Author Topic: MSG - The Madison Square Garden Company  (Read 43274 times)

KJP

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Re: MSG - The Madison Square Garden Company
« Reply #130 on: July 23, 2020, 11:43:10 AM »
Many fans think ticket prices are high because salaries are high, so they grumble about players being overpaid and are quite anti-labor.  They likely have the causation reversed.

I think the two most important "plays" above are 1 and 8.

I think even today, not many people recognize that pro sports are the only industry in the US that is exempt from anti-trust laws that bind every other business and industry from engaging in anti-competitive behavior.  This is what allows leagues to limit the number of franchises and allow a franchise owner to pit cities against each other in order to extract a better stadium deal. (ie, no. 7).  Large cities like New York City could support 5-6 NFL teams but there are only 2 because the NFL is exempt from anti-trust.

No. 8 is important because the size of both national and local TV money (if it exists - NFL has no local TV deals) and how that money is divided between teams determines so much of the franchise value of each team.   There would be no Green Bay Packers nor Buffalo Bills if the NFL had a similar TV money structure like baseball does that is heavily dependent on local TV vs national - those franchises would've relocated long ago.

wabuffo

I agree, but most of this happens in the background, so fans don't see the direct impact.  They do with ticket prices, and they (in my view) misidentify the cause.

I think fans would be better off with an open, multi-level system with promotion and relegation, like European soccer leagues.  But as you note, the owners have no reason to adopt such a system.


Foreign Tuffett

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Re: MSG - The Madison Square Garden Company
« Reply #131 on: July 23, 2020, 11:54:30 AM »
Sales like the Royals and Marlins have pretty well shown the bottom of the market for teams.  If the T-Wolves can get 1.2B plus w/o moving the team, which is the rumored starting point for discussions it will be yet another data point corroborating that.

Why aren't you making a distinction between NBA and MLB teams?


I think all sports teams are good "relative" feelers. You are right that there is a distinction, the more granular you want to get. But if the bottom teams in any sport are selling at record prices, I think thats a reasonable proxy for all of them as a whole. If for instance the Mets sell for $1.5B, I would definitely be concerned about the Knicks and Rangers, despite it being a baseball sale and a team that hemorrhages money.

Good article on the stadium too, thanks.

My understanding is that it has been widely reported that Cohen has already bid at least $2 billion, with at least one other bidder still involved in the process.


I think a very important distinction to be made in any discussion about sports team sales is whether the comps were forced sales, or otherwise detached from economic reality. So, using baseball as an example, and in reverse chronological order:

2019 - Royals sold due to owners' failing health (died just a few months after the sale closed)

2018 - Marlins sold. Owner probably was not a forced seller. $1.2 billion a very good price for what is, per Forbes, the least valuable team in the MLB

2016 - Nintendo (yes, that Nintendo) sold majority interest in Mariners to a group that already owned a minority interest in the team. Why did Nintendo own an American baseball team? I have no idea. Why did it insist on maintaining 10% ownership of the team? I have no idea.

The next most recent sales were in 2012.

So how many good, recent comps do we have for the sale of a MLB team? Maybe just the Marlins transaction? Even the Mets owners (Wilpon family) are reportedly very motivated sellers due to their financial circumstances. 
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winjitsu

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Re: MSG - The Madison Square Garden Company
« Reply #132 on: July 23, 2020, 01:05:34 PM »

2016 - Nintendo (yes, that Nintendo) sold majority interest in Mariners to a group that already owned a minority interest in the team. Why did Nintendo own an American baseball team? I have no idea. Why did it insist on maintaining 10% ownership of the team? I have no idea.


Nintendo owner never attended a game. He bought the team as a thank you to the city of Seattle for headquartering and helping Nintendo of America grow. The current Mariners have the longest play-off drought of any professional sports team in the US, I believe, and the apathy of the owners was quite apparent. I'm glad they were finally sold!

https://uproxx.com/sports/seattle-mariners-nintendo-ownership/

Spekulatius

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Re: MSG - The Madison Square Garden Company
« Reply #133 on: July 23, 2020, 04:31:36 PM »
Many fans think ticket prices are high because salaries are high, so they grumble about players being overpaid and are quite anti-labor.  They likely have the causation reversed.

