MSGS is undervalued; its $10B implied valuation for two major sports franchises is significantly below recent market comps ($12B for Lakers, $3B for Islanders minority).

Yes, MSGS was a long-term investment for you. Yes, MSGS stock was great for us. Let me give you a quick background on it . Originally, it was part of a company called Cablevision, which was controlled by the Dolan family.

Everyone loves to hate the Dolan family, but they split up MSG in 2010, which consisted of Madison Square Garden. I will take another step back. They bought MSG in 1992 or 1993 for a few hundred million dollars.

This included the Knicks, the Rangers, Radio City Music Hall, Madison Square Garden in general, and many other great assets. So, they split it all up in 2010, and since then they've done split after split, and now you have MSG Sports, which only includes the Knicks and Rangers.

The foundation is valued at $10 billion. So, you could buy both teams for $10 billion. Yesterday , they announced the sale of a minority stake in the Islanders, a team not as prestigious as the other two, for $3 billion.

The Lakers were sold for $12 billion in what I consider a forced sale. I mean, I think that guy was forced to sell, and very quickly. Therefore, there is no logic in the fact that you can buy the Knicks and Rangers teams for $10 billion .

So, what are the Dolan family doing to help unleash value? Sometime in October, they will split them into two separate companies. You'll have the New York Knickerbockers, and then you'll have the New York Rangers.

In this way, investors can buy both, and this will help to highlight the valuation gap. What it also does is you want a specialized investment in basketball, yes. An investment specializing in hockey.

Well, but there are also separate buyers for them. It is much easier to make a deal worth five or six billion dollars. People who buy hockey teams and... exactly. exactly.

I believe what they will do with the Knicks is sell a minority stake in one or both of these teams concurrently with the split or shortly afterward . I think this makes perfect sense, and they can then use the proceeds to buy back shares.

I believe that is what will happen , in addition to the existence of a tax law in effect, Rule 162, which essentially states that if you are a publicly traded company in the United States, you cannot deduct the salaries of your top five employees for income tax purposes.

So the Knicks are the only publicly traded sports team, and the Raptors are somewhat like that , but they are part of a larger company. This puts them at a significant competitive disadvantage .

If your top five players earn $150 million and you can't deduct that for income tax purposes , and your total earnings are $180 million, then that's a real problem. So they may have to sell or the law may be changed, but changing laws in this Congress is extremely difficult. There are many things that could happen there.