Wall Street Analyst Predicts James Dolan Will Sell The Knicks
Wall Street Analyst Predicts James Dolan Will Sell The Knicks
Jonathan Boyar predicted on CNBC that Dolan will sell the Knicks and Rangers after the MSG Sphere is finished being built in 2023.
Before digging into the Dolan stuff, some information related to the 2022-23 NBA schedule leaked over the past few days.
The Knicks will open the upcoming season in Memphis against the Grizzlies on October 19th, according to Fred Katz of The Athletic. This contest will feature a showdown between two of the top three picks in the 2019 draft, Ja Morant and RJ Barrett. Ja has already secured his max rookie extension. New York has until the day before the start of the regular season to decide if Barrett will receive the same financial windfall.
After James Harden broke the news by tweeting "Christmas in the Garden!" multiple outlets have confirmed that the Knicks will play the Philadelphia 76ers on Christmas Day. New York hosted the Hawks last Christmas in a game that started at noon (memorable due to Kemba Walker's triple-double). This year's matchup with the Sixers, one of five games that day, will likely tip off at noon as well.
The other date we learned about yesterday was the Knicks' lone trip to Dallas during the 2022-23 campaign will take place on December 27th. This is notable because it will be Jalen Brunson's first trip back to the city he spent the first four years of his career. In addition, the Knicks are currently under investigation by the league for possible tampering charges involving their pursuit of Brunson, as New York hired Brunson's father Rick as an assistant coach weeks before free agency began, and Knicks executives Leon Rose and Worldwide Wes traveled to Dallas to sit courtside for the opening game Jazz-Mavs first-round series. So there could certainly be some tension between the two organizations. Furthermore, the Knicks own the rights to the Mavs first-round pick this season.
The completed 2022-23 NBA schedule is expected to be released this week, possibly as early as Wednesday.
The other non-schedule-related tidbit to pass along comes from an unlikely source: an interview with Jonathan Boyar on CNBC's 'Closing Bell: Overtime' late last week.
Some background: Boyar is president of Boyar's Intrinsic Value Research, an independent equity research group established in 1975 that, according to its website, counts some of the world's largest sovereign wealth funds, hedge funds, mutual funds and family offices as subscribers. Boyar is also a principal of Boyar Asset Management. It is important to note that clients of Boyar Asset Management research services collectively own approximately 15% of both MSGN and MSGE as of 2020. In addition, Boyar called out Knicks owner James Dolan following the poorly received merger between Madison Square Garden Entertainment and MSG Networks last year.
One other bit of context: The MSG Sphere at The Venetian is a massive 17,500-seat arena being built in Las Vegas. It is a partnership between The Madison Square Garden Company and Sands Corporation estimated to cost a cool $1.865 billion and is scheduled to open in 2023. MSG Entertainment's senior VP of construction stated in May that the venue will "absolutely" be ready to host the FIA Formula One World Championship in November 2023. Upon its completion, the MSG Sphere will reportedly become the largest spherical structure in the world, at 336 feet tall and 516 feet wide, that will be able to accommodate up to 20,000 standing spectators or 17,500 seated guests. The Sphere is expected to feature an insane 160,000-square-foot wraparound LED display on the interior, a 580,000-square-foot exterior LED display, and north of 150,000 speakers.
Speaking with CNBC host Scott Wapner last Thursday, Boyar boldly predicted "it's likely" that after construction on the MSG Sphere is completed, "James Dolan, who controls the company, will sell the teams," - referring to both the Knicks and the Rangers. Boyar added that "private equity has gotten involved in a big way."
Monday evening, in response to a clip of the interview posted by @NBA_NewYork, the Boyar Value Group account tweeted that potential bidders for the franchises may include PE firms Silver Lake (a California-based investment group with more than $88 billion in combined assets under management - which also happens to be one of the top institutional shareholders of MSG Sports) and global investment titan KKR (Kohlberg Kravis Roberts & Co). Among other possible interested parties, Boyar points to the Bill & Melinda Gates Foundation Trust (which also holds more than 500,000 shares of $MSGS) and Egyptian Billionaire Nassef Sawiris (who has a 5% stake in MSG Sports Corp and co-owns the Aston Villa Football Club with Milwaukee Bucks co-owner Wes Edens).
As of this morning, Madison Square Garden Sports Corp stock ($MSGS) was trading north of $162, representing a 5% increase since Thursday. $MSGE is up nearly 4% over that same stretch.
"Two things could happen in our opinion," Boyar forecasts, "either a PE firm or a family office will take a minority stake in either the Knicks or the Rangers. Or there could be a sale of one or both of the teams. Too bad Steve Cohen is not a basketball fan!... At some point it would not surprise us if someone makes an offer for one or both of the teams."
However, plenty of pundits and financial analysts would be shocked if Dolan decided to cash out any time soon. Earlier this year, Dolan, the executive chairman of MSG Sports and MSG Entertainment, signed new contracts to remain in both roles. According to The Athletic, Dolan will be paid "a minimum of $26.5 million annually for his roles with the two companies, based on a combination of base salaries and equity grants, with the possibility to earn annual bonuses targeted to be worth no less than 200% of those base salaries."
Per an SEC filing made by MSG Sports in 2021, the Dolan Family Committee - which consists of five family members - ensures that an "approval of a change in control transaction must be approved by not less than all but one vote." According to The Athletic, each committee member gets one vote, except James Dolan, who gets two, "which allows him to block any sale that would change who runs the company."
There have been rumors in the past that Dolan might put the team up for sale, but they have obviously never come to fruition. In an interview with ESPN's Ian O'Connor in December of 2018, Dolan said he had received "feelers" for the Knicks at around $5 billion but added, "no one has come through with a bona fide offer" for the team. A short time later, Dolan released a statement: "As we have previously stated, there are no plans to sell the Knicks."
Holding onto the team has been a brilliant business decision by Dolan, which has, quite literally, paid dividends.
Earlier this month, according to an annual list published by Sportico, the Knicks were valued at $6.12 billion, making them the most valuable team in the NBA and the third most valuable in all of North America (behind only the Yankees and Cowboys).
Forbes also recently ranked New York as the NBA's most valuable franchise, noting the Knicks saw a whopping 67% increase in value from 2016 to 2021. And that's with the team posting a losing record in eight of their last nine seasons!
With the NBA set to sign a monstrous new TV deal (CNBC has reported the total value of the upcoming pact could be as much as $75 billion) in 2025, it's probably safe to assume Dolan would have to be beyond overwhelmed by an outlandish offer even to consider selling the team at any point in the near future.
UPDATE: After posting this piece, I received a prompt and direct response from an MSG executive regarding speculation that owner James Dolan might consider selling the Knicks or the Rangers:
"We have no plans to sell either of the teams."