Madison Square Garden’s Stock Gets Lift from Linsanity

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As soon as Tebowmania quieted down, a new athlete came to town and took over the airwaves and water cooler conversations: New York Knicks Jeremy Lin. As his popularity increased, it created a stir called Linsanity and it doesn’t appear to be dying down any time soon.

Lin’s popularity has been more than excited NBA fans. Its tentacles have reached to, local retailers such as Modell’s and E-Bay with sales of fake jerseys. The success has even extended to Madison Square Garden’s stock, MSG. Earlier in the month as Lin’s play took off while pinch hitting for the injured Carmelo Anthony, so did MSG.

Linsanity Hits, MSG Rises

On Feb. 4, Lin began his ascent into Linsanity, scoring a team-high 25 points against the New Jersey Nets and kicking off a five-game win streak for the Knicks. MSG’s stock price on the day before, Feb. 3, closed at 29.32.

Fast forward to Feb. 13 as the Knicks had won five games with Lin as the leading scorer for three of them.

Shares of MSG also continued to rise, closing at $32.32 on Feb. 13. Earlier it had hit $33.18, the highest price since the stock first started trading in January 2010. From Feb. 3 through Feb. 13, it rose 10 percent.

But MSG reported its second quarter earnings report on Feb. 15. Its profit declined from the lockout and the abbreviated NBA season. The Knicks schedule in the December quarter had dropped 40 percent as compared to the previous year, while the revenue from the MSG Sports business dropped 31 percent.

On Feb. 15, the stock closed at $31.91.

Analysts Take Note

On Feb. 17, the increased viewership from Lin’s play is believed to have helped Time Warner Cable and MSG Network resolve their dispute and restore Knicks game to viewers. Morgan Stanley analyst Benjamin Swinburne noted this in the note, Jeremy Spoke & a Deal Gets Done. He wrote, “It appears that the success and sudden popularity of recent Knick addition Jeremy Lin helped bring greater political pressure to both sides to come to terms.”

Swinburne has rated the shares as “overweight.”

And earlier this week on Tuesday, more analysts noted the effect of Linsanity.

Rich Tullo of Albert Fried & Co. wrote, “If Jeremy Lin and other marquee players drive sell-out ticket sales at underperforming team home games then it is possible that the overall BRI (basketball-related income) pie could expand dramatically. We think if the Knicks and the Rangers continue on their winning ways then MSG can drive incremental revenue from higher ticket, concessions and luxury suite sales.”

With the analysts’ bullish comments, it nudged MSG’s share price up 15 percent for year, according to CNBC and during Tuesday’s trading day, MSG shares hit an all-time high of $33.49. It has also doubled its share price return for former parent, Cablevision, this year.

On Thursday, the stock closed at $32.59.

Fans are getting excited about a possible postseason run and MSG share holders are reaping the benefits. Madison Square Garden has sold out for each game and the audience for MSG Network has risen 70 percent, with an 87 percent ratings rise in Lin’s initial five starts.

Should Lin continue his successful run with the team, he could help the Garden bring in revenue next year when it opens its Madison Club and 176 new luxury seats from its latest round of renovations. Happy Knicks fans will need to shell out a lot of money for the seats: around $40,000 each.

But as every athlete, sports fan and market watcher knows, every day is different. It’s best to look at things one day at a time and not get too caught up in Linsanity.




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