Bloomberg Audio Studios, podcasts, radio news. Our next guest. He's been all in really on some of these Jim Dolan businesses for quite some time. A long time investor in MSGS, the sports business at least a decade, and the largest holder in MSG Entertainment. John Rogers joins us right now, the legendary value investors, the founder, chairman, co, CEO, and CIO over at Aerial Investments. John, Great to have you here.
We've talked a lot over the years, and you've always been banging the drum here on the value and more importantly, some of the unlocked value in the MSG stocks. Let's start with MSGS. This is the business that includes the Knicks as well as the hockey team, the New York Rangers.
I know it's hard to sort of put a valuation on sentiment, but when you walk around this city and you feel the excitement, you see jerseys and all the paraphernalia selling out, you're already getting words here that whatever season tickets are going to look like for the next season are going to be a lot higher. Does that mean that the value of this stock goes up with it?
Well? As you know, markets are so efficient and even with all this excitement and all this enthusiasm, you know, the stocks have done extremely well over this last year as people started to see the team coming together, starting to see a gel, and the playoffs have gone on, the stocks have made new highs. So I do think it's going to be a good year. I think it's gonna be still more good news, but a lot of the good news has already incorporated in the price of the publicly traded companies.
There has been some discussion prior to this series that there was the idea that they would actually split MSGS into two separate socks. Basically, one stock for the Knicks and it's w NBA counterpart, and another for the hockey team, the Rangers, and it's our counterpart in the minor leagues here. Do you think that that would be a good idea to do it this time?
I think it's an ext idea to split the two companies up. I think it will make it much easier for a private equity investor to put capital into either of the companies or both companies. It will be easier for Jim Dolan if he wants to sell one of
the companies. You know, he might want to sell it these all time highs as the stocks have done so extraorninally, well, you know, get out on top and realize the valuation will probably never be higher than what's happening during this environment, after this iconic championship and again all the excitement of New York City. So the spin off and splitting up the two companies, splitting up into two companies is a really, I think a terrific idea.
Well, I'm curious about that. You've talked in the past about this stolen discount, the idea that for better or for worse, are there are a lot of people that don't look favorably on Jim Dolan as a person and to a certain extent, as a manager. And I do wonder if it's some reason he was willing to sell here at the top, whether that would be welcome by investors like yourself.
Well, I think investors would love it, because the stocks have not reflected the entire value of these franchises. As we know, the Knicks, who have been rumored to be worth ten eleven maybe now it'll be twelve billion dollars, you know, probably the highest priced basketball team in history if it were ever to be sold. So would be the time if to really take advantage of all the enthusiasm.
You could imagine all those billionaires that are out there would want to be part owner of the New York Knicks and to be able to be in Madison Square Garden, you know, celebrating the next championship as an owner. So it is the right time to be thinking about a sale and again to be able to realize the value because the markets have never really reflected the true underlying asset value of Madison Square Garden Sports and the Knicks and the Rangers.
We'll certainly be interesting to follow along and see what decision Jim Dolan ultimately makes. But I do want to talk about, you know, your other exposure that you have too, his sort of publicly listed portfolio here. Of course, Area Investments also a big holder in Sphere Entertainment, and I just wonder, you know, how how you think about that fitting in when you think about Okay, MSG is one thing you think about the nixt exposure that you have there. How does Sphere factor in?
Well, Sphere was spun out into a separate company several years ago, and you talked about the Dolan discount, The stock got extremely cheap. People thought that they had spent, you know, way over budget to build the sphere, cost over two billion dollars when it was only supposed to cost one point three billion, and people sort of gave up on it. The stock was sort of treading water, you know, forties, thirties, even into the twenties, and now it's over one hundred and fifty dollars, so that Dolan
discount has become a Dolan premium. It's just done exceedingly well, and it's been executed in a beautiful way. If you go to see a concert at the Sphere, everyone says they've never seen anything like it. They don't want to go to a traditional venue anymore. Once you've seen an act in the Sphere with all the j ordinary technology in the world class sound system is just something special. And then of course the movie is like now The Wizard of Oz that plays every day there, several times
a day. They used AI to be able to take that old movie and make it spectacularly successful in the Sphere. So Jim Dolan has executed beautifully from the time that he first drew what the Sphere was going to look like on a napkin, and now to see way it is and starting to grow globally, and you're going to start to see more spheres around the world. It's just something we couldn't be more excited about. The execution around the sphere.
Well, you think about that Jim Dolan discount flipping into a premium as you say, I know we've been focusing on MSG and those associated socks, but Sphere shares hire by sixty one percent on a total return basis year to date. When you have winners like this in your portfolio, John, I wonder how you manage them. I mean you think about target allocation level, not wanting a particular holding to
go too big. Is that something that you're thinking about as you see these really stellar runs that some of these stocks are going on.
Well, well, it's interesting these have been some of our largest holdings. Sphere was our largest holding last year. Madison Square Garden Entertainment that owns the garden has been one of our top holdings also throughout the year. So we've had very, very large positions in our aerial fund in two of our favorite stocks. But you're right, at some point when the value starts to be realized, it's proven for us to scale back. We don't like to have one company be more than six percent of the aerial
fund portfolio. And so it just means that as stocks get more expensive, more people realize the economic value of those businesses and the cash flows that are there. It's a time for us often to be lightening up. But now we feel like we're in a great position. We think we're well positioned for future growth in all three of the companies and just couldn't be more excited to be Jim Dolan's partner.
So, John, I do want to startle this back to the next year. I mean, you obviously are a basketball fan. You played obviously a Princeton. You know a lot about this sport when you look at the team and what you saw this year and really coming out of last season as well. Is this going to be a one off championship wise and we wait another fifty years or maybe the start of a multi year run.
Well, I'm very very optimistic. You know, I'm really good friends with Bill Bradley, the former senator who was one of the stars of the last Knicks championship, and you know, I think we'll be able to have multiple years again. In New York, people want to come and play in the world's greatest arena in one of the world's greatest cities. So it'll help us to attract free agents as time goes on, to keep the team fresh and exciting for the future. And of course Jalen Brunson is arguably the
best player in the world. I mean, what he's been able to accomplish is this remarkable. The degree of difficulty on the shots that he makes, his ability to make shots under pressure, there's just really no in life him. So I think he is still at the right age to be able to help us deliver more championships as we go forward, and more value for both the Garden
as well as the sports. All right, well said, and we had your friend Bill Bradley on on Friday, and he was giddy about the prospects of actually seen the first championship since well he won that championship. And we shall also point out also a Princeton Tiger himself. John really appreciate it. John Rodgers there the founder, chairman, co.
CEO and CIO of Aerial Investments, And you know, Katie, he's also I think the first guest we've ever had that's actually beaten Michael Jordan in a one on one, No kidding, that's actually verified.
That's quite a size and skull it is.
It is a size and school.
We should leave with that. Next time.
Here you go,