* Mets $200 million investment talks collapse
* Club says pursuing other potential investors
* Einhorn says Mets demanded surprise, last minute changes (Adds comments and Madoff background)
By Svea Herbst-Bayliss and Jonathan Stempel
NEW YORK/BOSTON, Sept 1 (Reuters) - The New York Mets have ended talks to secure a $200 million investment from hedge fund manager David Einhorn, clouding the baseball team's future as its losses and legal bills mount.
Einhorn said the Mets imposed a series of surprise, "last-minute" changes that made an investment, which would have given him a minority stake, impossible. The team's owners said they would seek other investors.
"A week ago, I thought this deal was in great shape and thought it would close very soon," Einhorn said on a conference call with reporters. But in light of the team's moves, he is walking away. "We are finished here, we are done with this transaction."
The 42-year old has been a self-professed Mets fan since childhood and is one of the $2 trillion hedge fund industry's best-known traders. His hedge fund firm, Greenlight Capital, oversees about $7.8 billion.
Mets owners led by Fred Wilpon opened exclusive negotiations with Einhorn in May to sell a minority, non-operating interest. The team said on Thursday that the exclusivity period had expired and would not be extended.
Winners of the World Series in 1969 and 1986, the Mets have have stumbled financially and on the baseball field, even after building a state-of-the-art ballpark, Citi Field, in 2009. Attendance has fallen, and the Mets are 22 games out of first place in the National League East.
The team has also been losing tens of millions of dollars a year, and its problems were compounded by a $1 billion lawsuit by Irving Picard, the trustee seeking money for victims of Bernard Madoff's Ponzi scheme.
Picard is seeking $300 million from the Mets owners' investments with Madoff, plus $700 million arising from the alleged failure of Wilpon, Saul Katz and other Mets executives to recognize Madoff's fraud.
A federal appeals court ruling last month strengthened Picard's claim for the $300 million, and U.S. District Judge Jed Rakoff is expected this month to decide how much of the lawsuit should go forward.
It is unclear how the collapse of talks with Einhorn might affect efforts to mediate the Mets owners' dispute with Picard.
"It was always a tough deal to make in part because he would have been at risk if there were further judgments against Wilpon," said Robert Boland, a professor of sports management at New York University.
A spokeswoman for Picard declined to comment.
"We are very confident in the team's plans -- both off and on the field," Wilpon said in a statement. "We will engage with other individuals, some who have been previously vetted by Major League Baseball, along with other interested parties, regarding a potential minority investment into the franchise."
The New York Times, citing a person directly involved in the talks with Einhorn, reported that the Mets will try to recruit investors willing to take stakes of about $20 million.
A spokesman for Major League Baseball declined to comment. The league this year took over day-to-day operations of another marquee team, the Los Angeles Dodgers. That team is now in bankruptcy.
Some of Einhorn's Greenlight investors may be relieved that the Mets investment fell apart. Even though Einhorn planned to invest his own money in the baseball team, some of his investors grumbled that it might distract him from running his hedge fund.
Greenlight's results have been disappointing this year, with its flagship fund down about 5 percent through August, a person familiar with the firm said.
One of Einhorn's investors, who is not permitted to speak about him publicly, said the hedge fund manager insisted the Mets stake would not affect his work at Greenlight.
STICKING POINT
On the conference call, Einhorn said several times how disappointed he was that the deal failed, but would not provide specifics, citing a confidentiality agreement.
He shared one sticking point -- his prospects of becoming majority owner. Einhorn said the original understanding left him a clear path to take over, but that the team and Major League Baseball went behind his back to block this.
However angry Einhorn may be privately, acted calmly on the conference call. "There won't be any litigation from us," he said.
In announcing that talks broke down, the Mets said they have enough money to cover projected 2011 losses.
According to Forbes magazine, the Mets owed creditors $450 million in March. The Dodgers had $433 million of debt.
"The Dodgers and Mets have been two of the big spending teams," Boland said. "This actually may create a better economic picture for MLB because they'll have to be conservative over the next several years." (Reporting by Steve James, Jennifer Ablan, Jonathan Stempel, Svea Herbst-Bayliss and Phil Wahba. Editing by Lisa Von Ahn, Robert MacMillan and Matthew Goldstein)
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