The Intrinsic Value Podcast - The Investor’s Podcast Network

TIVP001: Madison Square Garden Sports (MSGS): Buying the Knicks & Rangers w/ Shawn O’Malley

Jan 5, 2025

Shawn O’Malley delves into the investment landscape of Madison Square Garden Sports Corp., spotlighting its ownership of the iconic Knicks and Rangers. He explains why these franchises are considered trophy assets for billionaires and how their value has skyrocketed recently. Unpacking the concept of discounted ownership, he estimates the intrinsic value of MSGS shares. The conversation also highlights the costs tied to sports franchises and the impact of league structures, while touching on the potential investment pitfalls.

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Intro

00:00 • 4min

The Billionaire Effect on Sports Valuations

04:09 • 13min

Exploring the Economics of Professional Sports Ownership

17:04 • 4min

Analyzing Revenue Streams and Financial Dynamics in Sports Franchises

21:03 • 7min

Navigating Sports Franchise Ownership

27:35 • 13min

Valuing Madison Square Garden Sports

40:26 • 16min

In today’s episode, Shawn O’Malley (@Shawn_OMalley_) breaks down Madison Square Garden Sports Corp., ticker: MSGS, which is the holding company that owns the NBA’s New York Knicks and NHL’s New York Rangers. MSGS is one of the few publicly-traded equities that allows retail investors to directly own professional sports teams, and few franchises are of a higher profile than the Knicks and Rangers.

Shawn covers the business model of professional sports teams, why sports franchises are trophy assets for billionaires, the driving factor behind the rapid appreciation in the value of professional sports teams, why investors in MSGS are effectively getting ownership in the Knicks and Rangers at a 50% discount, estimates for the intrinsic value per share of MSGS, plus so much more!

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IN THIS EPISODE, YOU’LL LEARN

00:00 - Intro

02:59 - How MSGS gives retail investors a chance to own two of the most valuable sports franchises in the world

04:02 - Why purchase prices for sports teams have appreciated so dramatically in recent years

16:06 - How to think about MSGS’s valuation and its discount to NAV

20:55 - How league structure affects the Knicks and Rangers differently

27:19 - What is the biggest cost for sports teams

29:57 - Why the business of pro sports teams isn’t as good as you’d think

30:17 - How a tax break incentivizes billionaires to buy sports teams

32:24 - The bear case against investing in MSGS

33:28 - Shawn’s estimate of MSGS’s intrinsic value and decision on whether to add it to The Intrinsic Value Portfolio

And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

BOOKS AND RESOURCES

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$MSGS pitch on the Value Investor’s Club forum.
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