MSGS represents irreplaceable sports franchise value
The speakers framed Madison Square Garden Sports as an irreplaceable 'halo asset' trading at an attractive valuation with an upcoming corporate spin-off catalyst.
The argument
The guest noted that the company (which owns the NY Knicks) has a market cap of $9-10B and has not fully recovered its revenue trajectory since the COVID-19 crash, despite the unique, non-replicable nature of its franchise assets.
The thesis, stress-tested
✓ What validates it
- ✓Completion of the corporate spin-off
- ✓Revenue returning to or exceeding pre-COVID growth trajectories
▸ Risks discussed
- ▸Discretionary consumer spending downturns affecting ticket and stadium revenues
- ▸Execution risks surrounding the upcoming spin-off
Hear it yourself
"He did a, an interview with PBS Frontline. It was a documentary in 1997, and this hit me so hard, like, so so hard when I when I first listened to him say this. So he was talking about the difference in yields between stocks and bonds and the historical relationship. And I'm I'm I think you guys have probably heard me say this like you too, and maybe the audience has heard me reference this. So here's here's here's me quoting Peter Bernstein. He said, you got twice as much income owning stocks as bonds. And even though people felt it was very risky, he's talking about stocks, they felt well the difference in income made it worthwhile."
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