Baseball Is Said to End Large Loans to Mets

The Mets, in need of cash to pay off loans and meet other financial obligations, can no longer look to Major League Baseball for substantial monetary assistance, according to two people briefed on the team’s finances.

The league, having already extended the Mets a $25 million loan in November to help the team meet operating costs, will not make another major loan to the club, according to the two people. The people would not be identified because they were not authorized to speak publicly on the matter.

Baseball’s decision to restrict the Mets’ access to further emergency funds probably leaves the team’s beleaguered owners, Fred Wilpon and Saul Katz, without their best remaining source of cash as they struggle to maintain control of the team in the face of a $1 billion lawsuit brought by the trustee for victims of the Bernard L. Madoff fraud.

Mets officials did not respond to two requests for comment.

The two people briefed on the situation said baseball could conceivably re-evaluate its position in the coming months if it thought it needed to protect its larger interests, like trying to avoid a fire sale of one of its elite clubs. In addition, with opening day a month away, baseball could make a modest short-term loan to help the Mets avoid defaulting on certain payments, like player salaries. But it would not be enough to rescue the Mets’ owners in any long-term sense, the people suggested.

“It’s tapped out,” one of the people briefed on the situation said, referring to the availability of more money.

After months spent denying they faced any financial difficulties, the Mets, with significant debt on their team and cable television operation, announced in January that they were seeking to sell 25 percent of the team, valued by Forbes magazine last year at $858 million. They recently acknowledged they would consider selling a larger stake but maintained they would never sell a controlling interest.

The Mets say the sale offering is because of the “uncertainties” surrounding the lawsuit filed by the Madoff trustee, Irving H. Picard. The lawsuit, filed in December, accuses the owners of having turned a blind eye to the possibility Madoff was operating a fraud, all while they invested ever more of their money and reaped ever more of his “fictitious” profits.

The judge overseeing the suit has chosen Mario M. Cuomo, the former New York governor, to try to serve as a mediator in settlement talks.

But the Mets appear to be under significant financial duress independent of the lawsuit. The $25 million loan, which was made after the Mets had already used up an M.L.B.-sponsored line of credit worth tens of millions of dollars, was extended to the Mets before the lawsuit was filed. Some in the industry see the loan as an indication that because of their heavy indebtedness, they are no longer able to borrow substantially from traditional commercial lending institutions.

With pressure mounting, and the financial pipeline from M.L.B. shut off in any meaningful way, the Mets’ ability to keep creditors at bay could hasten the sale of a portion of the team as they seek cash. The Mets, of course, would love to get the best price for the piece of the club, but the process takes time as potential buyers must be vetted first by the club’s representative in the sale, Steve Greenberg, and then Major League Baseball.

Baseball recently intervened to try to shore up another franchise, the Texas Rangers. In June 2009, soon after Texas’ holding company defaulted on $525 million in loans, Major League Baseball provided the club with a $15 million line of credit. Then, in November 2009, baseball again used its $1.2 billion credit facility to let the Rangers borrow up to $10 million more.

The Rangers had apparently used $18.5 million of the $25 million by the time they filed for bankruptcy protection last May. Several days after the filing, baseball agreed to provide the team with another $21 million loan. When the loans became public, the owners of several other teams complained that the loans gave the Rangers a competitive advantage, particularly when the team traded for the ace pitcher Cliff Lee.

In subsequent court testimony, Kellie Fischer, the Rangers’ chief financial officer, said that the team’s lending relationship with baseball “works for us.”

Fischer testified: “We’ve never had any issues with borrowing money as far as getting funded timely and providing information back and forth. M.L.B. has been very easy for us to work with.”

But the loans and working relationship notwithstanding, the Rangers’ owner, Tom Hicks, was still forced to sell. The team was sold for $593 million last August, and the loans were repaid.