Author Topic: MSG - The Madison Square Garden Company  (Read 35877 times)

Spekulatius

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Re: MSG - The Madison Square Garden Company
« Reply #110 on: July 05, 2020, 03:54:38 PM »
I don't think he'd ever sell the knicks. They're a toy & status symbol (same with the garden). Cablevision is simply a business.

In fact I'd say there's a greater chance the Garden sells, if somehow another huge venue gets build in manhattan. That is a higher probability event (IMHO) vs. adding another NBA team.
Boyar thinks that Dolan would rather sell the sports teams than MSGE. He doesnít really actively manage the teams much, but is an aspiring artists, so it seems to be that the LV sphere Is his project (and itís a terrible idea, imo).

I own some MSGS and  upon thinking about this from various angles , the thesis hinges upon Sports team becoming more expensive and I am not sure how strong of a thesis this is. I think the economic value of sports may be maxed out and we are seeing the problem with the cable bundle which looks like it is pricing itself out of the Market.

As far as the Braves are concerned, I think baseball is in a secular decline (horrible aging demographics, no international viewership), so I think it is a way less interesting asset than the Knicks or the Rangers. I do acknowledge the discount to fair value, but I think the key isnít buy the assets rather than the cheapest ones.
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D33pV4lue

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Re: MSG - The Madison Square Garden Company
« Reply #111 on: July 06, 2020, 11:59:13 AM »
I don't think he'd ever sell the knicks. They're a toy & status symbol (same with the garden). Cablevision is simply a business.

In fact I'd say there's a greater chance the Garden sells, if somehow another huge venue gets build in manhattan. That is a higher probability event (IMHO) vs. adding another NBA team.
Boyar thinks that Dolan would rather sell the sports teams than MSGE. He doesnít really actively manage the teams much, but is an aspiring artists, so it seems to be that the LV sphere Is his project (and itís a terrible idea, imo).


I'm sorry but I could not disagree more. Dolan is hands-off with the rangers, which is why they are a half-decent team that is able to attract talent and compete. The Knicks on the other hand are a complete disaster and have Dolan's fingerprint ALL over it. Banning Charles Oakley, Phil Jackson drama, trading for Melo when you could have gotten him in Free Agency, Spike Lee drama, and MANY MANY MORE. There are numerous reports from ex front office workers who say while Dolan maintains the stance that he is hands-off he is very much in control of the team. Last year NBA Free Agency had some of the biggest names and NOT one of them even considered coming to the Knicks. That says alot.

Gregmal

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Re: MSG - The Madison Square Garden Company
« Reply #112 on: July 06, 2020, 12:36:38 PM »
I dont really want to like the E piece of MSG, but a $400M EV is pure insanity. The air rights alone are possibly worth more than that. The London land is possibly $100M itself. Both irrelevant inputs to the whole thing but significant at current valuation.

Foreign Tuffett

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Re: MSG - The Madison Square Garden Company
« Reply #113 on: July 07, 2020, 12:15:08 PM »
I don't think he'd ever sell the knicks. They're a toy & status symbol (same with the garden). Cablevision is simply a business.

In fact I'd say there's a greater chance the Garden sells, if somehow another huge venue gets build in manhattan. That is a higher probability event (IMHO) vs. adding another NBA team.
Boyar thinks that Dolan would rather sell the sports teams than MSGE. He doesnít really actively manage the teams much, but is an aspiring artists, so it seems to be that the LV sphere Is his project (and itís a terrible idea, imo).


I'm sorry but I could not disagree more. Dolan is hands-off with the rangers, which is why they are a half-decent team that is able to attract talent and compete. The Knicks on the other hand are a complete disaster and have Dolan's fingerprint ALL over it. Banning Charles Oakley, Phil Jackson drama, trading for Melo when you could have gotten him in Free Agency, Spike Lee drama, and MANY MANY MORE. There are numerous reports from ex front office workers who say while Dolan maintains the stance that he is hands-off he is very much in control of the team. Last year NBA Free Agency had some of the biggest names and NOT one of them even considered coming to the Knicks. That says alot.

