Madison Square Garden Stock Sets Another Record On Knicks-Rangers Spin

Shares in the Madison Square Garden Co. gained more than 2% today to reach a new record high and have risen 17% since Wednesday’s news that MSG plans to spin off the New York Knicks and Rangers sports franchises.

The stock ended the trading day at $312.92, on more than triple the average trading volume, at one point spiking to a new 52-week high of $321.92.

Long-suffering Knicks and Rangers fans hope the spinoff augurs a change of ownership, with James Dolan recently sending signals he is more committed to his burgeoning blues-rock career than pro sports. But that’s the sports talk-radio angle — plus, the company tamped down that speculation by issuing an unambiguous statement: “There are no plans to sell the Knicks or the Rangers.”

Wall Street, meanwhile, sees the spinoff as unlocking more value for both the teams and the venues. The Knicks and Rangers can take advantage of soaring franchise valuations and legalized sports betting, and MSG, which owns its namesake arena and several others, becomes more of a pure play. Already the investment thesis was simplified in 2015 by separating the TV and digital networks business from the venues.

Many analysts have applauded the latest spinoff. In a research report this morning titled “Never Too Late to the Game,” Macquarie’s Amy Yong upgraded MSG to “outperform,” asserting a 12-month price target of $350, up from $302. The spinoff “should narrow the private-public market valuation and allow sports/entertainment to pursue unique strategies/options.”

On the venue side, MSG is building two strikingly designed, globe-shaped Sphere arenas in London and Las Vegas, which are both expected to be marquee attractions.

The sports teams, meanwhile, are a conundrum, throwing off a reliable source of cash despite the uneven performance on the court and on the ice.

NBA superstar LeBron James, who is exploring new teams as a free agent, has never seriously considered suiting up for the underachieving Knicks. Rather than championships Dolan’s tenure instead has been marked by turmoil, despite two trips to the NBA Finals since 1993. There was the disastrous run of Isaiah Thomas as team president. The team settled a case brought by team executive Anucha Browne Sanders alleging sexual harassment by Thomas. And more recently, there was Dolan’s ejection of ex-Knick Charles Oakley from the Garden in handcuffs after a fracas with security guards during a game. The Rangers have fared much better, but have won the Stanley Cup just once (in 1994) over the past 58 years.

In 2014, Dolan oversaw the sale of Cablevision, the major U.S. cable provider founded by his father, Charles Dolan, to Altice. Its TV network holdings, now known at AMC Networks, became their own separate public company, though the Dolans remain major shareholders.

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