Instant Reaction: MSG Sports Considering Spinning Off New York Knicks, Rangers

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1:02Bloomberg Audio Studios. Podcasts. Radio. News. Okay, I'm going to sit back. Alexis Christophorus can't even. She's had two Titos in tanks just since this announcement on the Rangers and the Knicks. Paul Sweeney has those rock star seats for the Knicks as well. Nick Turner's biggest headache has joined us. Randall Williams is with us. Writing it up. Has Ronald Grigori ever seen your Amex? All of my managers have seen it. They've all seen your Amex? I'm under. The Bad Bunny merch at the Super Bowl? Oh, I don't have any Bad Bunny merch, not this time. I wore Kendrick Cuddy yesterday from Super Bowl 59's halftime show, but I did not get any Bad Bunny merch this year.

1:42Interesting. Randall Williams, EO Sports Business Reporter for Bloomberg News, joins us here. Randall, we saw some news this morning. Alexis was just reporting it. MSG, which is a publicly traded company, thinking about splitting off two of their main businesses, the Knicks and the Rangers. What's behind that, do you think? Well, they said in the statement that they want to get a proper valuation on these things. MSG as a company is valued at$7 billion. Sportico, Forbes, CNBC all estimate the Knicks and the Rangers combined are much larger than that. You're talking about the Knicks being a 10, potentially the Rangers probably at three to four.

2:15And so that combined is anywhere between 13 to$14 billion. I think when you're thinking about these assets, they are very huge and they want to get a proper valuation on them. Isn't there generally speaking though, when you think about that, whether you think about the Atlanta Braves, which is also publicly traded that they do in fact trade at a discount to private market value but i guess the dolens are thinking not this much of a discount yeah i think so i mean look the knicks are the i believe the third most valuable team depending on who you ask i'm sure really in the nba i think if both the warriors and the lakers were up for sale again they might trade for higher but there would be a strong strong market and the rangers as well because they do play yeah so lexus they're like the Toronto Maple Leafs.

2:56They're like the third most valuable franchise. Which is crazy when you think about the fact that both the Knicks and the Rangers haven't won a championship in years. And the Knicks, and we're talking about 1973. I was a toddler. What's going on? So what would they be worth, you know, if they actually went out and won a championship? I think that there is a championship surge as part of it. You'll probably see it with the Seahawks, which are expected to trade later this year. Give us a number. On the Seahawks, I would guess at minimum$8 billion, at maximum $10. That would be my guess on the Seahawks.

3:29And the reason that these assets trade for so large is because there's not that many of them. You're talking about a New York-based market. And so with that in mind, anybody who wants to own a sports franchise, it's almost a once-in-a-lifetime opportunity. The Knicks, whoever were to buy them, if they were for sale, would probably not be up for sale for another 50 years. You know what's another once-in-a-lifetime opportunity? To see them live because these ticket prices are out of control. Oh, here we go. You're not wrong. So I guess if they spin off, we're still not going to get cheaper tickets, are we?

3:56Sports are a luxury experience right now. Gone are the days where you can just be like, oh, I want to go to a Knicks game and walk in. Now you sort of have to plan for it. We had the head of sports investment banking at Goldman Sachs yesterday in on the Bloomberg Intelligence program. Yep. And he did a great job. But he was saying there's institutional investor money out there, Tom, that is looking to invest in professional sports franchises, they now view it as an asset class, not as like a trophy property. It's stocks, bonds, and sports teams. Excuse me, it sounds like David Rubinstein. Yes, exactly.

4:29Absolutely. I mean, you look at the Knicks, they have Silver Lake as one of their investors, or Madison Square Garden has Silver Lake. You look across sports, and private equity is increasingly buying more stakes because they are seeing these media rights fees continue to rise. You're seeing sports franchise valuations continue to rise. years ago, the Knicks were probably worth between$2 to$3 billion. Today, they're valued at$10. When I think these private investment firms are looking at this, they're like, okay, well, if this is turning over so many times over again, of course, I would like to be in the dance.

