MSG Sports: Undervalued Assets and Potential Opportunities

MSG Sports, the proud owner of two highly valuable professional teams, the New York Knicks and Rangers, is vastly undervalued in the market. Despite estimates valuing the Knicks at $7.4 billion and the Rangers at $2.45 billion, MSG Sports has a market value of only $4.2 billion with a net debt of $300 million. Even more surprising is that the stock is currently priced at around $173, below its value from five years ago.

This discounted price can be attributed to what experts call the "Dolan discount," named after the controlling Dolan family. However, MSG Sports Chairman Jim Dolan asserts that neither team will be sold partially or entirely. Nevertheless, Jonathan Boyar, president of Boyar Research, believes this undervaluation presents an opportunity. He values the stock at over $300 a share and suggests options such as selling a minority stake, buying back stock, or issuing regular dividends. Ultimately, a sale of the entire company could yield significant returns with minimal downside risk.

Comparing this situation to the recent sale of a majority stake in the Dallas Mavericks by Mark Cuban, Boyar highlights that surprises can occur even with owners who were previously believed to be in it for life.

While MSG Sports' stock has been overlooked and neglected by investors due to the perceived inaction of the Dolans, this may change in 2024.

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Written by Andrew Bary