00:00Great to have you here. We've talked a lot over the years and you've always been banging the drum here
00:04on the value and more importantly some of the unlocked value in the MSG stocks.
00:10Let's start with MSGS. This is the business that includes the Knicks as well as the hockey team, the New
00:16York Rangers.
00:17I know it's hard to sort of put a valuation on sentiment. But when you walk around this city and
00:23you feel the excitement, you see jerseys and all the paraphernalia selling out.
00:27You're already getting words here that whatever season tickets are going to look like for the next season are going
00:32to be a lot higher.
00:33Does that mean that the value of this stock goes up with it?
00:37Well, as you know, markets are so efficient. And even with all this excitement and all this enthusiasm, you know,
00:44the stocks have done extremely well over this last year.
00:48As people started to see the team coming together, starting to see a gel and the playoffs have gone on,
00:53the stocks have made new highs.
00:55So I do think it's going to be a good year. I think there's going to be still more good
01:00news.
01:01But a lot of the good news is already incorporated in the price of the publicly traded companies.
01:06There has been some discussion prior to this series that there was the idea that they would actually split MSGS
01:14into two separate stocks.
01:16It's basically one stock for the Knicks and its WNBA counterpart and another for the hockey team, the Rangers, and
01:23its counterpart in the minor leagues here.
01:26Do you think that that would be a good idea to do at this time?
01:30I think it's an excellent idea to split the two companies up.
01:33I think it will make it much easier for a private equity investor to put capital into either of the
01:40companies or both companies.
01:41It will be easier for Jim Dolan if he wants to sell one of the companies.
01:45You know, he might want to sell at these all-time highs as the stocks have done so extraordinarily well.
01:50You know, get out on top and realize the valuation will probably never be higher than what's happening during this
01:56environment after this iconic championship and, again, all the excitement of New York City.
02:01So the spinoff and splitting up the two companies, splitting up into two companies is really, I think, a terrific
02:06idea.
02:07Well, I'm curious about that.
02:08You've talked in the past about this stolen discount, the idea that, for better or for worse, there are a
02:13lot of people that don't look favorably on Jim Dolan as a person and to a certain extent as a
02:18manager.
02:18And I do wonder if, for some reason, he was willing to sell here at the top, whether that would
02:25be welcome by investors like yourself.
02:28Well, I think investors would love it because the stocks have not reflected the entire value of these franchises.
02:35As we know, the Knicks would have been rumored to be worth $10 billion, maybe now it'll be $12 billion,
02:42you know, probably the highest-priced basketball team in history if it were ever to be sold.
02:49So it would be the time to really take advantage of all the enthusiasm.
02:53You can imagine all those billionaires that are out there would want to be part owner of the New York
02:58Knicks and to be able to be in Madison Square Garden, you know, celebrating the next championship as an owner.
03:05So it is the right time to be thinking about a sale and, again, to be able to realize the
03:09value because the markets have never really reflected the true underlying asset value of Madison Square Garden sports and the
03:17Knicks and the Rangers.
03:17Well, it would certainly be interesting to follow along and see what decision Jim Dolan ultimately makes.
03:24But I do want to talk about, you know, your other exposure that you have to his sort of publicly
03:28listed portfolio here.
03:30Of course, Aerial Investment is also a big holder in Sphere Entertainment.
03:34And I just wonder, you know, how you think about that fitting in when you think about, okay, MSG is
03:39one thing.
03:40You think about the Knicks exposure that you have there.
03:42How does Sphere factor in?
03:45Well, Sphere was spun out into a separate company, you know, several years ago.
03:49And you talked about the Dolan discount.
03:51The stock got extremely cheap.
03:53People thought that they had spent, you know, way over budget to build the Sphere.
03:58It cost over $2 billion when it was only supposed to cost $1.3 billion.
04:02And people sort of gave up on it.
04:04The stock was sort of treading water, you know, 40s, 30s, even into the 20s.
04:09And now it's over $150.
04:11So that Dolan discount has become a Dolan premium.
04:15It's just done exceedingly well.
04:18And it's been executed in a beautiful way.
04:21If you go to see a concert at the Sphere, everyone says they've never seen anything like it.
04:26They don't want to go to a traditional venue anymore once you've seen an act in the Sphere
04:30with all the extraordinary technology and the world-class sound system.
04:33It's just something special.
04:35And then, of course, the movies, like now the Wizard of Oz that plays every day there several times a
04:40day.
04:41They used AI to be able to take that old movie and make it spectacularly successful in the Sphere.
04:48So Jim Dolan has just executed beautifully from the time that he first, you know, drew what the Sphere was
04:55going to look like on a napkin.
04:57Right.
04:57And now to see it the way it is and starting to grow globally, as you're going to start to
05:02see more Sphere's around the world,
05:04it's just something we couldn't be more excited about, the execution around the Sphere.
05:08Well, you think about that Jim Dolan discount flipping into a premium, as you say.
05:13I know we've been focusing on MSG and those associated stocks, but Sphere shares higher by 61% on a
05:21total return basis year to date.
05:23When you have winners like this in your portfolio, John, I wonder how you manage them.
05:28I mean, you think about target allocation levels, not wanting, you know, a particular holding to go too big.
05:35Is that something that you're thinking about as you see these really stellar runs that some of these stocks are
05:41going on?
05:42Well, it's interesting.
05:43These have been some of our largest holdings.
05:45Sphere was our largest holding last year.
05:49Madison Square Garden Entertainment that owns the garden has been one of our top holdings also throughout the year.
05:55So we've had very, very large positions in our aerial fund in two of our favorite stocks.
06:00But you're right.
06:01At some point, when the value starts to be realized, it's prudent for us to scale back.
06:07We don't like to have one company be more than 6% of the aerial fund portfolio.
06:12And so it just means that as stocks get more expensive, more people realize the economic value of those businesses
06:18and the cash flows that are there.
06:20It's a time for us often to be lightening up.
06:22But now we feel like we're in a great position.
06:24We think we're in a well-positioned for future growth in all three of the companies and just couldn't be
06:30more excited to be Jim Dolan's partner.
06:33So, John, I do want to circle this back to the Knicks here.
06:36I mean, you obviously are a basketball fan.
06:38You played, obviously, at Princeton.
06:39You know a lot about this sport.
06:40When you look at the team and what you saw this year and really coming out of last season as
06:44well, is this going to be a one-off championship-wise and we wait another 50 years?
06:48Or maybe the start of a multi-year run?
06:53Well, I'm very, very optimistic.
06:56You know, I'm really good friends with Bill Bradley, the former senator who was one of the stars of the
07:01last Knicks championship.
07:02And, you know, I think we'll be able to have multiple years again in New York.
07:06You know, people want to come and play in the world's greatest arena, in one of the world's greatest cities.
07:11So, it'll help us to attract free agents as time goes on to keep the team fresh and exciting for
07:17the future.
07:18And, of course, Jalen Brunson is arguably the best player in the world.
07:21I mean, what he's been able to accomplish is just remarkable.
07:25The degree of difficulty in the shots that he makes, his ability to make shots under pressure.
07:30There's just really no one like him.
07:31So, I think he is still at the right age to be able to help us deliver more championships as
07:36we go forward
07:37and more value for both the guard and as well as the sports.
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