I am a avid New York Knicks fan and have invested in MSG in the past. I do not believe MSG would be a wise investment at this time due to several uncertaintities as follows: 1) Potential NBA lockout 2) High Renovation costs 3) Summer Slowdown
MSG is a lot more than just the New York Knicks as it spans from television broadcasting, live entertainment, and Sports Franchises. With the risk of a potential NBA lockout approaching the risk of lost revenue could severely impact MSG's stock as well as result in unforseen costs. The NBA has indicated that NBA teams should reimburse season ticketholders if there is a pending lockout and there is a potential that this could be down at a premium. Furthermore, with the three year planned renovations currently in progress, there are several additional costs that have not be calculated. Lost Revenue due to unable to host invents will impact the top and bottom line of MSG's income statement. The summer months also tend to be slow for the company so without the certaintity of an NBA season to cushion the stocks outlook, there is tremendous risk investing at this juncture.
Why would I retract my statement? I was not predicting the stock was going to nosedive in one day,and again I will RESTATE my argument that MSG is not a good buy at these prices. Any positive upside in the stock is priced in and there are absolutely no surprises in the near future that could boost the stocks earnings. I would wait for the stock to trade lower before considering a new position. The only thing going for MSG is that the NBA avoids a lockout. The Knicks are no longer looking to shed salary that saw them reduce their fixed costs associated to player salaries by millions of dollars.
I agree that the short term outlook is not entirely positive for this company. However, your claim that there is tremendous risk investing at this juncture." is plainly not true. What's the risk? They have no long term debt, so there's no risk of bankruptcy anytime soon. If you're buying this on margin, then of course there's a lot of risk but that's true with anything. So don't buy on margin.
Also, I don't understand your comment: "MSG is a lot more than just the New York Knicks as it spans from television broadcasting, live entertainment, and Sports Franchises. With the risk of a potential NBA lockout approaching the risk of lost revenue could severely impact MSG's stock as well as result in unforseen costs."
Yes, MSG is a lot more than just the Knicks. So the lockout shoudn't hurt it too much.
When I was discussing MSG's stock, I was not attributing that the company has a risk of going bankrupt, they have extremely low risk of doing so. The stock price however could still suffer and trade down to $18-$20. The renovations that the MSG is going through has resulted in lost of potential revenue. A recent example of this is the cancellation of several college graduations that have decided to host the events somewhere else due to the renovations. Furthermore, an NBA lockout would have an enormous impact on MSG's stock price on speculation alone. How long will the lockout last, how much will season ticket holders need to be reimbursed, voided sponsorship deals. The Kniks also had one of its lowest total salary seasons in recent years as the knicks had done as part of landing free agents. With the addition of anthony and amare and their annual kicker, their salaries and fixed costs will only go higher. It all boils down to the definition of MSG as a company. Its a sports media company. So if there are no Knick Games, that equates to less advertisement on its MSG network, and it is a domino affect from there. I would wait until lockout is resolved before even considering buying the stock. Rangers, Radio City, NY liberty, FUSE, etc cannot generate enough revenue/income to boosts the stocks earnings. At the end of the day stock prices go up based on Eearnings growth.