I think the two most important "plays" above are 1 and 8.

I think even today, not many people recognize that pro sports are the only industry in the US that is exempt from anti-trust laws that bind every other business and industry from engaging in anti-competitive behavior.  This is what allows leagues to limit the number of franchises and allow a franchise owner to pit cities against each other in order to extract a better stadium deal. (ie, no. 7).  Large cities like New York City used to support three baseball teams in the 1940s-50s but now only has two.  Is it because NYC can only support two?  I don't think so - New York could probably support 5-6 MLB teams with all that local TV money available, but there are only 2 because baseball is exempt from anti-trust laws due to a Supreme Court ruling in the 20s.

No. 8 is important because the size of both national and local TV money (if it exists - NFL has no local TV deals) and how that money is divided between teams determines so much of the franchise value of each team.   There would be no Green Bay Packers nor Buffalo Bills if the NFL had a similar TV money structure like baseball does that is heavily dependent on local TV vs national - those franchises would've relocated long ago.

wabuffo

The problem with TV is that the bundle is is falling apart. This means that either revenue go down for the teams (and with they their value) or the viewers that do like to watch sports in TV will have to pay much more. I think the latter is how this is going to play out, but it won’t be a painless transition, imo.

With MSG, you have to add the “leaches” MSG (TV rights) and part of MSGS (stadium rents  etc) to the EV value  and I am not sure the way this was split is creating much value as is. It makes it harder to sell the teams.

Anyways, I am out after some consideration. In the end, it’s just an asset play that won’t create any FCF and likely will bleed some money while waiting for the sellout.
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txvalue

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Re: MSG - The Madison Square Garden Company
« Reply #134 on: July 27, 2020, 08:18:43 AM »
Sales like the Royals and Marlins have pretty well shown the bottom of the market for teams.  If the T-Wolves can get 1.2B plus w/o moving the team, which is the rumored starting point for discussions it will be yet another data point corroborating that.

Why aren't you making a distinction between NBA and MLB teams?

The average value for NBA & MLB teams is similar - both are a touch under 2 billion. I tend to think NBA teams are worth a bit more but valuations are more related than you'd think at first blush in terms of revenue, markets etc. 

With so few comps I think its a useful barometer to see where things stand. As a side-note really interesting to see PE money flowing into the space, the minority stake sales seem to be pretty active and under reported. Lots of investors/value investors hold stakes in teams everyone from big names to guys like David Abrams.
« Last Edit: July 27, 2020, 08:22:23 AM by txvalue »

Gregmal

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Re: MSG - The Madison Square Garden Company
« Reply #135 on: August 10, 2020, 05:17:27 PM »
Rangers just won the draft lottery.

"Lafreniere, long-considered the consensus No. 1 pick and who has drawn comparisons to future Hall of Famer Sidney Crosby, had 35 goals and 77 assists for 112 points in 52 games last season with Rimouski Oceanic (QMJHL)."


Probably won't be a huge impact next season, but the Rags will almost certainly be a premier team 2-5 years from now with the rebuild they've now put together. Good for hockey, good for MSG. (Hate it as a Devils fan)

spartansaver

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Re: MSG - The Madison Square Garden Company
« Reply #136 on: August 10, 2020, 07:28:44 PM »
Rangers just won the draft lottery.

"Lafreniere, long-considered the consensus No. 1 pick and who has drawn comparisons to future Hall of Famer Sidney Crosby, had 35 goals and 77 assists for 112 points in 52 games last season with Rimouski Oceanic (QMJHL)."


Probably won't be a huge impact next season, but the Rags will almost certainly be a premier team 2-5 years from now with the rebuild they've now put together. Good for hockey, good for MSG. (Hate it as a Devils fan)

Tell that to Edmonton Oilers fans.

bizaro86

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Re: MSG - The Madison Square Garden Company
« Reply #137 on: August 11, 2020, 09:38:39 AM »
Rangers just won the draft lottery.

"Lafreniere, long-considered the consensus No. 1 pick and who has drawn comparisons to future Hall of Famer Sidney Crosby, had 35 goals and 77 assists for 112 points in 52 games last season with Rimouski Oceanic (QMJHL)."


