The Stanley Cup finals may mean as much to investors as hockey fans this year

June 3, 2014
June 3, 2014

The New York Rangers last week advanced to the Stanley Cup finals for the first time in 20 years, meaning suddenly everyone in New York City is a devoted fan and expert in the sport of ice hockey.

The Rangers, who broke a 54-year curse when they last won the title in 1994, will play the 2012  champions, the Los Angeles Kings, in an unusual sports matchup that pits America’s two biggest metropolises and media centers against each other in a winter sport—held, strangely, just at the beginning of summer’s heat.

The return to the Stanley Cup finals is good news for the Madison Square Garden Company, which owns the Rangers, and for its executive chairman, James L. Dolan, who is CEO of MSG’s former parent company, Cablevision. MSG also owns the long-suffering New York Knicks basketball franchise, a team whose fans have blamed Dolan for their woes.

Over the past month, as the Rangers progressed through the playoffs, shares in Madison Square Garden have been ticking higher, although they’ve still underperformed the market this year.

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Steve Ballmer’s $2-billion purchase of the LA Clippers basketball team should in theory also benefit the company. Many think the ex-Microsoft boss overpaid, but the purchase should boost the value of all NBA teams.

Macquarie analyst Amy Yong argues in a note today that MSG has one of the best portfolios of assets in media. She values its Knicks and Rangers holdings at a combined $3 billion. The company’s current market value is about $4.2 billion, which doesn’t leave much room for its other assets, including its cable television businesses and the eponymous arena and music venue in New York City’s Midtown West—the home of the Knicks and Rangers, as well as its other sports teams such as the New York Liberty women’s basketball team.

That the sum of Madison Square Garden’s parts seems greater than its current valuation may reflect concerns about corporate governance at the company, which was spun out of Cablevision in 2010. It is controlled through a dual-class share structure by the Dolan family. Dual-class share structures, common in both media and technology, are controversial because they allow owners to maintain control over companies without actually owning a majority of stock.

Whatever the games do to the company’s stock, if the Rangers win the best of seven series, Dolan may have a chance at some personal redemption, the New York Times opined: He will no longer be viewed just “as a gravel-voiced, impetuous, publicity-averse boss who should have stuck to the cable television business.” Instead, the Times declares, “Dolan would be — get ready for it — a champion.”

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