Shares of Madison Square Garden (NYSE: MSG ) are trading within pocket change of a new all-time high, and it's hard to see why.
Last month's Jeremy Lin storybook run is over. The New York Knicks are winless this month, and the once-ballyhooed basketball team is likely to lose its sixth game in a row when it plays the league-leading Bulls in Chicago tonight.
The Knicks were once hoping that Linsanity would propel the battered franchise into its first deep playoff run in ages. Now the team is barely clinging to the eighth and final seed in its conference.
Madison Square Garden's run began last month when Lin came out of seemingly nowhere to lead his team on an unlikely winning streak. The stock closed higher on nine consecutive trading days during the peak of Lin's stardom.
As many feared, the Knicks have stumbled back into sub-mediocrity now that key starters are back and Lin is no longer the focal point of the team's offense. His own defensive shortcomings and knack for turnovers have also been woefully exposed.
The Knicks are who we thought they were -- so why is Madison Square Garden winning this month even as its team is losing?
Well, win or lose the Knicks are exciting again -- and that's good news for the MSG sports network. It was able to cash in during the peak of the Lin craziness to broker a new deal with Time Warner Cable (NYSE: TWC ) to begin carrying the blacked-out station again. The dynamic storylines of this season will also carry into the next NBA season, even if the team sputters its way out of the playoffs during the final two dozen games of the season.
It remains to be seen whether the other Lin stock plays will bear fruit. As a Nike (NYSE: NKE ) signee, we'll have to see if Nike feels that the market is there to put out an official line of Jeremy Lin shoes later this year. SINA's (Nasdaq: SINA ) Weibo -- China's top micro-blogging website -- was ablaze last month with new followers for Lin's Weibo account. It's closing in on an amazing 2.5 million followers, but is the buzz still there?
Madison Square Garden's stock may be ripe for a pullback if the team fails to clinch the final playoff spot. The team and venue would forgo the additional revenue stemming from the playoff games, and the MSG sports network would lose viewers if the team is eliminated from postseason contention sooner rather than later.
However, the team and company are in a better place than they were a year ago. Just be careful in chasing a stock where the underlying fundamentals (you know -- the team's performance) appear to have peaked weeks before the stock.
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