MSG Sports shares climb as Knicks finals run eases pressure on James Dolan

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MSG shares climb on Knicks run

Highlights

MSG Sports shares nearly double over twelve months as the Knicks' NBA Finals run and rising franchise valuations alleviate pressure on James Dolan.
The Las Vegas Sphere, a $2.3 billion investment, becomes the world's highest-grossing arena in 2023 with $379 million revenue from 1.7 million tickets sold.
Potential separation of the Knicks and Rangers could unlock higher public market valuations, with the finals run creating opportunities for stake sales or restructuring.

Knicks success sharpens focus on asset value

As reported by Financial Times, the Knicks' run to the NBA Finals is giving Dolan a rare respite after years of criticism over the team's poor results, fan disputes and his hardline control of Madison Square Garden. MSG Sports, which owns the Knicks and the New York Rangers, has seen its shares nearly double over the past year as the basketball team's title push coincides with rising valuations for sports franchises.

Dolan's business empire also includes Sphere Entertainment and MSG Entertainment. Jonathan Boyar, principal of Boyar Value Group and a longtime MSG Sports shareholder, says Dolan is being vindicated and argues he has been a stronger capital allocator than critics acknowledge, although representatives for Dolan and his companies do not respond to requests for comment.

For much of Dolan's tenure, the Knicks are associated with front-office turmoil, weak long-term performance and public clashes with fans and former players. Critics have also attacked his use of facial recognition technology at Madison Square Garden and his practice of barring detractors from the arena, making the current period of goodwill especially notable.

Wall Street weighs breakup potential and broader upside

Dolan's record in capital markets is stronger than his reputation as a team owner suggests. After entertainment assets were separated, Cablevision was sold in 2016 to Patrick Drahi at a valuation close to $20 billion, and Sphere Entertainment later became a standalone company in 2023, moves that help Dolan exit a cable sector facing pressure from streaming while preserving upside in sports and venues.

The Sphere in Las Vegas, initially viewed as a risky $2.3 billion bet, becomes the world's highest-grossing arena last year with $379 million in revenue from 1.7 million tickets sold, according to Pollstar. The venue is planning expansion to Abu Dhabi and a second U.S. site in the Washington DC area.

Investors are also watching whether Dolan separates the Knicks and Rangers, a step that could narrow the so-called Dolan discount by allowing each franchise to capture its own valuation in public markets. Boyar says the next few years could be especially consequential, with the Knicks' finals appearance creating a rare opportunity for a stake sale, a restructuring or even a full team sale at a premium price.

On the court, Dolan is drawing credit for giving basketball executives room to operate. Since Leon Rose becomes team president in 2020, the Knicks make a series of roster moves including the 2022 acquisition of Jalen Brunson, and even some longtime fans who remain critical of Dolan now concede his hands-off approach helps bring the franchise to the brink of its first title since 1973.

Our earlier article on Premier League finances and ownership pressures explained that strong on-field results are increasingly colliding with weak profitability across much of the league. We noted that relegation risk, tighter sponsorship and compliance scrutiny, and signs of talent moving abroad can make investors more cautious even as club revenues and valuations remain high.

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