Sell Madison Square Garden If the Rangers Lose?
By Rocco Pendola - 04/26/12 - 8:14 AM EDT
Tickers in this article: MSGNEW YORK (TheStreet) -- Another Game Seven goes off Thursday night in the National Hockey League playoffs. The New York Rangers host the Ottawa Senators at Madison Square Garden. I am working feverishly to ensure that I am firmly planted on the couch by 4:30 p.m. PT with Molson Canadian in hand. There might not be a better time of the year than the NHL's second season. I happen to be a Toronto Maple Leafs fan. This, however, does not mean that I dislike all other Canadian franchises. In fact, when the Leafs are out of the race (every year), I root for Canadian teams. I was born in Western New York, but have always identified in many ways with Canadian culture. Right now, the Sens are the last Canadian team standing. Up until yesterday, I was preparing to root for them to win this evening. Then, I read an article by Mike Ozanian in Forbes, titled: Senators Set to Extract $300 Million from Madison Square Garden Shareholders. Mike wrote a nice article, but he did leave several things out. He estimates that every time the Rangers host a playoff game, Madison Square Garden
The Company's, MSG Media segment's and MSG Sports segment's results of operations for the three and six months ended December 31, 2011 were impacted by the NBA work stoppage. The delay in reaching an agreement . . . delayed the start of the 2011-12 NBA regular season by approximately two months until December 25, 2011. In addition to the delayed start, the resolution of the NBA work stoppage resulted in the 2011-12 regular season being shortened by 16 games, or approximately 19.5%, to a 66-game season. A higher percentage of games will be played in the second half of our 2012 fiscal year as compared to the comparable period of the prior year. In the second quarter of our 2012 fiscal year, the Knicks played a combined 6 preseason and regular season games, of which 2 were home games and 4 were away games, as compared to a combined 40 preseason and regular season games in the comparable period of the prior year, of which 18 were home games and 22 were away games.If the Rangers lose tonight, they could actually miss out on up 21 games over three potential playoff rounds (Eastern Conference, Semifinals, Eastern Conference Final and the Stanley Cup Final). If each series went seven games, I am pretty sure MSG would miss out on 11 or 12 Rangers home games. The home games represent the bigger hit, but Ozanian also left out the fact that MSG would lose advertising and other dollars on the missed away games. But, is this a reason to sell or not buy the stock? Stock Performance MSG has been on a roll lately. It closed at a 52-week high of $35.43 on Wednesday, trading as high as $35.55 intraday. I am not certain we can attribute the stock's run since late last year to the Rangers' games, though they didn't hurt. Neither did Jeremy Lin-Sanity or the Knicks' forthcoming playoff appearance. In the short-term, the bear case is that the Rangers lose tonight and the Knicks get swept in the first round. The bull case would have both teams going to their respective league finals, creating a potential scheduling nightmare at MSG. But, that's all short-term stuff that might impact a day or swing trade, but likely as little to do with the long-term narrative here. As a long-term investor, I will continue to buy MSG no matter which near-term scenario plays out. I do not own the stock on the basis of a sports team's fluctuation between winner and loser. I own MSG because of the massive cross-platform opportunities it can leverage as sports team owner, venue owner, content owner and regional advertising juggernaut. As I noted in an article on TheStreet earlier this month, MSG's unique situation also makes it a prime buyout candidate for a larger player in media and/or telecom.
Tickers in this article: MSG
Latest news from section
See all news From Opinion