4:58Private equity. We've seen private equity in the NFL. Of course. Will we see that in other sports, do you think? It's all over. The NFL was the last to add the rules. The NBA has had private equity for years, so has the NHL, the MLB, and I believe the MLS as well. I mean, it used to be a sport for if you're a millionaire, you own a sports team. Right. Now it's billionaire. Sure. And even then, Stevie Cohen, the wealthiest owner in Major League Baseball individually, is being outgunned by this consortium of investors in Los Angeles for the Dodgers. Yeah. And I think a good way to look at this is thinking about the Seahawks sale.

5:34Let's say that they do sell for at minimum$8 billion. Well, in NFL rules that you have to have 30 percent of that overall valuation in cash. So that's at minimum two point five billion dollars. There's not that many people in the world who can write that check. That check cannot come from private equity. You can use private equity to add on to that to get to the eight billion dollar number after the discount. But it's a lot of money to buy these sports franchises. And the pool of people who can buy these teams is getting smaller. All right. You were out in the Bay Area for the Super Bowl. I mean, six nothing going into the third quarter, but still 125 million people tuned in.

6:14I mean, this is the juggernaut. No signs of shutdown. It is the NFL is a booming business, unlike any other. When you have two teams, Seahawks and the Patriots, who, you know, Boston is a big market, but Seattle is a midsize market, and they attract that number. Of course, Roger Goodell wants to rip up the media deal and go get some more money. Randall Williams, with his definitive in U.S. sports and the finance of it as well, just absolutely owns a high ground on all this back and forth. You went to Hampton University. My father beat into me that you read Tom Boswell and the Baltimore Sun in the Washington Post.

6:54randa williams on the elimination of the venerable sports desk of the washington post discuss yeah i had some friends who were actually out there with me on the super bowl trip who were at roger goodell's press conference and they got the news there and it's a it's a travesty i mean you think about just the things that have occurred in washington dc over the last five years with the commander's sale before that the ownership of dan snyder nfl owners essentially forcing him out alongside the coverage of just Washington, D.C. as a whole. That's some of the larger stories. But talk about the Wizards and when they were thinking about moving.

7:30To think about the Washington Post without a sports desk is insane. Is it a money loser? Because I went down to Washington Post yesterday. I literally did this, folks. I counted 12 articles of Washington Post substance, international politics, and that. And the next article was, here's the three ways to eat a cheese pizza. Yeah, it's ridiculous. That's what we're substituting for the legacy of Sally Jenkins and Tom Boswell. It's ridiculous. I think that the Baltimore banner had announced that they are going to be hiring some people to cover D.C., and I think that that's good. But to imagine the Washington Post without a sports desk is unfathomable.

8:07Who was your hero? You're at Hampton. Okay, you're a kid. Who was your hero in sports writing? I would say Bill Roden. Bill Roden, who was at the New York Times for many, many years. And to think about even the New York Times and what they have done. They have no sports, actually. They bought athletics. There are still sports writers here and there that dabble, but they bought the athletic, and that is essentially their substitute. The Washington Post did not buy anything. They just cut jobs. I have in my closet at home a fancy leather briefcase, what would you expect, from years ago. And in it is a folded up globe of Buster Olney.

8:40Excuse me, maybe at Times, Buster Olney's classic article on Pedro Martinez getting older. That's what we're losing, is people like Olney and others. George Will's away from it, maybe. This has been great. Can you do less American Express? Reto just emailed in Keeper of the Amex and said, tell Randall to slow it down. I don't even think I would crack top 50 in the company. Why are you looking at me? Are you going to Canada, U.S. in two days in Italy? I'm not. See, you hear he's trying to set me up. He's trying to get me on the fly out of there. You can take my place. You can take my place. I'm not headed out there.

9:23We'll let Alexis go. Randall Williams, thank you, thank you so much. Thank you for having me. Short notice on this. Alexis, was that okay? Did we learn about the Rangers and the Knicks? I think he did a great job. I learned a lot. They're worth$10 billion. They've never won. These are eye-popping numbers. New York Yankees, aren't they worth like$8.5 billion? Oh, they're going to be worth way more than$10 billion. I don't know. My boy Josiah owns the Nets. He's laughing all the way to the bank. Wait a minute, five seconds. What are the Yankees worth? I say$8 billion. The Yankees got to be worth more than$10.

9:50The Lakers traded for$10 last year. I think the Yankees would go for something similar.