Market Overview

Madison Square Investors Buy into Linsanity

Today, shares of Madison Square Garden (NASDAQ: MSG) are up 6% after the New York Knicks recorded their fifth consecutive victory Saturday night. The team has been energized by the play of young point guard Jeremy Lin, who has emerged from obscurity and become an NBA sensation over the past week. Lin went undrafted and was released by both the Golden State Warriors and Houston Rockets earlier this season. The Knicks had considered doing the same before giving the player an opportunity due to the poor play of their other point guards Mike Bibby and Iman Schumpert, as well as the slow recovery of Baron Davis.

Lin's popularity lies with the fact that he is the first Asian American basketball player to play in the NBA for decades. His underdog success story of perseverance and hard work has led to unprecedented media coverage that rarely follows the Asian American community, and many fans of Asian descent have proclaimed Lin as a leader in increasing cultural awareness.

Lin has also drawn comparisons to Denver Broncos quarterback Tim Tebow for his openness towards speaking about his Christian beliefs. These religious issues have proved to be polarizing for some fans who have taken to Twitter to debate the merits of faith and its place in professional sports. Regardless of the arguments, fans have found Lin's story of rags to riches as a situation that they can relate to, in which persistence eventually yields rewards.

The Madison Square Garden has also benefitted from Lin's success, as increased ticket sales and an electric environment during games have brought newfound excitement to New York Knicks basketball. Jeremy Lin jerseys were released just a few days ago, and many souvenir stands reported selling out quickly. Lin's appearance on the road has also sparked ticket sales by fans in opposing cities eager to see the point guard play.

The play of Jeremy Lin has clearly delighted the Asian American community and NBA fans alike, and has already benefitted the bottom line for Madison Square Garden. While it remains to be seen whether Lin's style of play will hold up in the long run, MSG has significant opportunities to market the player to both the American and Chinese market, who has not seen a prominent player since the drafting of Yi Jianlian in 2007. As long as Lin can remain in the starting lineup, MSG shareholders could see more upside in their investment.


ACTION ITEMS:

Bullish:
If you believe that Linsanity will continue through the rest of the 2012 NBA season, you should consider these trades:
  • Go long Madison Square Garden. Shares are up 6% today and could continue to rise if more fans purchase merchandise and tickets to future games.
  • Go long Nike (NYSE: NKE). Jeremy Lin is currently in his second year of a three year merchandise agreement with the apparel manufacturer, and the company stands to benefit from increased sales of merchandise.
Bearish:
If you believe that Lin's play will suffer from the impending return of Carmelo Anthony and Amare Stoudamire, consider these trades:
  • Go short Madison Square Garden. If Lin's popularity wears off, fans may not be as excited to attend games later in the season.
  • Go short Time Warner Cable (NYSE: TWC). The company is currently involved in a dispute over television rights with MSG and has blacked out New York area viewers from Knicks broadcasts. While the company has missed out on revenue from Lin's emergence, those opportunities may not exist if Lin's popularity falls.
Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

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