MSG NEEDS TO SPIN OFF SPORTS FRANCHISES TO BRING FULL VALUE TO SHAREHOLDERS
Robin Hood, a NY based poverty-fighting organization, held their 5th annual investors conference late last week; gathering policy experts, hedge fund managers, financial leaders, tech innovators and real estate investors to share market insights and actionable ideas. Samantha Greenberg of Margate Capital made a presentation explaining how the Madison Square Garden Company (MSG) could bring full value to shareholders by spinning off their sports teams; a move that would be would be “consistent with Dolan’s history of using spinoffs to unlock value” and one that could potentially increase the value of the company by 25%. Greenberg also suggested a large-scale buyback, the monetization of air rights and selling a minority stake in the Knicks as other potential ways to increase the value of the MSG share price.
Howie Long-Short: If you value the Knicks at the same 10.8x multiple the Clippers sold for, based on ’16-’17 revenues, the Knicks are worth $4.06 billion. In ’16, Forbes valued the Rangers at $1.25 billion. The total current market cap of the company is $5.17B. Using those metrics, you must believe Greenberg is on to something. Wall Street isn’t giving MSG any credit for the MSG Arena (tax assessment valued it at $1.25 billion), the WNBA Liberty, an AHL team, Counter Logic Gaming or their entertainment portfolio.
Fan Marino: MSG sees its future growth coming from the live entertainment business. In February, the company acquired 62.5% of the Tao Group known for their restaurants/clubs. Earlier this month, the company announced it would opening a members-only viewing suite at MSG that costs up to $400,000/year to join. Membership includes access to all Knicks games, Rangers games and concerts, plus complimentary food from Tao Group restaurants and complimentary access to Tao venues. The lounge will debut on October 30th for the Knicks home opener. If you have access and are looking for some company, I’m your guy!
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