Shares of MSG Networks fell more than 2% on Wednesday after the New York Knicks lost out on the coveted No. 1 pick in this year's NBA draft.
The Knicks received the third overall pick in for next month's draft at Tuesday night's NBA draft lottery, meaning they will likely miss out on projected No. 1 pick and Duke University phenomenon, Zion Williamson. Williamson was named the National College Player of the Year for 2019 and is widely considered the best prospect since superstar LeBron James.
Picking Williamson could have increased Knicks viewership along with revenue for MSG Networks, which broadcast the lion's share of the team's games. This could have also enticed free-agent superstars like Golden State Warriors forward Kevin Durant to sign with New York, helping them build a championship caliber team.
"The Knicks are still well under-monetized relative to their potential," wrote BTIG analyst Brandon Ross in a note earlier this week before the lottery results. "Overall, we estimate building a championship contender could have a $79mm revenue impact and $40mm [adjusted operating income] impact with annual top line growth of at least mid-single digits."
Ross notes that building a contender could lead the team to raise ticket prices as well as increase its sponsorship revenues. That just got a bit more difficult now.
Williamson will likely be drafted first overall by the New Orleans Pelicans on June 20.