MSG Building Glass Sphere Arenas, Market Cap Below Forbes’ Valuations of Knicks/Rangers


Madison Square Garden Company (MSG) (in a joint venture with Sands Corporation (LVS), who is contributing $75 million to project) has released renderings of a 360-foot-tall (500-foot-wide) glass sphere (MUST SEE), set to be built behind the Venetian and Palazzo resorts and expected to open in late 2020. The arena, connected to the resorts via a pedestrian bridge, will seat 18,000 and hold concerts, residencies, boxing/MMA and other entertainment events (like mass gaming). MSG is expected to announce plans for the construction of a 2nd sphere in London, noteworthy as the booking and marketing of London’s O2 Arena is controlled by AEG live; a direct competitor of Azoff-MSG. The two companies have a history of preventing acts from performing at the other’s venues.

Howie Long-Short: Forbes released their ’18 NBA team valuations. For the first time, every team was valued at more than $1 billion; with team values increasing by an average of 22% YOY. Over the last 5 years, team values have grown 300%. The potential for international growth (revenue growing in high-teens) has NBA teams selling at a higher multiple (8x revenue), than NFL teams (6x revenue). MSG’s NY Knicks are the NBA’s most valued franchise, worth an estimated $3.6 billion (+9% YOY, on $426 million in revenue). Forbes has the Rangers valued at $1.5 billion (+20%, on $246 million in revenue). MSG’s current market cap is $4.93 billion. If Forbes’ valuations are accurate (they tend to be low), the market is assigning literally negative value to MSG Arena (tax assessment in ’17 was $1.2 billion, not including air rights), the Forum, the Liberty, Counter Logic Gaming and a controlling stake in Tao Group.

Fan Marino: Back in November, MSG announced it would be selling its WNBA franchise to a buyer who would immediately take over control of the team’s operations. Apparently, plans have since changed, James Dolan has stated that despite “numerous interested parties” the company would continue to operate the team. The Liberty plan to move most of their games from Madison Square Garden to the 5,000-seat Westchester Arena (pending county approval), home to the Knick’s G-League affiliate. The move would save the franchise dollars, as the cost associated with holding events at the Garden are significantly higher.

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