Last Update 11 Dec 25

MSGS: Future 60% Discount To Private Market Value Will Narrow

Analysts have modestly reduced their price target on Madison Square Garden Sports to about $268, down roughly $2, citing a still sizable discount to the estimated private market value for the Knicks and Rangers, along with concerns about governance and the visibility of potential catalysts.

Analyst Commentary

Street views on Madison Square Garden Sports remain mixed, with valuation support from private market benchmarks offset by governance and liquidity concerns.

Bullish Takeaways

Bullish analysts highlight that the Knicks and Rangers still trade at a sizable discount, estimated at around 60 percent, to combined private market value, which implies meaningful upside if that gap narrows.
Recent sales of comparable marquee franchises, such as the Celtics and Lakers, reinforce confidence that underlying asset values are higher than what the current share price implies.
The core business is viewed as capable of consistently generating modest cash flow while continuing to reinvest in operations, which supports a longer term value creation narrative.
Some see the recent price target trim as largely mechanical, with the rating and core thesis intact. This suggests execution has not fundamentally deteriorated.

Bearish Takeaways

Bearish analysts argue that the concentrated ownership structure, with management and related parties controlling a dominant share of voting rights, limits governance checks and could mute minority shareholder influence on strategic decisions.
Limited public float and trading liquidity are seen as structural overhangs that can constrain institutional participation and keep the valuation discount in place for longer.
Recent share price weakness following an offseason revenue miss, driven by lower league distributions, raises questions about earnings visibility and near term execution risk.
The lack of clear, near term catalysts to unlock asset value, such as a strategic transaction or structural change, leads some to see the current risk and reward profile as fairly balanced rather than compelling.

What's in the News

The company completed its long running share repurchase program announced in 2015, having bought back 2,018,458 shares, or 8.29 percent of shares outstanding, for a total of about $340.33 million, with no additional shares repurchased in the most recent quarter (Key Developments).
Madison Square Garden Sports renewed a multi year marketing partnership with Piece of Cake Moving & Storage, which will retain its role as the Official Moving and Storage Partner of the New York Knicks, featuring prominent in arena branding, on court contests, GardenVision features, LED signage, and sweepstakes for fans (Key Developments).
The New York Rangers named GAME 7 as their first ever jersey patch partner, launching in the 2025 26 centennial season, with GAME 7 branding on all game jerseys, related retail merchandise, a themed centennial night at The Garden, and collaborative content and merchandise drops across Rangers digital channels (Key Developments).

Valuation Changes

Fair Value Estimate: Unchanged at approximately $264.50 per share, indicating no material shift in the base valuation view.
Discount Rate: Risen slightly from about 9.66 percent to roughly 9.67 percent, reflecting a marginally higher required return.
Revenue Growth: Essentially unchanged, edging down fractionally from about 2.12 percent to 2.12 percent, with no meaningful impact on the model.
Net Profit Margin: Stable at roughly 10.32 percent, with only a negligible rounding adjustment in the latest update.
Future P/E: Risen very slightly from around 74.30x to approximately 74.32x, signaling a minimal change in the implied earnings multiple.

New national media rights and expanded global partnerships are likely to strengthen recurring revenue streams and sponsorship opportunities for MSG Sports.
Increased fan engagement and experiential demand, coupled with digital initiatives, will support revenue diversity, pricing power, and long-term earnings stability.
Heavy reliance on core teams, reduced local media revenue, and rising costs increase earnings volatility and threaten sustainable long-term margin and revenue growth.

Catalysts

About Madison Square Garden Sports

Operates as a professional sports company in the United States.What are the underlying business or industry changes driving this perspective?

The upcoming ramp-up in high-value national media rights fees for the NBA (beginning in fiscal '26) will offset the recent step-down in local media rights, positioning MSG Sports for an overall increase in recurring media revenue and supporting both revenue growth and higher net margins over the next several years.
Expanded international partnerships and marketing deals-such as with Abu Dhabi's Department of Culture and Tourism-signal rising global interest in the Knicks and Rangers franchises, enhancing sponsorship income and merchandise opportunities, which are likely to boost top-line revenue.
Persistent demand for live sports and premium arena experiences, as demonstrated by record-breaking gate receipts and suite revenues, combined with further investments in arena renovations and hospitality, is expected to drive stable or accelerating event-related revenue and higher average revenue per customer.
Broader social media engagement and digital content initiatives-evidenced by strong growth in follower counts and exclusive in-arena/online merchandise offerings-establish an expanded, youthful fan base and unlock new digital monetization channels, improving long-term revenue diversity and margin potential.
Ongoing consumer prioritization of experiential spending (high ticket renewal rates and playoff-driven demand) provides MSG Sports with robust pricing power and visibility into future ticket and hospitality revenue, supporting earnings stability and making forward growth less sensitive to near-term volatility.

Madison Square Garden Sports Earnings and Revenue Growth

Madison Square Garden Sports Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Madison Square Garden Sports's revenue will grow by 1.6% annually over the next 3 years.
Analysts are not forecasting that Madison Square Garden Sports will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Madison Square Garden Sports's profit margin will increase from -2.2% to the average US Entertainment industry of 9.4% in 3 years.
If Madison Square Garden Sports's profit margin were to converge on the industry average, you could expect earnings to reach $102.9 million (and earnings per share of $4.29) by about September 2028, up from $-22.5 million today.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 80.7x on those 2028 earnings, up from -220.7x today. This future PE is greater than the current PE for the US Entertainment industry at 39.3x.
Analysts expect the number of shares outstanding to grow by 0.1% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.77%, as per the Simply Wall St company report.

Madison Square Garden Sports Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The recently amended local media rights agreements with MSG Networks resulted in substantial reductions in annual rights fees (28% for the Knicks and 18% for the Rangers) and eliminated contractual escalators, with shorter expiration dates. This structural decline in a key recurring revenue stream directly impacts long-term revenue and margin growth.
MSG Sports remains heavily dependent on the performance and popularity of just two core assets-the Knicks and Rangers-making top-line revenue and earnings vulnerable to on-court/ice performance, local economic cycles, and shifting fan interest in New York City.
Although national media rights revenue is set to increase, the evolution of the RSN (regional sports network) landscape and continued decline in traditional linear TV viewership could introduce further uncertainties or downward pressure on future local media revenue, reducing predictability and possibly leading to earnings volatility.
Rising player compensation, luxury taxes, and escalating collective bargaining-related expenses (as highlighted by recent NBA and NHL salary cap and tax increases) will drive higher fixed operating costs, which, if not offset by broader revenue growth, are likely to compress net margins over the long term.
Merchandise and event-related revenues declined year-over-year, and the company noted that growth in these categories can be closely tied to special initiatives (e.g., new jersey launches) or deep playoff runs-raising risk that, without consistent performance or new fan engagement strategies, ancillary and core in-arena revenues could stagnate, impacting top-line growth.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $261.5 for Madison Square Garden Sports based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $314.0, and the most bearish reporting a price target of just $220.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $1.1 billion, earnings will come to $102.9 million, and it would be trading on a PE ratio of 80.7x, assuming you use a discount rate of 9.8%.
Given the current share price of $206.36, the analyst price target of $261.5 is 21.1% higher.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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