With the Rockets selling for $2.2 billion to Tilman Fertitta, more than half a billion more than their 2017 Forbes valuation of $1.65 billion, it’s clear that the market for NBA franchises has never been bigger. Now that Houston is off of the market, the Nets are expected to be the next team to change ownership as Mikhail Prokhorov has reportedly been shopping the team to overseas buyers in China.
While the Nets would be an unsurprising team sale, the other New York franchise would be a stunner, but there are some on Wall Street speculating that James Dolan listening to offers for the Knicks (or Rangers) could be a possibility.
According to BTIG’s Madison Square Garden analyst Brandon Ross, the sale of the Rockets for $2.2 billion could spark interest in Dolan to at least consider offers to sell the Knicks.
As Marketwatch notes, Dolan is keenly aware of the decline of the cable TV bundle as the former owner of Cablevision (which he sold recently) and MSG and MSG Networks, and, thus, he knows the dangers the collapse of the cable bundle has for sports television rights to decrease.
“Today’s monetization system, the one we’ve had over the last 20 years… Where 90 something percent of the American public who has television pays for ESPN whether they watch ESPN or not, right?” Dolan said during a future of sports content panel at the Consumer Electronics Show in January. “All of that advertising, if that system falls apart, which it looks like it is starting to erode now, it will not even come close to that kind of production of rights value and that’s really the thing we will all have to grapple with.”
With the NBA’s latest TV rights deal causing franchise valuations to skyrocket, it’s possible that Dolan could see this as the perfect time to get out before the bubble bursts and the decline of cable TV leads to a smaller rights deal in the future. As to whether he would sell the Knicks or the Rangers, because NBA teams are so much more valuable, Ross notes that it’d be far more lucrative for him to cash out on the Knicks should he decide to only sell one of the teams.
“Given Dolan’s views, we would think he would have to consider at least partially monetizing MSG’s sports interests (even with the Knicks at a competitive lull), if not now than in the near- to medium-term,” Ross wrote. “The largest dollar upside would clearly come from selling all or part of the Knicks.”
At a $3.3 billion valuation in the latest Forbes estimates, it’s conceivable, as Ross noted, the Knicks could fetch a record $4 billion price tag.
Should a group be willing to pony up that kind of money, it would have to force Dolan to consider selling the team and, in turn, delight Knicks fans that have loathed Dolan for nearly two decades.
(via Marketwatch and Street Insider)
