Hockey Lock-Out Would Cost Madison Square Garden (MSG) $78 Million - Analyst

October 8, 2012 9:43 AM EDT
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In a worst case scenario, Madison Square Garden (NASDAQ: MSG) would lose $78 million if the NHL hockey season is cancelled, according to a report by analyst at Needham and company. This would be equal to $26 million per quarter as long as the lockout continues.

Presently, the NHL Hockey season is cancelled through October 24th, and negotiations are expected to resume this week in New York.

For Madison Square Garden, essentially all revenue, profit and variable costs affiliated with Ranger Hockey are realized in MSG's second, third, and fourth quarters, while fixed costs are spread evenly over 4 quarters.

"Since we expect a solution shortly thereafter, we are maintaining our current revenue estimates,” said analyst Laura Martin. "So long as the lock-out ends by 12/31/12, we believe the season could be shortened and played in MSG's FY3Q13 and FY4Q13."

"Worst case, we calculate that if the entire 2012/2013 NHL hockey season is cancelled, the total economic impact on MSG’s AOCF could total $78mm in FY13 (virtually all in the Sports segment), made up of approximately $26mm per quarter so long as the lock-out continues," added Martin.

Needham & Company reiterated a Buy rating on Madison Square Garden (NASDAQ: MSG) with a price target of $44.00.

For an analyst ratings summary and ratings history on Madison Square Garden click here. For more ratings news on Madison Square Garden click here.

Shares of Madison Square Garden closed at $40.19 yesterday.

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