Probably won't be a huge impact next season, but the Rags will almost certainly be a premier team 2-5 years from now with the rebuild they've now put together. Good for hockey, good for MSG. (Hate it as a Devils fan)

Tell that to Edmonton Oilers fans.

The Edmonton Oilers are a 6 sigma event on screwing up number one picks. The NHL literally changed the rules of the draft lottery because they kept winning and wrecking young players with terrible development. Then they won the McDavid lottery under the new rules. If you draft flops number 1 (Yakupov), trade great players for scraps (Hall), or don't make them backcheck (McDavid) you'll have poor results. They've had 4 number one picks in the last 10 drafts and still couldn't make it out of the qualifiers this year. Most of this is just terrible management imo. Classic example is the 2014 draft, where they took Jesse Puljujarvi at number 4. Even at the time it was obvious they should have taken Tkachuk or Keller if they wanted a forward. These two (the next two forwards drafted) have both already been named All-Stars, while Puljujarvi is now a reclamation project who probably ends up playing in Europe.

I'm a big fan of their biggest rivals, and I think it would be more fun if they weren't such a dumpster fire.

Back on topic - Lafreniere seems to be the real deal. The Rangers have been doing a good job with their rebuild, and they have a big advantage with UFAs based on the desirability of living in NYC for young, rich men. Couple more years and a few rounds of playoffs are likely in MSG.

spartansaver

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Re: MSG - The Madison Square Garden Company
« Reply #138 on: August 11, 2020, 10:44:47 AM »
Rangers just won the draft lottery.

"Lafreniere, long-considered the consensus No. 1 pick and who has drawn comparisons to future Hall of Famer Sidney Crosby, had 35 goals and 77 assists for 112 points in 52 games last season with Rimouski Oceanic (QMJHL)."


Probably won't be a huge impact next season, but the Rags will almost certainly be a premier team 2-5 years from now with the rebuild they've now put together. Good for hockey, good for MSG. (Hate it as a Devils fan)

Tell that to Edmonton Oilers fans.

The Edmonton Oilers are a 6 sigma event on screwing up number one picks. The NHL literally changed the rules of the draft lottery because they kept winning and wrecking young players with terrible development. Then they won the McDavid lottery under the new rules. If you draft flops number 1 (Yakupov), trade great players for scraps (Hall), or don't make them backcheck (McDavid) you'll have poor results. They've had 4 number one picks in the last 10 drafts and still couldn't make it out of the qualifiers this year. Most of this is just terrible management imo. Classic example is the 2014 draft, where they took Jesse Puljujarvi at number 4. Even at the time it was obvious they should have taken Tkachuk or Keller if they wanted a forward. These two (the next two forwards drafted) have both already been named All-Stars, while Puljujarvi is now a reclamation project who probably ends up playing in Europe.

I'm a big fan of their biggest rivals, and I think it would be more fun if they weren't such a dumpster fire.

Back on topic - Lafreniere seems to be the real deal. The Rangers have been doing a good job with their rebuild, and they have a big advantage with UFAs based on the desirability of living in NYC for young, rich men. Couple more years and a few rounds of playoffs are likely in MSG.

Call it what you want, there's never a near certain path to become a premier team. Also I feel like every year, the number one pick becomes over-hyped. There are very few Crosby's/McDavid's who are generational players. Picking great draft picks in hind sight is very easy, but it's a giant crap-shoot. It's all easy in hindsight to say how bad managements are, but most of the time at the professional levels I think it comes down to luck. It's like investing, except there are no inefficient areas.

Gregmal

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Re: MSG - The Madison Square Garden Company
« Reply #139 on: August 11, 2020, 10:56:50 AM »
Simply having the number 1 overall is great for marketing, merchandise, and(not that they need it) ticket sales, if nothing else. The overall direction of the team is definitely, up.

I think Edmonton is a mix. They did have some awful management issues. Buts its also not as though they didnt have some bad luck. Nugent Hopkins never bulked up and stayed healthy. Yakupov was a typical Russian bust. But they also were guilty of self inflicted injuries. The Hall trade. The Lucic signing. Talbot. If I am not mistaken, they also had the Barzal pick and traded it for an already established draft bust...