Madison Square Garden (MSG)

TOP CONTRIBUTORS

Jonathan J. Smith

Madison Square Garden, Inc. (NASDAQ:MSG) operates in the sports, entertainment, and media industries. The firm owns the Madison Square Garden arena in New York, where it hosts games played by the New York Knicks (of the NBA), the New York Rangers (of the NHL) and the New York Liberty (of the WNBA), as well as concerts, conventions, and other events. MSG also leases other venues, such as Radio City Music Hall. MSG achieved fiscal year growth due to increased popularity for the New York Knicks, and is further optimistic about the current fiscal year as the Knicks popularity increases and disposable income levels continue to rise.

Business Overview

In the past fiscal year, MSG achieved revenue and net income gains due to increased ticket sales, particularly for the New York Knicks, who sold out season tickets for the first time since the 2001-2002 season.^[1] With the Knicks gaining popularity, the firm is optimistic that fiscal year 2011 revenues will be higher, though there is threat that a lockout will occur in the NBA.

Trends and Forces

Sports Teams Success Drives Revenues

The New York Knicks (of the NBA), New York Rangers (of the NHL), and the New York Liberty (of the WNBA) each play all of their home games at Madison Square Garden. Because of this, most of the firm's events are from these three sports teams, and thus the popularity of these three sports teams drive revenue growth through higher tickets and merchandise sales. For example, MSG can earn significantly higher ticket and merchandise sales if their teams win championships or host more popular players.

Revenue Contingent on New York Economy and Tourism

Since MSG provides entertainment service, consumers' purchase rate is dependent on general levels of disposable income amongst New York residents and tourists. The firm must gauge tourism and disposable income levels to price tickets, as to avoid pressuring operating margins.

Competition

Entertainment Competitors

• Live Nation (LYV): The world's largest concert producer by market capitalization, live nation competes with MSG for concert revenues.
• SMG Management (private): SMG manages venues to hold sporting events, concerts, and conventions.

Other New York Sports Teams

• New York Yankees
• New York Mets
• New York Giants
• New York Jets

References

1. ↑ MSG 2010 10-k