By Jonathan Weil
James Dolan is looking for ways to boost the value of his sports teams. For him, that is far easier said than done.
Dolan's sports and entertainment empire includes four public companies with holdings ranging from pro basketball's New York Knicks and hockey's New York Rangers, to Manhattan's Madison Square Garden and the famous Sphere in Las Vegas.
The family-controlled companies are so intertwined that it is practically impossible for outsiders to keep track of all the related-party transactions between them. This is a big reason why Madison Square Garden Sports, the company that owns the Knicks and Rangers, has long traded for a "Dolan discount" compared with other marquee teams. While the Dolans have voting control, the family owns only 21% of MSG Sports shares.
Now MSG Sports is exploring a possible spinoff that would separate the Knicks business from the Rangers business, creating two distinct public companies. The Feb. 18 announcement triggered a spike in MSG Sports' stock price.
But then came a wild card that illustrates some of the pitfalls of the Dolan companies' tangled dealings: The U.S.-Israeli strikes on Iran, followed by spillover violence throughout the Middle East. That has included Abu Dhabi, the United Arab Emirates capital where the Dolans have a lot riding.
An "Experience Abu Dhabi" logo appears on the Knicks' jerseys as part of a package deal with Abu Dhabi's Department of Culture and Tourism. Abu Dhabi also has marketing agreements with Madison Square Garden Entertainment, which owns the teams' home arena, and Sphere Entertainment, another Dolan-controlled company, which owns local media rights to Knicks and Rangers games.
Abu Dhabi's tourism department also is funding construction of a Sphere there to echo the scale of the Las Vegas version, which accommodates as many as 20,000 people.
MSG Sports' stock-market value is $7.5 billion, and its enterprise value, which includes net debt and lease liabilities, is $8.6 billion, or about eight times revenue. The latest estimates by Sportico, which ranks teams by enterprise value, pegged the Knicks' valuation at $9.85 billion and the Rangers at $3.65 billion, based on comparable sales and its own data collection.
Combined, that is $4.9 billion more than MSG Sports' current enterprise value, which begins to show the Dolan discount at play. Looking at other teams, it is easy to see why the Dolans might be suffering valuation envy. Last year, the Los Angeles Lakers sold at a $10 billion valuation, or 16 times revenue.
While these revenue multiples are quite high, team values have been climbing for decades and keep rising. In a way, professional sports teams could be seen as extremely expensive collectibles, like a high-dollar Pokémon or baseball card. The cash flows don't justify the price, but the ego boost does, and there are plenty of billionaires eager to pay up for trophy assets.
If MSG Sports splits up, a possible scenario is that an outside investor buys a minority stake in one of the team owners at some outlandish premium and injects fresh capital. This could entail the team owner issuing new shares, diluting existing stockholders.
The Dolans, and particularly James Dolan, have shown no willingness to sell the Knicks or Rangers outright. And to fully eliminate the Dolan discount, they likely would have to sever their ties, because currently MSG Sports is subsidizing the other Dolan companies to its great detriment. It is also possible that having five public companies in this ecosystem, instead of the current four, would further entrench Dolan and strengthen his control by making things even more complex.
MSG Networks, owned by Sphere, last year slashed the fees it pays MSG Sports for local media rights to Knicks and Rangers games, after it couldn't refinance its loans and had to restructure its debt.
MSG Sports pays rent to MSG Entertainment for the arena, splits food-and-beverage profits with it from game days, and pays commissions to MSG Entertainment for team merchandise and luxury-suite sales. It also pays MSG Entertainment for office space and back-office functions.
For the six months ended Dec. 31, MSG Sports' revenue from related parties was about $65 million, while its related-party expenses were $83 million. That drove the company's $555,000 net loss for the period. Worse, cash flow from operating activities was negative $53 million, and liabilities exceeded assets by $282 million. For fiscal 2025, MSG Sports had a $22 million net loss on just over $1 billion of revenue.
The Dolan companies also share executives and directors. James Dolan is chairman and chief executive of MSG Sports, MSG Entertainment and Sphere. In addition, he is chairman of AMC Networks, the other Dolan-controlled public company.
There also is uncertainty over the future of the Garden, which sits above Penn Station. The arena's city operating permit expires in 2028. The federal government and the rail agencies running train service at Penn Station are considering proposals to redevelop it. And it is conceivable that New York Mayor Zohran Mamdani may be more aggressive than his predecessors at squeezing MSG Entertainment for cash.
All in all, it is a hot mess. And that is why the Dolan discount at MSG Sports persists. It won't go away entirely unless the Dolans do, too.
Write to Jonathan Weil at jonathan.weil@wsj.com
(END) Dow Jones Newswires
March 08, 2026 05:30 ET (09:30 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
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