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What: Shares of diversified entertainment company Madison Square Garden
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
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
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Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.
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