Speaker 1: Bloomberg Audio Studios, podcasts, radio news. Our next guest. He's
Speaker 1: been all in really on some of these Jim Dolan
Speaker 1: businesses for quite some time. A long time investor in MSGS,
Speaker 1: the sports business at least a decade, and the largest
Speaker 1: holder in MSG Entertainment. John Rogers joins us right now,
Speaker 1: the legendary value investors, the founder, chairman, co, CEO, and
Speaker 1: CIO over at Aerial Investments. John, Great to have you here.
Speaker 1: We've talked a lot over the years, and you've always
Speaker 1: been banging the drum here on the value and more importantly,
Speaker 1: some of the unlocked value in the MSG stocks. Let's
Speaker 1: start with MSGS. This is the business that includes the
Speaker 1: Knicks as well as the hockey team, the New York Rangers.
Speaker 1: I know it's hard to sort of put a valuation
Speaker 1: on sentiment, but when you walk around this city and
Speaker 1: you feel the excitement, you see jerseys and all the
Speaker 1: paraphernalia selling out, you're already getting words here that whatever
Speaker 1: season tickets are going to look like for the next
Speaker 1: season are going to be a lot higher. Does that
Speaker 1: mean that the value of this stock goes up with it?
Speaker 2: Well? As you know, markets are so efficient and even
Speaker 2: with all this excitement and all this enthusiasm, you know,
Speaker 2: the stocks have done extremely well over this last year
Speaker 2: as people started to see the team coming together, starting
Speaker 2: to see a gel, and the playoffs have gone on,
Speaker 2: the stocks have made new highs. So I do think
Speaker 2: it's going to be a good year. I think it's
Speaker 2: gonna be still more good news, but a lot of
Speaker 2: the good news has already incorporated in the price of
Speaker 2: the publicly traded companies.
Speaker 1: There has been some discussion prior to this series that
Speaker 1: there was the idea that they would actually split MSGS
Speaker 1: into two separate socks. Basically, one stock for the Knicks
Speaker 1: and it's w NBA counterpart, and another for the hockey team,
Speaker 1: the Rangers, and it's our counterpart in the minor leagues here.
Speaker 1: Do you think that that would be a good idea
Speaker 1: to do it this time?
Speaker 2: I think it's an ext idea to split the two
Speaker 2: companies up. I think it will make it much easier
Speaker 2: for a private equity investor to put capital into either
Speaker 2: of the companies or both companies. It will be easier
Speaker 2: for Jim Dolan if he wants to sell one of
Speaker 2: the companies. You know, he might want to sell it
Speaker 2: these all time highs as the stocks have done so extraorninally, well,
Speaker 2: you know, get out on top and realize the valuation
Speaker 2: will probably never be higher than what's happening during this environment,
Speaker 2: after this iconic championship and again all the excitement of
Speaker 2: New York City. So the spin off and splitting up
Speaker 2: the two companies, splitting up into two companies is a really,
Speaker 2: I think a terrific idea.
Speaker 1: Well, I'm curious about that. You've talked in the past
Speaker 1: about this stolen discount, the idea that for better or
Speaker 1: for worse, are there are a lot of people that
Speaker 1: don't look favorably on Jim Dolan as a person and
Speaker 1: to a certain extent, as a manager. And I do
Speaker 1: wonder if it's some reason he was willing to sell
Speaker 1: here at the top, whether that would be welcome by
Speaker 1: investors like yourself.
Speaker 2: Well, I think investors would love it, because the stocks
Speaker 2: have not reflected the entire value of these franchises. As
Speaker 2: we know, the Knicks, who have been rumored to be
Speaker 2: worth ten eleven maybe now it'll be twelve billion dollars,
Speaker 2: you know, probably the highest priced basketball team in history
Speaker 2: if it were ever to be sold. So would be
Speaker 2: the time if to really take advantage of all the enthusiasm.
Speaker 2: You could imagine all those billionaires that are out there
Speaker 2: would want to be part owner of the New York
Speaker 2: Knicks and to be able to be in Madison Square Garden,
Speaker 2: you know, celebrating the next championship as an owner. So
Speaker 2: it is the right time to be thinking about a
Speaker 2: sale and again to be able to realize the value
Speaker 2: because the markets have never really reflected the true underlying
Speaker 2: asset value of Madison Square Garden Sports and the Knicks
Speaker 2: and the Rangers.
Speaker 3: We'll certainly be interesting to follow along and see what
Speaker 3: decision Jim Dolan ultimately makes. But I do want to
Speaker 3: talk about, you know, your other exposure that you have too,
Speaker 3: his sort of publicly listed portfolio here. Of course, Area
Speaker 3: Investments also a big holder in Sphere Entertainment, and I
Speaker 3: just wonder, you know, how how you think about that
Speaker 3: fitting in when you think about Okay, MSG is one
Speaker 3: thing you think about the nixt exposure that you have there.
Speaker 3: How does Sphere factor in?
