Apr
30

LA Clippers Sale Could Provide Catalyst for Madison Square Garden (MSG) Stock

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LA Clippers Likely to Fetch Massive Premium to Forbes Valuation in Imminent Sale

Hats off to the NBA and new commissioner Adam Silver for acting swiftly and decisively today in dealing with recently surfaced racist comments from Los Angeles Clippers Owner Donald Sterling.  The NBA displayed a zero tolerance for racism in the league by banning Sterling for life, fining him $2.5 million, and effectively forcing him to sell a team he has owned for more than 30 years.  Once the laughingstock of the NBA, the Clippers are now a top team featuring two of the most exciting players in the league in Blake Griffin and Chris Paul, and will be a highly desirable asset when they hit the market.

The Milwaukee Bucks grabbed headlines for the first time in ages this month when they were purchased by Wesley Edens and Marc Lasry for an NBA record $550 million.  Despite playing in one of the NBA’s worst stadiums, having the NBA’s worst team, playing in one of the NBA’s smallest markets, and being ranked as the NBA’s least valuable franchise; the Bucks managed to command a 36% premium over their most recently estimated value as per Forbes.  Marc Cuban wasted no time in declaring the purchase to be a bargain, stating that he believes the true value of an NBA franchise is in excess of $1 billion.

When Forbes released their annual list of team valuations in January, they pegged the Clippers at $575 million, good for 13th in the league.  If the Clippers were to command a similar 36% premium to this figure, they would be valued at $782 million.  Although being a lofty figure, I believe this mark will be easily eclipsed.  While the sale of the Milwaukee Bucks was met with almost zero fan fare and was done very much under the radar, the imminent sale of the Clippers will be highly publicized and is likely to create a bidding war, as numerous parties have already been named as potential suitors and more are sure to arise over the coming weeks.  Its not hard to see the Clippers fetching bids in the range of $800 million – $1 billion.  Such a number would force people to reconsider the value of all NBA franchises, which would be  nothing but beneficial to Madison Square Garden (MSG) shares.  A 36% increase to Forbes’ valuation of the New York Knicks would bring their value to $1.9 billion, a 50% increase would see them worth $2.1 billion.  Such a revision upwards should be seen as significant for Madison Square Garden as a whole, as they currently sport a market cap of only $4.2 billion, potentially providing a boost to their long-stagnant stock.  I believe shares of MSG are significantly undervalued based on a sum of the parts analysis and view Madison Square Garden stock as a strong buy.

Disclosure: I own shares of Madison Square Garden.

 

Mar
27

Madison Square Garden (MSG) Receives Bids For Fuse TV

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Multiple Bidders Emerge for Madison Square Garden’s (MSG) Fuse TV Network

Less than two weeks after receiving a $200 million bid for their Fuse TV Network from both Diddy and Jennifer Lopez, Madison Square Garden (MSG) has reportedly received a $350 million cash offer from Artist Series Inc.  Relatively unknown, Artist Series is in the process of securing financing for both the transaction and an additional $200 million for operating costs.  Management has yet to respond to any of the bids they have received thus far.  When we first recommended purchasing shares of MSG in October, we noted that J.P. Morgan was in the process of shopping Fuse TV around.  At the time we expected Fuse would fetch anywhere from $300 – $400 million in a sale, right in line with the offer from Artist Series.  With three parties expressing interest in such a short period of time, we could see an upward revision to the current bid.  Madison Square Garden’s stock has been extremely range bound since our recommendation.  A sale of Fuse TV coupled with the recent hiring of Phil Jackson as President of Basketball Operations could help awaken shares of MSG and get them moving towards fair value.  I continue to view Madison Square Garden as a strong buy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.

Nov
11

Madison Square Garden (MSG) Optimal Entry Level

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When to Buy Madison Square Garden (MSG)?

Madison Square Garden (MSG) is one of our top picks at the moment based on our belief that the sum of their parts is worth far more than the market is currently valuing the company. Taking a glance at their chart, they appear to be near an optimal entry level for the long term. Over the past 9 months, MSG shares have failed to trade meaningfully below $55, only closing beneath that number by a few cents on two occasions. Despite a very positive earnings report, the completion of the Madison Square Garden arena renovation project, and the opening of the NBA & NHL seasons in the past few weeks, MSG is trading at a 3% discount from our first recommendation to buy them. Currently at $55.75, Madison Square Garden is very near the ideal time to enter a position from a technical perspective.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.

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