M c I n t i r e I n v e s t m e n t I n s t i t u t e 1

McIntire Investment Institute At the University of Virginia

Prepared by Garrett Hynson| 7 April 2010

Madison Square Garden Inc. (NASDAQ: MSG)

M c I n t i r e I n v e s t m e n t I n s t i t u t e

•  Business Overview •  Stock Chart •  Basic Numbers and Ratios •  Thesis Points •  Risks or Signs That Possibly Indicate We’re

Wrong •  Trends to Monitor •  Final Recommendation

2

Agenda

M c I n t i r e I n v e s t m e n t I n s t i t u t e 3

Business Overview

•  3 segments: sports, media, entertainment •  Owns the New York Knicks, Rangers, and

Liberty •  Owns Madison Square Garden and Fuse

networks •  Produces and presents productions including the

Radio City Christmas Spectacular •  Manages concerts and events in large cities

across America

M c I n t i r e I n v e s t m e n t I n s t i t u t e 4

Stock Summary

M c I n t i r e I n v e s t m e n t I n s t i t u t e

•  Price: $27.71 (as of closing today) •  Market Cap: 2.1 billion •  P/E: 25.0 •  P/B: 1.8 •  P/S: 1.8 •  P/CF: 11.0 •  Revenue Growth: 4.9% •  Debt to Equity: 0.0

5

Basic Numbers and Ratios

M c I n t i r e I n v e s t m e n t I n s t i t u t e

•  Unique position in the market •  Vertical Integration •  High barriers to entry •  Undervalued •  Helped by a rebounding economy

6

Thesis Points

M c I n t i r e I n v e s t m e n t I n s t i t u t e

•  Manages sports teams •  Entertainment

segment cornered •  These feed off one

another •  Owns distribution

channels for sports and entertainment segments

7

Thesis Point: Unique position in the market

M c I n t i r e I n v e s t m e n t I n s t i t u t e

•  Distribution channels owned by the company

•  Avoids risk – Buyers/suppliers going

out of business – More revenue streams

8

Thesis Point: Vertical Integration

M c I n t i r e I n v e s t m e n t I n s t i t u t e

Revenue by Segment

9

Revenue Percentage

Sports

Media

Events

Thesis Point: Vertical Integration

M c I n t i r e I n v e s t m e n t I n s t i t u t e

•  Only so many sports teams •  Takes lots of time and money to build an arena,

often publicly funded •  Prestige of Madison Square Garden is

unmatchable •  Difficult to build/match the distribution

channels – Exclusive rights to NYC sports programming – Fuse Networks reach 55 million households

10

Thesis Point: High Barriers to Entry

M c I n t i r e I n v e s t m e n t I n s t i t u t e

•  Total assets on balance sheet: approximately $2 billion

•  Knicks are the NBA’s estimated most valuable team: $655 million

•  Rangers are NHL’s estimated 2nd most valuable team: $411 million

•  Calculations show, based on similar land, that Madison Square Garden’s land and building should be worth well over $2 billion (PPE <500)

11

Thesis Point: Undervalued

M c I n t i r e I n v e s t m e n t I n s t i t u t e

•  Strong correlation to overall economic performance

•  Discretionary spending key for sports and events such as concerts and other live performances – TV channels are a

hedge against this 12

Thesis Point: Helped by a rebounding economy

M c I n t i r e I n v e s t m e n t I n s t i t u t e

•  People move away from live television •  Piracy of content

– Hedged by the fact that sports demand live viewing

•  Sports teams decline – New York is one of the biggest markets in the world – Knicks have seen a huge improvement

•  Work stoppage in the sports market (see NFL) •  Economic decline •  Dolan family owns 70% voting rights

13

Risks/Signs to Indicate We’re Wrong

M c I n t i r e I n v e s t m e n t I n s t i t u t e

•  Performance of sports teams – Knicks – Rangers – Making a deep run into the playoffs, etc.

•  Potential buyouts – possible beginning next year •  Cash is being accumulated – will be used for

renovations of Madison Square Garden…other uses?

14

Trends to Monitor

M c I n t i r e I n v e s t m e n t I n s t i t u t e

•  Initiate a purchase at 3% •  Monitor the stock according to the important

trends to follow •  Consider scaling up the position

–  If more favorable conditions appear –  If stock appears undervalued

15

Final Recommendation

M c I n t i r e I n v e s t m e n t I n s t i t u t e

•  MSG Company Website •  ESPN •  Forbes •  Motley Fool •  Federal Reserve Bank of New York •  Easytobook.com

16

Sources Used