It’s one of the most famous sports and entertainment venues in the world. Known colloquially as simply “The Garden” and situated right in the middle of Manhattan, Madison Square Garden is the oldest stadium in both the NBA and the NHL and has also hosted countless music, arts and comedy events over the past 52 years. For athletes and performers, “playing at the Garden” is synonymous with having reached the top of their field. It’s truly iconic.
The Madison Square Garden Company (MSGS) doesn’t own the building – the property itself belongs to a related company.*
MSGS owns the NBA’s New York Knicks and the NHL’s New York Rangers – two teams who play in the building and have enjoyed a huge local market and loyal fans around the country who buy up licensed merchandise and watch televised broadcasts. They also own several minor league franchises in both sports, training centers and even an esports team.
*(For clarification: Madison Square Garden Entertainment (MSGE) owns not only that notable, hulking physical facility that looms over two city blocks between 7th and 8th avenue in the low 30s; it also owns Radio City Music Hall and the Beacon Theater in Manhattan, the Chicago Theater, The Forum in Inglewood, CA and Boston’s Wang Theater. All those venues are currently closed. MSGE is currently a Zacks Rank #4 [Sell].)
Live sporting events are a very tough business to be in right now. The NHL cancelled the remainder of the regular season at the beginning of the outbreak in the US in March and pulled together a modified playoff format so that they could still award the Stanley Cup – which was eventually won by the Tampa Bay Lightning. Most teams had played roughly 70 out of a planned 82-game regular season schedule.
It was a similar story in the NBA with the regular season cancelled and an elimination tournament held in an isolation “bubble” in Florida in which all players, coaches, staff and referees have been avoiding all contact with the outside world throughout the proceedings. (The Los Angeles Lakers will look to take the championship trophy home tonight when they take the court up 3 games to 1 against the Miami Heat.)
While sports franchises were able to salvage at least some broadcast revenue from the truncated seasons, it’s a far cry from what they’re accustomed to pulling in from a diverse set of revenue sources during a normal season.
The real concern is next season: 2020-2021.
It’s anyone’s guess when we’ll be gathering once again in public spaces. Under normal circumstances, the new seasons for professional basketball and hockey should be underway soon, but obviously that’s not going to happen. Even if the leagues are able to cobble together something, there will be a massive revenue hit for individual teams.
For MSGS – which has never made all that much in net profits – that’s a disaster. Over the past 60 days, the Zacks Consensus Earnings Estimate has fallen from a net