Speaker 2: Well, Sphere was spun out into a separate company several
Speaker 2: years ago, and you talked about the Dolan discount, The
Speaker 2: stock got extremely cheap. People thought that they had spent,
Speaker 2: you know, way over budget to build the sphere, cost
Speaker 2: over two billion dollars when it was only supposed to
Speaker 2: cost one point three billion, and people sort of gave
Speaker 2: up on it. The stock was sort of treading water,
Speaker 2: you know, forties, thirties, even into the twenties, and now
Speaker 2: it's over one hundred and fifty dollars, so that Dolan
Speaker 2: discount has become a Dolan premium. It's just done exceedingly well,
Speaker 2: and it's been executed in a beautiful way. If you
Speaker 2: go to see a concert at the Sphere, everyone says
Speaker 2: they've never seen anything like it. They don't want to
Speaker 2: go to a traditional venue anymore. Once you've seen an
Speaker 2: act in the Sphere with all the j ordinary technology
Speaker 2: in the world class sound system is just something special.
Speaker 2: And then of course the movie is like now The
Speaker 2: Wizard of Oz that plays every day there, several times
Speaker 2: a day. They used AI to be able to take
Speaker 2: that old movie and make it spectacularly successful in the Sphere.
Speaker 2: So Jim Dolan has executed beautifully from the time that
Speaker 2: he first drew what the Sphere was going to look
Speaker 2: like on a napkin, and now to see way it
Speaker 2: is and starting to grow globally, and you're going to
Speaker 2: start to see more spheres around the world. It's just
Speaker 2: something we couldn't be more excited about. The execution around
Speaker 2: the sphere.
Speaker 3: Well, you think about that Jim Dolan discount flipping into
Speaker 3: a premium as you say, I know we've been focusing
Speaker 3: on MSG and those associated socks, but Sphere shares hire
Speaker 3: by sixty one percent on a total return basis year
Speaker 3: to date. When you have winners like this in your portfolio, John,
Speaker 3: I wonder how you manage them. I mean you think
Speaker 3: about target allocation level, not wanting a particular holding to
Speaker 3: go too big. Is that something that you're thinking about
Speaker 3: as you see these really stellar runs that some of
Speaker 3: these stocks are going on.
Speaker 2: Well, well, it's interesting these have been some of our
Speaker 2: largest holdings. Sphere was our largest holding last year. Madison
Speaker 2: Square Garden Entertainment that owns the garden has been one
Speaker 2: of our top holdings also throughout the year. So we've
Speaker 2: had very, very large positions in our aerial fund in
Speaker 2: two of our favorite stocks. But you're right, at some
Speaker 2: point when the value starts to be realized, it's proven
Speaker 2: for us to scale back. We don't like to have
Speaker 2: one company be more than six percent of the aerial
Speaker 2: fund portfolio. And so it just means that as stocks
Speaker 2: get more expensive, more people realize the economic value of
Speaker 2: those businesses and the cash flows that are there. It's
Speaker 2: a time for us often to be lightening up. But
Speaker 2: now we feel like we're in a great position. We
Speaker 2: think we're well positioned for future growth in all three
Speaker 2: of the companies and just couldn't be more excited to
Speaker 2: be Jim Dolan's partner.
Speaker 1: So, John, I do want to startle this back to
Speaker 1: the next year. I mean, you obviously are a basketball fan.
Speaker 1: You played obviously a Princeton. You know a lot about
Speaker 1: this sport when you look at the team and what
Speaker 1: you saw this year and really coming out of last
Speaker 1: season as well. Is this going to be a one
Speaker 1: off championship wise and we wait another fifty years or
Speaker 1: maybe the start of a multi year run.
Speaker 2: Well, I'm very very optimistic. You know, I'm really good
Speaker 2: friends with Bill Bradley, the former senator who was one
Speaker 2: of the stars of the last Knicks championship, and you know,
Speaker 2: I think we'll be able to have multiple years again.
Speaker 2: In New York, people want to come and play in
Speaker 2: the world's greatest arena in one of the world's greatest cities.
Speaker 2: So it'll help us to attract free agents as time
Speaker 2: goes on, to keep the team fresh and exciting for
Speaker 2: the future. And of course Jalen Brunson is arguably the
Speaker 2: best player in the world. I mean, what he's been
Speaker 2: able to accomplish is this remarkable. The degree of difficulty
Speaker 2: on the shots that he makes, his ability to make
Speaker 2: shots under pressure, there's just really no in life him.
Speaker 2: So I think he is still at the right age
Speaker 2: to be able to help us deliver more championships as
Speaker 2: we go forward, and more value for both the Garden
Speaker 2: as well as the sports. All right, well said, and
Speaker 2: we had your friend Bill Bradley on on Friday, and
Speaker 2: he was giddy about the prospects of actually seen the
Speaker 2: first championship since well he won that championship. And we
Speaker 2: shall also point out also a Princeton Tiger himself. John
Speaker 2: really appreciate it. John Rodgers there the founder, chairman, co.
Speaker 1: CEO and CIO of Aerial Investments, And you know, Katie,
Speaker 1: he's also I think the first guest we've ever had
Speaker 1: that's actually beaten Michael Jordan in a one on one,
Speaker 1: No kidding, that's actually verified.
Speaker 3: That's quite a size and skull it is.
Speaker 1: It is a size and school.
Speaker 2: We should leave with that. Next time.
Speaker 3: Here you go,