Dallas Mavericks owner Mark Cuban speaks his mind on Twitter, hopping between subjects, whether it is his disdain for his home state senator Ted Cruz or the financial issue of the day. As a major league sports team owner, he had largely been alone in this profile, with his peers not eager to mix it up. That was until last week’s tulipian GameStop phenomenon infiltrated sports and sent a familiar shudder through New York Mets fans.
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By now, one would have to be living in a cave not to have heard of the brick and mortar mall staple GameStop that counterintuitively has seen its stock surge to absurd levels, doubling and tripling a day at times last week. Investors on Reddit forums have banded together to attack hedge funds that make bets on stocks to fall, and GameStop — for a legitimate business reason — is a top target (video games are largely played online, so GameStop’s business of selling physical games appears outdated).
So how did the GameStop flame shake up sports? Here are the key players, including the billionaire Mets owner, a New York sports media personality who once starred in the NFL, and someone who may run for governor in the nation’s largest state.
Gabe Plotkin, founder Melvin Capital, minority owner Charlotte Hornets
It is Plotkin’s Melvin that appeared to have taken the biggest bath on GameStop, having heavily shorted the stock to the point he needed nearly $3 billion of capital from two rivals, including Steve Cohen’s Point72. Plotkin, who once worked for Cohen, bought an undisclosed part of the Hornets in 2019 from owner Michael Jordan. With NBA teams hemorrhaging cash with no fans in the stands, owners like Jordan are likely making capital calls on their partners. The question here is how badly hurt is Plotkin’s wallet; could it be enough to impair his obligations to the Hornets? That seems unlikely given cash is already flowing into Melvin from investor confidence in his fund, despite the massive January loss. And his losses haven’t stopped him from a home expansion.
Steve Cohen, founder Point72, Mets owner
Cohen, in his short time owning the Mets, was building a Twitter persona of a slightly goofy engaged team owner. Now, his account deactivated amid reports his family received death threats. Cohen’s fund owned part of Melvin and put in some of the rescue capital, and that move first led to worries he could be taken down, like the Duke brothers in Trading Places. Fans on Twitter expressed their worries, to which Cohen replied that his Mets team ownership was safe, tweeting, “Why would one have anything to do with the other?” But then he got drawn into the arguments over no-fee brokerage platforms like Robinhood suspending trading in the shorted stocks, which he ostensibly had nothing to do with. He tried to engage Barstool founder Dave Portnoy, but only served to stir up the masses with tweets like this: “I’m just trying to make a living, just like you.” For those worried about Cohen’s Mets’ payroll, that fear is almost surely misplaced. “Say he loses $500 million. He will be pissed, but he is worth $14 billion,” said one sports banking source, who requested anonymity because he has had discussions with people close to Cohen. “This is a blip.”
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Market trader Thomas Hayes off Great Hill Capital, wrote in a direct message, “Nothing to worry about. Will be over in days or weeks. Cohen’s a big boy.” In fact Hayes added, “I’m not sure where the price inflects, but the elevator down will be like the tower of terror at Disney. When all is said and done he probably comes out with a windfall.”
Said another sports investment banker with ties to Cohen: “If he lost $5 billion, he might have to sell some of his art!”
Cohen is widely reported to have an art collection in excess of $1 billion. This source admits he is not privy to Cohen’s financial hedges, but said it is hard to believe he would have gambled it all away on one investment.
Cohen was greeted as a savior by Mets fans when he acquired the team last year for $2.475 billion, a MLB record. The parsimonious Wilpons, the previous owners who were entangled in the Bernie Madoff financial scandal, did not spend like a major-market club, and Cohen has already changed that, evidenced by his trade for Francisco Lindor.
But precisely what gave Mets fans solace, Cohen’s fiscal wizardry, may be on display time and time again as tumultuous markets gyrate. There is a saying in sports that it is the only business with its own section in the newspaper, underscoring the point that Cohen’s previous actions did not receive the glare of the sports media.
One sports investment banker said last fall, “Google him before and ‘hedge fund’ or ‘SEC investigation’ might come up,” referring to the Securities and Exchange Commission fining his now-shuttered SAC Capital fund $1.8 billion in 2013 for insider trading. “Now it will come up first as ‘Mets owner.’”
It is a testament to the interests of fans that Cohen’s black marks — the SEC fine, sexual harassment allegations at his fund — seemingly did nothing to concern team backers in supporting his bid and ownership of the team. It’s only his connection to a fund, Melvin, that surely few them had heard of until this week, that suddenly prompted interest in his business.
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Chamath Palihapitiya, Golden State Warriors minority stakeholder
In the middle of last week’s frenzy, former Facebook executive Palihapitiya joined the action, tweeting that he had purchased options to buy GameStop shares. He then tweeted: “Tell me what to buy tomorrow and if you convince me I’ll throw a few 100 k’s at it to start. Ride or die.” He soon after closed out the position, but then debated on CNBC the right of small investors to sway the market, even when the values attached to stocks like GameStop appear widely inflated. “Instead of having ‘idea dinners’ or quiet whispered conversations amongst hedge funds in the Hamptons, these kids have the courage to do it transparently in a forum,” he said
Palihapitiya may be on to bigger platforms. He is considering running for governor of California.
(Photo of Steve Cohen: Courtesy the Mets)