Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of diversified entertainment company Madison Square Garden (NYSE: MSG) jumped as much as 11% earlier in the trading session after reporting fourth-quarter earnings results.

So what: Madison Square Garden, which owns the building that bears its name in New York, benefited in the fourth quarter from increased ticket sales for the New York Knicks and New York Rangers, which both made the playoffs. The extra revenue stream allowed Madison Square Garden to grow revenue by 40% to $332.9 million while earnings more than tripled to $0.37 from just $0.11 in the previous year. Both figures absolutely crushed Wall Street's expectations for $272.7 million in revenue and a profit of just $0.20. Also aiding the company was a television contract signed with Time Warner Cable (NYSE: TWC) to carry its MSG Network and MSG Plus channels.

Now what: Carmelo Anthony and Amar'e Stoudemire are going to need some immaculate games for the Knicks this year if Madison Square Garden hopes to maintain this valuation. Even with the sizable beat, the company is valued at 30 times forward earnings. In addition, the Knicks lost one of their main attractions in Jeremy Lin to the Houston Rockets in the offseason.

Perhaps more damaging is the poor investment history of sports clubs and/or the venues behind those clubs. Manchester United (NYSE: MANU), for instance, recently debuted with a valuation of roughly $2.2 billion despite major debt concerns and with operating income growth barely heading higher. Valuations in the sports sector are way out of whack, and that goes the same for entertainment provider Madison Square Garden, which is reliant on the Knicks and Rangers for a good chunk of its revenue.

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