The New York Knicks, one of the worst teams in the National Basketball Association the last three years, keep making Jim Dolan richer. It’s the other parts of his empire that look questionable.
Fans may point fingers at Dolan, 62, for the Knicks’ on-court struggles, but the team’s value has surged to $3.5 billion, according to Macquarie Research, which based its figures on the $2.2 billion sale of the Houston Rockets this week. The Knicks, part of the Dolan family’s Madison Square Garden Co., are “Jimmy’s toy,” said Bloomberg Intelligence analyst Paul Sweeney -- a glamorous asset in the world’s biggest media market.
The rising fortunes of Madison Square Garden are separating the Dolans’ major holdings into winners and losers, fueling speculation that the family will part with their underperforming cable assets. Those include controlling stakes in MSG Networks Inc., which airs Knicks and New York Rangers games, and AMC Networks Inc., the home of “The Walking Dead” and other hits.
MSG Networks is coming up on the two-year anniversary of its split from Madison Square Garden. Starting next month, a conservative tax attorney would say the family can sell assets without endangering the tax-free status of the spinoff, according to Brandon Ross, an analyst at BTIG Research. That’s among the reasons the Dolans would be willing to sell MSG Networks to the right suitor at the right price, according to a person familiar with the matter.
“Everyone is looking to Oct. 1 as the date that MSG Networks really comes in play,” Ross said.
The television business is in a period of upheaval as consumers shut off their cable subscriptions, turning away from channels like MSG and AMC and toward Netflix, Facebook and Snapchat for entertainment. Dolan himself has called attention to the shifting landscape.
“Viewing habits are changing and how people get the game and how they view it is also changing,” he said during a panel at the International Consumer Electronics Show earlier this year. “And I don’t know that those old monetization vehicles are going to continue to work.”
A spokesman for Madison Square Garden and MSG Networks declined to comment.
As executive chairman of both companies, Jim Dolan is the most prominent family member in the business, though his 90-year-old father Charles remains chairman of AMC and is on the boards of the others. The family controls all three through a collection of trusts and investment vehicles.
Wall Street is betting that hosting live sports and concerts is a better business than broadcasting them on TV. Shares of Madison Square Garden, which owns the iconic New York arena and other venues in addition to the Knicks and Rangers, are up 42 percent since the split with MSG Networks, which is up just 14 percent in that span. AMC has sunk 19 percent.