Madison Square Garden's stock price surged Tuesday, and big investors cheered the Knicks owner's decision to explore a possible spinoff that would separate its entertainment businesses from its media and sports businesses.
The board of directors unanimously approved the exploration plan on Monday.
Shares of MSG were up more than 9 percent in early trading Tuesday. (For the latest stock price, click here.)
"We're delighted that they're doing this and giving clarity to what I want to own as a legacy holding," said Mario Gabelli, chairman and CEO of Gamco Investors, which owns more than 4.5 million shares of MSG. "Owning the Knicks and (New York) Rangers is very attractive."
In an interview on CNBC's "Squawk Box," Gabelli said that if the spinoff goes through, he would hold shares in both companies, calling MSG Network and the teams the company's crown jewels. He also noted the value of Madison Square Garden—as well as the air rights above the property—and other live performance venues in its portfolio.
Earlier, Ariel Investments CEO John Rogers Jr. told "Squawk Box" the split is the right thing for shareholders, noting that developments in the Knicks organization put the team in a position to reach the championships. Ariel owns nearly 2 million shares.
Rogers said the recent $2 billion purchase of the Los Angeles Clippers by former Microsoft CEO Steve Ballmer illustrates that people see the value in sports teams more than ever. He expects valuations of sports teams to keep pace in the future.