Sports Finance Report: Dolan Could Unlock Value By Spinning Off Knicks/Rangers

Editor’s Note: Welcome to a daily column we run here at BroBible breaking down the day’s biggest stories in sports finance with commentary from the equities analyst and sports fanatic perspectives. It comes to us via our friends at JohnWallStreet, publisher of a free e-mail newsletter focused on sports related public equities and their subsidiaries. You can sign up here.


Robin Hood, a NY based poverty-fighting organization, held their 5th annual investors conference late last week; gathering policy experts, hedge fund managers, financial leaders, tech innovators and real estate investors to share market insights and actionable ideas. Samantha Greenberg of Margate Capital made a presentation explaining how the Madison Square Garden Company (MSG) could bring full value to shareholders by spinning off their sports teams; a move that would be would be “consistent with Dolan’s history of using spinoffs to unlock value” and one that could potentially increase the value of the company by 25%. Greenberg also suggested a large-scale buyback, the monetization of air rights and selling a minority stake in the Knicks as other potential ways to increase the value of the MSG share price.

Howie Long-Short: If you value the Knicks at the same 10.8x multiple the Clippers sold for, based on ’16-’17 revenues, the Knicks are worth $4.06 billion. In ’16, Forbes valued the Rangers at $1.25 billion. The total current market cap of the company is $5.17B.  Using those metrics, you must believe Greenberg is on to something. Wall Street isn’t giving MSG any credit for the MSG Arena (tax assessment valued it at $1.25 billion), the WNBA Liberty, an AHL team, Counter Logic Gaming or their entertainment portfolio.

Fan Marino: MSG sees its future growth coming from the live entertainment business. In February, the company acquired 62.5% of the Tao Group known for their restaurants/clubs. Earlier this month, the company announced it would opening a members-only viewing suite at MSG that costs up to $400,000/year to join. Membership includes access to all Knicks games, Rangers games and concerts, plus complimentary food from Tao Group restaurants and complimentary access to Tao venues. The lounge will debut on October 30th for the Knicks home opener. If you have access and are looking for some company, I’m your guy!


Under Armour (UAA) is entering the subscription box business. Armour Box, a customized package of 4-6 pieces of the season’s latest gear, is different from many subscription box services in that there are no monthly fees. Subscribers receive a box based on their needs, style and goals, monthly, bi-monthly or quarterly; then pay for what they want to keep and return the balance (at UAA’s expense). Customers that purchase everything in the box receive a 20% discount. The company is using data curated from their Connect Fitness apps and e-commerce platform to deliver outfits that have been frequently purchased and positively reviewed.

Howie Long-Short: The subscription box business has seen its share of success stories (see: Dollar Shave Club) and failures (see: meal kit delivery businesses). Stitch Fix proved the model can work, generating $1 billion in ’17 revenue and filing for an IPO. Of course, Stitch Fix sells more than just their own label and UAA’s biggest issue right now is that teens won’t wear the brand. Subscription boxes aren’t changing that.

Fan Marino: Here’s a feel-good story to start your day. Under Armour has signed Syrian refugee and Olympic swimmer Yusra Mardini to an endorsement deal. Mardini describes her experience of fleeing Damascus in a new video, saying “I should have been killed by the bomb that hit the pool in Damascus. I should have drowned in the Mediterranean Sea. I should have been one of the many faces of refugees who died along the way, but I am here.” Mardini participated in the ’16 Rio Games, competing under the Olympic Flag as a member of the Refugee Olympic Team (ROT). She finished 41st among 45 entrants, but managed to win a 100m butterfly heat.

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NeuLion (NLN), a company that specializes in the broadcasting, distribution and monetization of video content to mobile devices, has announced the launch of Virtual Announcer; a new feature for their digital platform. Virtual Announcer provides OTT sports rights holders the ability to easily add, package and distribute broadcast commentary, to live video feeds, from anywhere in the world. The cloud-based technology enables the viewer to select from various audio options; including the language used and PBP/color teams. The English Football League is among the first broadcast partners to take advantage of the technology, with EFL teams broadcasting “team streams” (commentary slanted towards one team) of their games.

Howie Long-Short: Broadcasting from a remote location is far less expensive than the traditional in-venue model and the truth is, there is little advantage to being on site. The networks figured this out in ’15. As cord cutting continues and niche OTT programming gains popularity, this trend becomes the norm. As for NeuLion, the share price is at a 12-month low ($.53 Canadian).

Fan Marino: NLN is selling the technology as a method to “spark longer fan engagement, attract more subscribers and reduce subscriber churn”, but who’s buying that? No one watches a game for the announcers. For those who have an appreciation for the art of play-by-play, Richard Deitsch of Sports Illustrated recently put out his list of the top 25 PBP broadcasters. Fan’s favorites? Ian Eagle, Joe Tessitore and Dave Pasch.

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JohnWallStreet is not a person or location, but a destination for the educated sports fan.

While we won’t be publishing “hot takes” on LeBron’s relative greatness to Jordan, we will be offering up the most relevant sports related finance news, in easily digestible bites, with commentary from both the equities analyst and sports fanatic perspectives.

We’ll cover publicly traded professional teams & stadiums, television networks, apparel & footwear companies, equipment companies, ticketing companies, content and facilities providers. If it trades on Wall Street, and has a sports angle, it’s in our wheel house.

Howie Long-Short and Fan Marino will be providing their expert opinions on each story. They have slightly different areas of expertise. Fan Marino is a firm believer that the SEC is the premier football conference. Howie Long-Short knows it as the Security & Exchange Commission. Fan Marino lives and dies with the college selection of 5 star, blue chip recruits. Howie Long-Short spends his days analyzing blue chip stocks. Howie Long-Short knows that Black Monday occurred on October 19th, 1987. Fan Marino swears it happens every January after Week 17. You get the point.

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