The Madison Square Gardens Company (MSG) is officially putting its WNBA New York Liberty franchise up for sale. As a result, it's got some investors wondering whether a possible sale of the New York Knicks could be coming as well.

In February, Forbes valued the Knicks at $3.3 billion. However, it also valued the Houston Rockets at $1.65 billion, 33% below its final $2.2 billion selling price earlier this year. Following the Rockets sale, one analyst from Macquarie valued the Knicks at $3.5 billion. If the team were to get the same "Forbes premium" that the Rockets received, the Knicks would sell for close to $4.4 billion.

Will the Knicks fetch that much? In a good economy in one of the strongest markets, it's possible. A figure of $4 billion or more wouldn't be out of the question. With stock markets hovering near record highs, what's to say a basketball-loving billionaire fund manager wouldn't want to own the team?

Given Madison Square Garden's $5.25 billion market cap, a $4 billion sale would likely undervalue the company. Consider that the Rangers were last valued at $1.25 billion. That right there gets us to $5.25 billion between the Rangers and Knicks.

That doesn't consider its WNBA Liberty asset, its entertainment business, or the company's future revenue and earnings potential from having one of the most well-known sports and entertainment venues in the world.

NBA valuations have been on the rise, particularly over the last few years. As mentioned, the Houston Rockets franchise most recently sold for $2.2 billion. Talk about ROI, as former Rockets owner Les Alexander bought the team for just $85 million in 1993. The sale broke the previous record of $2 billion when former Microsoft (MSFT) chief Steve Ballmer purchased the Los Angeles Clippers in 2014.

What's driving these prices higher? The ever-increasing broadcasting rights fees paid to the teams sure are helping, along with higher traction in international markets. 

While companies like Facebook (FB) and Alphabet (GOOGL) have been pushing into content, they have not managed to recreate live audiences in a "truly effective" manner, Mark Cuban, owner of the NBA's Dallas Mavericks, said last week. Since the internet is not making it a tougher market, broadcasting fees for the NBA are headed higher once again, he added.

While this equates to more money for the clubs, it also finds its way into the players' pockets, too, thanks to the collective bargaining agreement between them and the teams. As these broadcasting fees (paid to team owners) continue to climb, it makes owning a franchise that much more attractive, thus helping to drive team prices even higher.

Of course, it helps that this is a very supply-shortened industry, with only 30 teams to begin with. Selling is rare, so when one finally heads to the auction block, there are a bevy of buyers willing to pay a massive premium to get in one. Could the Knicks be next? If so, a big premium wouldn't be shocking at all.

MSG stock ended Wednesday down 0.69% to $221.18. 

Facebook and Alphabet are holdings in Jim Cramer's Action Alerts PLUS Charitable Trust Portfolio. Want to be alerted before Cramer buys or sells FB or GOOGL? Learn more now.

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This article is commentary by an independent contributor. At the time of publication, the author had no positions in the stocks mentioned.

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