It is well documented that iconic venue and sports holding company Madison Square Garden is under valued. I estimate (below) that the discount is as much as 33%. The problem is that it is likely to remain undervalued, especially with the Dolan family in charge and unlikely to sell.
However, there are a number of articles in Benzinga and Marketwatch suggesting things are beginning to change.
Driven by the current extraordinarily high value of the Knicks (estimated between $3.5bn and $4.5bn following the sale of the Houston Rockets for $2.2bn) and viewed against threats to cable bundles revenues driven by changing viewing trends, it seems that Mr Dolan is considering off loading all or a large part of the Knicks along with MSG Networks (already spun off). Such a move could be an important catalyst for realising value in the company.
However, even if a sale doesn’t materialise the company’s discount still makes it an attractive proposition. I would always prefer to pay $1 for an asset worth $1.50. That is even more the case when the asset’s value is increasing at a rapid rate and, with the value of the average NBA franchise increasing 250% in the past 5 years, that is the case with MSG and the Knicks.
Mr Dolan’s concerns could be the catalyst for realising shareholder value. Many other commentators believe that the changing viewing trends could be extremely positive and lead to a bidding war from new entrants such as Amazon. Either way the 33% discount provides a reassuring margin of safety.
Back of envelope valuation NY Knicks $3.5bn NY Rangers $1.25bn Rockettes/other $0.4bn MSG Arena $1.25bn Chicago Theatre/other$0.5bn Cash $1.2bn Debt -$0.1bn Total $8.0 versus $5.3bn market capitalization (September 12th 2017) = 33% discount
This is not a recommendation to buy or sell. Stocks are not suitable for all investors. Please do your own research.
Submitted September 13, 2017 at 01:20AM by InterestingNews1 http://ift.tt/2y4aTqN
