How to Cover Wall Street

Just before the previews started at a showing of Slumdog Millionaire on Saturday night, my ear caught the two 40-something guys behind my wife and I talking about Bernard Madoff’s giant Ponzi scheme.

“That makes like 10 people we know who were caught up in this,” said one of the guys.

As I pretended to listen to what my wife was saying I focused on their conversation – hoping to hear a name I might know.

“This is crazy,” the other guy said. “We’re talking billions of dollars. I talked to my mother today and she said some more friends of ours are caught up in this.”

These guys looked wealthy – as did their female companions. But it made me think about that in the small world of the ultra rich this must be like one of those small-town scandals when the preacher cheats on his wife or something. All these high-income people must be gossiping about who got hit. Who was duped? And who won’t be able to recover.

Then I read the WSJ story on scam and found out that none other than Mets owner Fred Wilpon (pictured below).

New York Mets owner Fred Wilpon, GMAC LLC Chairman J. Ezra Merkin and former Philadelphia Eagles owner Norman Braman were among the dozens of seemingly sophisticated investors who placed money on what could prove to be history’s largest financial scam…

Mets owner Mr. Wilpon, who also owns real-estate investor Sterling Equities, often raved about Mr. Madoff’s investment prowess and invested tens of millions of dollars of both his own money and the team’s with his company, say financiers who have worked with him. Mr. Madoff handled investments for the Judy & Fred Wilpon Family Foundation, which distributed about $1 million a year in 2005 and 2006 to charities, according to its most recent federal tax returns..

Mets spokesman Jay Horowitz declined to comment Friday. Mr. Wilpon’s Sterling Equities said in a statement: “We are shocked by recent events and, like all investors, will continue to monitor the situation.”

Then I read the New York Times story on Wilpon and Madoff and find out that they grew up in the same Brooklyn neighborhood. And that even reinforced the small-town feel this must have to upper-crust of New Yorkers.

The Times’ story also looked at how Wilpon’s losses, which included some of the team’s money, might affect the Mets. Wilpon’s total investments with Madoff wasn’t known but a big loss could hurt the team’s ability to afford the second-largest payroll in baseball and the recent signing of reliever Franscisco Rodriguez to a $37 million contract over three years.

For Wilpon and the Mets, this could be a tough season. They are moving into a new ballpark, Citi Field, that bares the name of troubled financial firm, Citigroup, at a time when the New York economy is already in a recession. And their division rival, the Philadelphia Phillies, are World Series champs (this is especially for Damian).

The Yankees bagged 28-year-old Sabathia this week with a seven-year, $161 million deal that includes an opt-out clause after three years. Combined with the $82.5 million spent on Burnett, that’s $243.5 million in five days.