Jim Dolan's sports and entertainment empire — tucked neatly under the roof of Madison Square Garden and other noted venues — could double in value with the proposed split of the company, several analysts said Tuesday.
MSG, which is exploring a possible separation into two publicly traded entities — one for its Knicks, Rangers and MSG Network and the other for the venues — could be worth as much at $9.7 billion after the separation, the Wall Street pros said.
The company closed Tuesday with a market capitalization of $5.1 billion.
"We are very pleased that MSG's board of directors and management have committed to pursue a plan to enhance value for all MSG shareholders," JAT Capital Management, which owns a 9 percent stake in MSG and has been pushing for a way to enhance shareholder value, said in a statement.
MSG has been considering the split — in large part to unlock the value of its sports teams — since Steve Ballmer agreed this summer to buy the NBA's LA Clippers for a staggering $2 billion — four times the previous record sales-price for an NBA team.
While it is clear the true value of the Knicks will be realized by Wall Street after the split — some analysts pegged the New York hoops team alone being worth $2 billion — what is less apparent is which piece of the split company will get the famed Garden arena, itself valued at $2 billion-plus.
That's the question bouncing around Wall Street.
MSG, in announcing that it is weighing a split in the company, was vague about who would get the arena. A company spokesperson refused to comment beyond the announcement.
Without knowing which entity would get the Midtown Manhattan complex — the busiest arena in the nation — it is tough to ascribe a valuation on either unit, according to MSG shareholder Mario Gabelli.
"How much cash and borrowing will go to each side of the equation?" he said. "What's the rent on the arena and then on the live entertainment side, what's the cash flow and overhead and the five-year outlook?"
Gabelli, who also holds positions in Cablevision and AMC Networks, believes the plan is being considered partly because of negative reaction to Dolan's recent diversification into smaller entertainment assets. Shareholders want to know which side his heart lies on, the investor said.
Richard Tullo, an analyst with Albert Fried & Co., puts the value of the split company at as much as $8 billion.
Gabelli, however, thinks the assets, once split, would be worth more — with MSG Network, which broadcasts the Knicks and Rangers games, worth $4 billion.
The Knicks could be worth $2.5 billion and the Rangers $1 billion, sports bankers told The Post.
Investors loved Dolan's proposed split, rushing in to buy MSG shares and pushing the stock up 11 percent on Tuesday, to $72.99 a share.
Separately, former AEG Chief Executive Tim Leiweke told Bloomberg Tuesday that he has had talks about a possible role in the company.
"Clearly, I know Jim [Dolan]," Leiweke said. "What he did yesterday was extremely smart. We have talked about doing things together. Nothing is locked down yet."
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