Episode Details

Madison Square Garden Sports (MSGS) Q4 FY2026 — Q4 FY2026 (quarter ended June 30, reported before the open Aug 13): revenue $278.745M, up 37%; diluted EPS $1.16 against a $0.635 estimate, an 83% beat; the Knicks won the NBA championship. The stock closed DOWN 0.3% at $412.98 that session after touching a record $438.93 intraday, then fell 1.4% to $407.17 on Aug 14. The move had come the day before: +5.2% on the $12.5B Lakers deal. The Knicks won the 2025-26 NBA championship and MSG Sports delivered a genuine blowout - Q4 revenue up 37% to $278.7M and diluted EPS of $1.16 against a $0.635 bar. The stock closed lower anyway. It had already re-rated the day before, on a $12.5B Lakers transaction three thousand miles away. Across the full fiscal year this company earned $7.8M, so the income statement cannot price it; the private-market value of two franchises can, and that discount has gone from 52% to 20% in ten months. THE CALL: HOLD (3/5, RARE ASSETS, ALREADY RE-RATED) — base-case value ~$457 vs ~$407.17 today. KEY METRICS: - CALL: HOLD, 3/5. Fair value $457 vs the $407.17 close on Aug 14, about 12% upside. Bull $534, bear $367. We are BELOW the Street: 20 buy, 9 hold, 0 sell, average target $511. All three post-print targets landed Aug 14, the morning after results - Guggenheim raised to $584 from $522, Susquehanna to $477 from $430, Seaport to $473 from $435. Morgan Stanley had already upgraded to Overweight at $450 on Jul 15. - THE QUARTER (ended Jun 30, reported BMO Aug 13): revenue $278.745M, up 37% or $74.8M, about $51M past a $227.7M estimate. Operating income $32.2M against a $22.6M loss; adjusted operating income $39.6M vs a $16.8M loss. Diluted EPS $1.16 and basic $1.17 against a $0.635 bar - an 83% beat. Playoff revenue alone added $66.9M as the Knicks won the 2025-26 NBA championship. League distributions rose $7.2M. - THE FULL YEAR: revenue $1,153.8M, up 11%. Operating income $28.9M, up 95%; adjusted operating income $58.7M, up 54%. Net income just $7.8M and diluted EPS $0.32 - so 1,272x earnings and 169x adjusted operating income at $407.17. Operating cash flow $62.7M vs $91.6M. Event-related $536.5M, media rights $295.7M, sponsorship and suites $255.3M, league distributions $66.2M. No dividend was paid. - THE ACTUAL THESIS - THE HOLDING-COMPANY DISCOUNT: Forbes marks the Knicks at $9.75B (Oct 23, 2025) and the Rangers at $4.00B (Dec 11, 2025); Sportico had the pair at $13.5B (Oct 22, 2025). Market cap $9,805M on 24,079,941 shares, net debt $94M, arena leases $902M - enterprise value $10.8B, a 20% discount. On Oct 22, 2025 the same method gave 52%. Two-thirds of it has already closed. What to watch: UP: the Rangers separation completing by end-October 2026 and the two pure-plays trading tighter than the holdco; the NBA board approving the $12.5B Lakers transfer in September, which would mark the Knicks up alongside it; a fresh Forbes or Sportico mark reflecting the championship. DOWN: the separation slipping past October; the Lakers transfer being blocked, which removes the comp underpinning half the upside; franchise values flattening and the discount widening back toward 35%, which alone puts the shares near $367. Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision. Learn investing free in the Charged Alpha app: https://chargedalpha.com/app?source=youtube&ref=video Educational only. Not financial advice.