporting Melvin Capital is down 30 percent.

The Times states Point72 was impacted by Wall Street’s disarray due to the fact Melvin Capital was investing money on Point72’s behalf.

Cohen and Ken Griffin, who is the founder of Citadel, are teaming up to invest $2.75 billion in Melvin Capital, bailing out its founder Gabe Plotkin, who started his career at Citadel and then worked for Cohen before starting Melvin Capital in 2014. Griffin is expected to put $2 billion in the deal while Cohen, who is worth roughly $14 billion, will add $750 million to the investment.

How does this affect the Mets?

On Tuesday, Cohen tweeted that this financial hit will not affect the Mets. However, for the Mets, this circumstance might trigger deja vu of Bernie Madoff’s Ponzi scheme that financially killed the Wilpons, the Mets’ former owners.

With the slew of millions of dollars the Wilpons lost from Madoff, they were forced to operate as a small-market team under Sandy Alderson. The good news for the Mets is Alderson is back as the Mets’ president of baseball operations after leaving the team in 2018.

Alderson put together a pennant-winning club in 2015 – anchored by the starting pitching staff –  operating with a small-market mindset. However, after the 2016 NL Wild Card Game, where the Mets lost 3-0 to the Giants at Citi Field, the Mets have been nothing short of a dumpster fire.

Since Cohen has bought the team, he has promised that the Mets will operate as a big market franchise again to help restore the team back to glory, though Cohen said they won’t spend like “drunken sailors.” 

The Mets made one of the first big(ish) moves off the offseason by signing catcher James McCann. Then they started off the new year in a big way by trading for shortstop Francisco Lindor and pitcher Carlos Carrasco.

Lindor, 27, a four-time All-Star, is in the last year of his contract. When the trade was made it was widely expected Lindor would re-sign for big money with the Mets and this wouldn’t be a Manny Machado Dodgers type of situation.

Yesterday, the Mets traded Steven Matz to the Blue Jays for three pitching prospects, freeing up $5.2 million in their quest to stay under the $210 million luxury-tax threshold. There are reports that the team is breaking out the checkbook for last year’s Cy-Young winner Trevor Bauer.

However, with reports that Bauer is seeking north of $30 million per year, could Cohen’s recent losses force the Mets to be outbid by the Angels or Dodgers for Bauer?

If a deal falls into place for the Mets they’ll pull the trigger, but if Bauer is commanding an annual average salary adjacent to Gerrit Cole ($36 million), the Mets may say no thanks and roll the dice with a strong starting rotation led by DeGrom, Stroman, Carrasco and Syndergaard when he comes back from Tommy John surgery.

If Bauer does come to Flushing, how will that impact negotiations with Lindor? With the Mets’ goal to stay under a $210 million payroll, is that goal more vital now after the stockmarket’s turmoil?

Maybe the $5 million from the Matz trade frees up money the Mets can use to sign Jackie Bradley Jr. to help close the Mets’ hole in center field after the team lost out on George Springer – who signed with the Blue Jays for about $30 million more than what the Mets’ reported offer was.

With Michael Conforto, Noah Syndergaard and Marcus Stroman headlining the 2021-22 free-agent class, re-signing those three along with Lindor and potentially Bauer seems unlikely, even before Cohen’s investment.

Will Cohen’s bail-out affect the Mets to the extent of the Wilpons? No. He’s still one, if not the wealthiest owner in baseball. However, $750 million isn’t pocket change to anybody and it’s worth noting how Wall Street’s GameStop saga can potentially impact the Mets moving forward.