*This post was updated at 6:30pm on Friday 5/14
Shares of Madison Square Garden Inc., the publicly traded owner of the New York Knicks, are up 12 percent since the Boston Celtics began their three-game win streak that knocked the LeBron James-led Cleveland Cavaliers out of the NBA playoffs.
Following the Boston Celtics game-four win on Sunday night evening the seven-game series, MSG, which was spun-off from parent Cablevision earlier this year, jumped four percent in Monday’s trading. The stock added another three percent this week as the Celtics won two more in a row, including a 32-point blowout Tuesday night that many sports pundits believed pushed James’ frustration with the Cavaliers’ supporting cast to a boiling point.
“Investors are hoping that James chooses to come to New York to improve the profitability of the Knicks (ticket sales/suite sales/merchandising/MSG Network ratings, etc.)” wrote Richard Greenfield, media analyst for BTIG, in a note to clients this afternoon. (Click here to see Greenfield’s blog ) “And to help drive the return on investment of the Garden rebuild project.”
The Dolan family made the decision to spin-off Madison Square Garden Inc. last year, creating one of the few pure investment plays on sports entertainment. Along with operating the so-called most famous arena in the world, Madison Square Garden Inc. also owns the New York Rangers, Radio City Music Hall and the MSG Sports Network.
The company is renovating the Knicks home for the 2011 season by widening the concourses, adding HDTV’s and renovating the locker rooms. A complete transformation of the building, including the upper level, will be ready for the 2012 season, according to Madison Square Garden.
James Dolan, the Cablevision chief executive who is also chairman of MSG, is hoping James is sitting one day in one of those new lockers. He could rest assured that the winner of the NBA MVP award the last two years would fill up those bigger luxury boxes and new restaurants also being planned.
MSG shares pulled back a bit today, which may be related to the increase in Vegas odds of the Chicago Bulls’ chances of landing James when he becomes a free agent in July. The Cavaliers are still the favorites to sign him at 8-11, according to online gambling site Bodog.com, but the once-time dark horse Chicago Bulls are now second at 2-1, ahead of the Knicks third with 5-2 odds. At the start of the month, Knicks were the clear second favorite.
But Knicks fans, and apparently Madison Square Garden shareholders, still believe James won’t turn down the opportunity to play in the biggest sports market in the country.
“I personally just don’t see LeBron letting his legacy be second tier to MJ’s in Chicago, but it is an appealing destination,” read a post on the ‘Countdown2LeBron.com’ blog this morning.
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