Nugget: Madison Square Garden Valuation

From Brian Griffin´s article “Madison Square Garden Seems Significantly Undervalued” :

Valuation: I will keep it relatively simple as I’ve always felt that the more numbers you need, the less likely it is that you have a real winner.

You can add up the low end of my estimates and come up with 800 + (give the franchises a 50% haircut) 500 + 100 = 1.4B in EV. Or take the high end and get 1.6B + 1B + 100m = 2.7B in EV = $40. I think you have a large margin of safety with some pretty good upside.

They are owed a 190mm cash receivable from Cablevision due by June 1, 2010 and will probably have about 100mm in cash as of 12/31/09. No debt. Market cap of 1.5B. EV = 1.21B

To look another way (sanity check):
There is quite a bit of seasonality in their numbers and Q4 is generally the strongest. I expect them to generate about 100mm in EBITDA for 2009 and for this number to go up to at least 150mm in 2010. Using a maintenance capex number of 50mm, I expect FCF of 130mm, to be conservative, after adding 30mm for their deferred tax liability. (They get some serious tax breaks from NYC) So, I have them at less than 10x a conservative FCF number ex-cash.

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