The title of the long Bloomberg piece that came out last year ("Is the Knicksí James Dolan the Worst Owner in Professional Sports?") really says it all.

https://www.bloomberg.com/news/features/2019-07-26/is-the-knicks-james-dolan-the-worst-owner-in-professional-sports
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wabuffo

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Re: MSG - The Madison Square Garden Company
« Reply #114 on: July 07, 2020, 12:35:01 PM »
the thesis hinges upon Sports team becoming more expensive and I am not sure how strong of a thesis this is

There are two things that drive the value of a sports franchise (particularly one whose franchise covers the greater New York area).

1) Scarcity value - these franchises rarely come onto the market.  When they do, it may be the only opportunity to buy one for a generation.  This is especially true for a NYC team because of the value of local broadcast rights in the US's largest TV market for live sports (in addition to league broadcast money).

2) The tax benefits it provides to a rich owner with large amounts of taxable income.  Almost all of the purchase price becomes tax deductible over a fifteen year period.  The deal can be structured so as to pass through the tax deductions directly to the owner in order to offset his/her personal taxes.  That's why a Steve Ballmer paid so much for the LA Clippers.  He can deduct his 1/15th of his purchase price every year against his personal income tax and reduce his taxable income from his ownership of Microsoft stock.  At top marginal tax rates, the net present value of that tax deduction gets built into the purchase price to some degree such that the real, after-tax cash acquisition price to the buyer is lower than the reported price.

If/when the NY Knicks go on sale, there will be no shortage of buyers willing to pay top dollar.

wabuffo
« Last Edit: July 07, 2020, 12:53:03 PM by wabuffo »

Castanza

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Re: MSG - The Madison Square Garden Company
« Reply #115 on: July 07, 2020, 12:53:50 PM »
the thesis hinges upon Sports team becoming more expensive and I am not sure how strong of a thesis this is

There are two things that drive the value of a sports franchise (particularly one whose franchise covers the greater New York area).

1) Scarcity value - these franchises rarely come onto the market.  When they do, it may be the only opportunity to buy one for a generation.  This is especially true for a NYC team because of the value of local broadcast rights in the US's largest TV market for live sports (in addition to league broadcast money).

2) The tax benefits it provides to a rich owner with large amounts of taxable income.  Almost all of the purchase price becomes tax deductible over a fifteen year period.  The deal can be structured so as to pass through the tax deductions directly to the owner in order to offset his/her personal taxes.  That's why a Steve Ballmer paid so much for the LA Clippers.  He can deduct his 1/15th of his purchase price every year against his personal income tax and reduce his taxable income from his ownership of Microsoft stock.  At top marginal tax rates, the net present value of that tax deduction gets built into the purchase price to some degree such that the real, after-tax cash acquisition price is lower than the reported price.

If/when the NY Knicks go on sale, there will be no shortage of buyers willing to pay top dollar.

wabuffo

I think this analysis makes a lot of sense. The quality of the team has almost nothing to do with the franchise itself. This is especially true for iconic teams. The Yankees haven't won a World Series since 2009 (prior to that it was 2000). Yet at the same time their estimated franchise value has climbed from 1.7B in 2011 -> 5B in 2020 https://www.forbes.com/teams/new-york-yankees/#75a21dbe4e6e

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Gregmal

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Re: MSG - The Madison Square Garden Company
« Reply #116 on: July 07, 2020, 02:15:05 PM »
Art doesnt have a cash flow, and the owners are often cunts. Sports teams are the same type of asset. If they traded based on their ability to make money, they wouldn't be worth very much.

KJP

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Re: MSG - The Madison Square Garden Company
« Reply #117 on: July 08, 2020, 05:58:45 AM »
Art doesnt have a cash flow . . . .

Do you talk that way in person to people you don't know well? If no, why talk that way here?

Gregmal

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Re: MSG - The Madison Square Garden Company
« Reply #118 on: July 08, 2020, 11:33:43 AM »
Art doesnt have a cash flow . . . .

Do you talk that way in person to people you don't know well? If no, why talk that way here?

I do. I am a little tone deaf sometimes. Actually most of the time.