MSGS - Embedded Expectations Analysis - 2021 04 26
Madison Square Garden Sports Corp. (MSGS:USA) currently trades at a historical high relative to UAFRS-based (Uniform) assets, with a 23.9x Uniform P/B. At these levels, the market is pricing in bullish expectations for the firm, but management may have concerns about the NBA's amended CBA, fan engagement, and operating cost reductionsSpecifically, management may have concerns about the potential of their NBA and NHL draft picks, the upcoming NBA media agreement expiration in 2024-2025, and the terms of the NBA's amended Collective Bargaining Agreement (CBA). Furthermore, they may lack confidence in their ability to improve fan engagement, sustain team operating expense reductions, and improve season ticket renewal rates. Moreover, management may be exaggerating the impact of mobile sports betting legalization on fan engagement, the long-term value of sports rights, and the value of sports team scarcity. Additionally, they may be concerned about their recent debt refinancing, their car manufacturer sponsor advertising, and the potential for private equity firms to buy minority and controlling interests in teams
Madison Square Garden Sports is a holding company. Through its subsidiaries, the company is engaged in the sports business. The company owns and operates sports franchises, including the New York Knicks and the New York Rangers. The company also owns and operates Hartford Wolf Pack of the American Hockey League, and NBA G League team, the Westchester Knicks. The company's operations also include CLG, a North American esports organization, and Knicks Gaming, the company's franchise that competes in the NBA 2K League. The company also promotes, produces and/or presents a range of live sporting events including boxing, college basketball, college hockey, bull riding, mixed martial arts, esports, and college wrestling.
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