Knicks Win, Rangers Lose: Either Way, MSG Remains a Buy

NEW YORK ( TheStreet) -- Over the weekend, Madison Square Garden's ( MSG) New York Knicks hung on in the NBA Playoffs, beating the Miami Heat 89-87. In the NHL's Eastern Conference semifinal series, the Rangers fell to the Washington Capitals, 3-2. Although the Rangers appear to have a much better chance of winning a championship, the success of sports franchises only tells part of MSG's story from an investment standpoint.

Back in mid-April, I spelled out my case for investing in MSG.

Since then, the stock popped 10.1%, moving up more than $3 to this past Friday's close of $37.94. During that session MSG touched an intraday, 52-week high of $38.38.

Before we consider the bull case for MSG, in light of last week's killer quarterly report, please allow me to get something off of my chest.

The company blew the door off of the quarter. Because MSG owns the Knicks, the media associated Jeremy Lin's fleeting stardom with the company's solid quarter. I have great respect for The Wall Street Journal (I subscribe and read it religiously), but it's nothing short of absurd that the newspaper would allow this headline to hit: Lin Boosts Madison Square Garden. And it was not the only one offering a thin assessment of MSG's earnings release.

As a long-term investor, I do not own MSG shares on the basis of Lin or even the mere presence of the Knicks and Rangers.

I am long because of synergy. MSG is a vertically integrated regional powerhouse: It owns the sports franchises. It owns the venues they play in. It owns the distribution channels for broadcasts of the teams it owns as well as others.

A bull case built on uncertain and short-term factors, such as Lin, is good for little more than a swing trade. It's irresponsible of the financial media to connect "Linsanity" with MSG's quarter. That approach makes for a decent story with mainstream mass appeal, but provides little, if anything, of value to investors.

Sifting through MSG's conference call, however, makes you a smarter and better-informed investor.

Over the course of the entire call, Lin's name came up twice, including just this one materially meaningful reference:
On the marketing partnership front, we have recently established new partnerships with Unilever, Blackberry, Tissot, (inaudible). The emergence of Jeremy Lin also created additional sponsored opportunities including a partnerships with Thailand based companies Acer and Maxis and a court side marketing campaign with Coca-Cola that include signage in Mandarin.

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