By Chris Preston
On the court, the New York Knicks are a mess. But the storied building that houses their home court has never been hotter.
More specifically, the company that owns the building where the Knicks play had a very good morning Friday. The Madison Square Garden Company (NYSE: MSG), which owns the hallowed building in which the Knicks and New York Rangers play plus the television network on which the teams' games are aired, posted quarterly earnings that blew analyst estimates out of the water.
The quarter ended March 31, MSG's fiscal third quarter, was the most profitable since Madison Square Garden went public two years ago after splitting from Cablevision (NYSE: CVC). The company's earnings [see transcript] of 40 cents a share more than doubled the 19 cents per share analysts were expecting. It was also a vast improvement from the 25 cents a share the company earned during the same quarter a year ago.
Beating earnings by such a wide margin sent MSG shares up 3% in early trading Friday.
Two words truly capture what was behind MSG's banner quarter: Jeremy Lin. The Asian-American, Harvard graduate's unexpected rise to superstardom in February and March created a nationwide fervor known as "Linsanity," boosting ticket sales and propelling the MSG network to record regular-season ratings.
As ratings and ticket sales rose, so too did MSG's stock. Since Lin burst onto the scene with an out-of-nowhere 25-point, seven-assist effort against the New Jersey Nets on February 4, shares of the small cap stock have vaulted 27%.
Unfortunately, Linsanity came to a screeching halt when Lin suffered a season-ending knee injury in late March. His absence has been bad for the Knicks, who after Thursday night's loss to the Miami Heat are just one loss away from yet another early end to their season.
The Knicks have now lost 13 consecutive playoff games dating back to 2001 - the longest playoff losing skid in NBA history. The NBA playoffs last until late June, so the Knicks bowing out in the first round again means squandering weeks' worth of potential ticket sales and monster TV ratings.
The good news for MSG is that the Knicks' fellow Madison Square Garden tenant, the New York Rangers, are still alive in the NHL playoffs. The Rangers are leading their second-round series with the Washington Capitals, 2-1. The longer the Rangers can stay alive, the better MSG's current quarter will be.
Even if the Rangers win the Stanley Cup, however, it will be difficult to match the Linsanity of the previous quarter.