As a native New Yorker and a Mets fan, I instantly found this New York Times article intriguing. Since the time the Mets announced their financial issues I have been reading articles like these, however it’s quite interesting to look at this for a more economic and financial standpoint.
Basically, The New York Mets owners Fred Wilpon and Saul Katz are in an extremely poor financial standing. Wilpon and Katz invested money with Bernard L. Madoff, and due to his fraud are now also in poor standing. At this point the owners are trying to keep control of the Mets despite the one billion dollar lawsuit, because of speculation that they knew something about the Madoff scam.
One important economics concept is the concept of the business cycle discussed in chapter twenty-two. In our country we run on a cycle that is almost like seasons for our economy. There are four stages in this cycle. Peaks, where the economy is at its best. Then there is the contraction phase, where the economy is decreasing in worth. Then there are troughs, where the economy is at a low point. Lastly there is the expansionary phase where the economy is growing. The business cycle lasts peak to peak and can last anywhere from two to ten years. Right about now, the New York Mets are feeling the bouts of the contraction and trough phase of our business cycle. Much of the country is in a recession; a recession is just a decrease in the GDP for two or more quarters. By GDP is meant, Gross Domestic Product and that is measured by the following formula, consumption + investment + government purchases+ net exports= GDP. Basically this is just the money we are making on the home front.
Another concept is the idea of loans and investments. What Wilpon and Katz did back in the day was take a chunk of their money and invested it with Madoff. Madoff is now in jail because of his shady business behavior. How investments work, are you taking a certain sum of money and then you receive interest on that sum of money. The interest is determined by the interest rate, which varies depending on factors such as maturity, the risk factor, tax status, and other attributes of the loan.
Another place this idea of loans comes full circle in the “25 Million Dollar loan in November” extended from Major League Baseball. I saw this as almost a similar concept to the Federal Reserve System. In this system the federal bank watches over, and will help if necessary all the banks in its 12 regions. In a way Major League Baseball is comparable to the Federal Reserve Bank because they are watching over the teams in their league and helping them when necessary. Back in June, Major League Baseball helped the Texas Rangers with a somewhat similar crisis. In the article is argued that MLB will probably not extend anymore money to The Mets. The Mets are now looking to sell their team and want to receive the best price, however it will prove challenging to do this when they cannot borrow from traditional lenders and are in such a poor economic standpoint.
In conclusion although the standing of my favorite team is poor right now, I like to hope that like the business cycle their economic standing takes a turn for the better!
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