MSG is undervalued; $10B market cap for Knicks/Rangers is low vs comps; split/stake sale could unlock value.

As for MSG, it was one of your long-term investments. What's her story? Yes, MSG was a great stock for us. To give you a quick overview , it was originally part of a company called Cablevision, which was controlled by the Dolan family.

Everyone loves to hate the Dolan family, but they split up MSG in 2010, which included Madison Square Garden. I will take a step back . They bought MSG in 1992 or 1993 for a few hundred million dollars.

A very profitable deal . This deal included the New York Knicks, the New York Rangers, Radio City Music Hall, Madison Square Garden itself, as well as many other impressive assets.

So, they separated all of that in 2010. And since then, they have carried out successive separations. And now, you have MSG Sports, which only includes the New York Knicks and the New York Rangers.

Good? The company's market capitalization is $10 billion. Good? So, you could buy both teams for $10 billion. Yesterday , they announced the sale of a minority stake in the New York Islanders, a much less well-known team, for $3 billion.

As for the Los Angeles Lakers , they were sold for $12 billion in what I consider a forced sale. I mean, I think that person was forced to sell, and he had to sell very quickly.

Therefore, it makes absolutely no sense that you could buy both the New York Knicks and the New York Rangers for $10 billion . So, what are the Dolans doing to help unleash this value?

Is there, at some point in October, whether they will split them into two separate companies? So, you'll have MSG, New York Knicks, and New York Rangers. Investors can buy both, and this will highlight the difference in value valuation.

It also allows for a comparison of the performance of basketball and hockey teams. In addition, there are separate buyers for each one. It is much easier to make a $ 5 or $6 billion deal by buying hockey teams. exactly . exactly.

As for the Knicks, I think they will sell a minority stake in one or both teams, either at the same time as the split or shortly after . I think this makes perfect sense , and then they can use the proceeds to repurchase shares.

So, I think that's what will happen. In addition, there is a tax law that will go into effect, Rule 162 and the like, which essentially states that if you are a publicly traded company in the United States, the salaries of your top five employees cannot be deducted from income taxes.

Therefore, the New York Knicks is the only sports team listed on the stock exchange. It is true that the Toronto Raptors are also part of a larger company. Therefore, he is in a highly unfavorable competitive position .

If your top five players earn $150 million and you ca n't deduct it from your income taxes, and your total earnings are $180 million, then that's a real problem. Therefore, they may be forced to sell or the law may be changed, but changing a law in this Congress is extremely difficult.

So, there are many possibilities. The Dolan family, as you know, although everyone loves to hate them, they were selling assets. They sold Cablevision at the peak of cable valuation.

So, maybe they'll sell one or both of them, who knows?

If you would like to get some free reports, I believe they are available on Madison Square Garden Sports and Markel.