Knicks Resurgence Driving Value for MSG Sports

The New York Knicks are on the road back to relevance after years of embarrassment and disappointment.

They haven’t won an NBA title since 1973, but there’s hope for their fans amid a resurgence that the city has not seen in years. After coming up just short last season of their first appearance in the Eastern Conference Finals since 2000, the Jalen Brunson-led Knicks are poised to contend again and stop the favorite Boston Celtics from repeating as champions.

Some offseason trades have also built anticipation for this year’s campaign. Though the squad is moving on from All-Star forward Julius Randle and sharpshooter Donte DiVincenzo, the timely arrival of center Karl-Anthony Towns (from Minnesota) and forward Mikal Bridges (from Brooklyn) positions them to potentially make another deep playoff run.

More postseason games at Madison Square Garden is good news for parent company MSG Sports, which reeled in $1 billion in revenue last year in large part due to the success of the Knicks and the New York Rangers. Last season was the first since 2013 that saw both MSG teams reach at least the second round of the playoffs in the same year. This could start to become the new normal as the Rangers are also situated to make another run at the Stanley Cup this season.

The Knicks’ rebound though has been the catalyst for more excitement and dollars for Jim Dolan-owned MSG Sports.

MSG analyst David Joyce of Seaport Research Partners points out the added attendance at Knicks games boosts other revenue streams including food and beverage spending inside the arena. “It also helps with the pricing and traction of more sponsorship dollars,” he said in an interview. “The sponsors who have various named properties within the Garden have elements in those contracts that monetize better for the (MSG Sports) when there’s added impressions and more people in the building.”

MSG typically raises season ticket prices after a stellar postseason run to capitalize on the momentum, but the company announced earlier this year that it will not do that. The good PR could be helpful to get Knicks fans to spend more dollars elsewhere on group sales or MSG+ subscriptions. Meanwhile, the added success surrounding the team’s most anticipated season in years positions the parent company to create more value for shareholders.

Wall Street continues to value MSG Sports at a steep discount to the private valuations done by Sportico in its most recent NBA and NHL team valuations. The current enterprise value of MSG Sports is $6.15 billion, 38% lower than the $9.9 billion combined for the Knicks ($7.43 billion) and Rangers ($2.45 billion). MSG leadership has previously said it would be open to selling a limited stake in its teams, perhaps that’s an option with value at an all-time high.

“There’s other corporate stuff you can do like buybacks but more interesting would be a spinoff of the Knicks and/or Rangers to its own company,” Boyar Value Group principal Jonathan Boyar said in an interview. “There are certain people who may want to buy a hockey team or someone who may want a basketball team. This would also potentially highlight value more.”

Regardless of what transpires in the corporate office, Knicks fans are excited for another season with star players both new and old who are determined to finally get back to the postseason playing at the basketball mecca MSG.