http://www.Gabelli.com
Invest with Us 1-800-GABELLI (800-422-3554)
Hi my name is john Tinker and 1 recommend buying Madison Square Garden Entertainment.
MSGE was spun out on April 17 from MSG, which is keeping the Knicks and Rangers. MSGE
owns a collection of unique entertainment assets including Madison Square Garden,
the first of which opened in 1879 and is the world’s highest grossing indoor venue in its class,
the Tao Group and The Christmas Spectacular.
our PMV is $190, suggesting the stock is trading at a 57% discount . The $2B/$81 stock market
capitalization includes net cash of $1.5B/ $61 per share implying that investors
are paying $500M /$20 per share to own the physical Garden plus
other properties which are worth $3.1B / $130 per share.
The stock is inexpensive as the risk is that the cash spent building the $1.6B Sphere in Las Vegas
– a new unique light filled 17,500 person arena, will not generate a strong return.
CEO Jimmy Dolan does not get great publicity from the team’s performance,
but off the court, operating performance and value creation have been compelling with the current
combined market capitalization of MSGE, MSGS and MSGN of $7B implying a 10 year annual stock return of 16%.
The Forum was just sold to LA Clippers owner Steve Ballmer for $400M with an original cost of $125M in 2012.
Investors are also concerned that the venues are all closed and hemorrhaging cash. We estimate zero EBITDA for a
year and that the Garden reopens in the October when the NBA/NHL begin the new season, albeit with fewer seats
sold due to social distancing.
We recommend MSGE as an opportunity to own the “The World’s Most Famous Arena” inexpensively.
