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Knicks' fast break
Team's hot streak means rebound for Madison Square Garden
ADDED VALUE: Amar’e Stoudemire of the Knicks has arguably become the most marketable sports star in the city.
When Pope Benedict XVI visited New York in 2008, David Letterman joked that after celebrating Mass at Yankee Stadium, the Holy Father would head to Madison Square Garden and administer “last rites for the Knicks.”
On Thursday, Knicks center Amar'e Stoudemire appeared on the Late Show with David Letterman—not as the butt of any joke, but as the 6-foot-10-inch, 240-pound pillar of a team off to its best start since the 2001-2002 season. “It's great to have you in town,” Mr. Letterman said. “All of a sudden, we can't make jokes about the Knicks anymore.”
Indeed, after a lost decade, the Knicks are back, riding Mr. Stoudemire's high-flying performance. A player with unusual quickness for someone his size, he leads the NBA in field goals per game and is second in scoring. The free agent from Phoenix also set a team record last month with nine consecutive 30-point games. Fans routinely serenade him with chants of “M-V-P,” and their votes have him on pace to be New York's first All-Star starter since Patrick Ewing in 1992. The 28-year-old is primed to be a star off the court as well, with the opportunity to bring in tens of millions in non-basketball revenue in the next five to seven years.
Perhaps more important, Mr. Stoudemire, along with fellow free-agent acquisition Raymond Felton and a cast of young supporting players, has made the Knicks relevant again. The empty seats of past seasons are now filled. Ratings on the MSG Network are skyrocketing. And the Knicks appear headed to the playoffs for the first time since 2004, which would add “several million dollars” to the Garden's bottom line for each round played, analysts say.
PERFECT TIMING
The rebound is well-timed for MSG, which is in the middle of an estimated $850 million renovation that is expected to transform the arena's revenue-generating capacity. “You build the business to perform, regardless of won-loss record, but when the won-loss record is what it is, it's a nice assist,” said Hank Ratner, the Garden's chief executive. “It puts more wind behind the sails.”
As the Knicks have won—they were 22-16 through the end of a West Coast trip last week—the Garden's stock has soared. The price of MSG shares are up 15% since the National Basketball Association season opened on Oct. 27, trading last Friday at around $24.
“It's not just based on sentiment,” David Joyce, an analyst at Miller Tabak & Co., said of the stock's jump. “They've had the highest ratings on the MSG Network in years. That helps their ad revenue, and that's what tangibly translates into better stock performance.”
Through last Wednesday, Knicks games on the MSG Network were averaging a 1.54 household rating (nearly 116,000 households), up 44% over last season. A December matchup against the Celtics drew a 3.61, the highest since the 2001 season opener.
Mr. Joyce estimated the increased viewership resulted in the network taking in an additional 7.8% in advertising revenue last year. He projected an 11.8% surge in viewership in 2011—a bump that other analysts say could generate an additional $60,000 per game for the network.
The Knicks are playing to crowds of better than 99% capacity, MSG officials said, and sold out 15 of their first 17 games, compared with just 26 full houses all of last year. There's a season-ticket waiting list for the first time in a decade, and demand for individual games on the secondary market is way up. Spike Lee is once again a fixture in his courtside seat, and fellow celebrities—including Dylan McDermott, Donald Trump and Vera Wang—have returned to the Garden's front rows. Page views on the Knicks' website are up 65% compared with last year, and the team now boasts 340,000 Facebook friends and 52,000 followers on Twitter.
RANGERS LOOK PROMISING, TOO
“Fans are thirsting, they're desperate, they want to be able to root hard for this team,” said Tommy Dee, who runs TheKnicksBlog.com, where traffic is up about 20% from a year ago.
The reversal, which coincides with a promising season by a young New York Rangers hockey team, couldn't have come at a better time for the Garden, which has already started selling suites in the overhauled arena. The first batch are expected to be ready for next season and could fetch around $1 million a year, with contracts extending between five and seven years, according to a research note by Robert Routh of Phoenix Partners Group.
New sponsorship deals with J.P. Morgan Chase, Anheuser-Busch and Coca-Cola, among others, will bring in as much as $70 million, Mr. Routh predicted. Add in an expected bump in ticket prices, and the newly revamped arena could bring in an extra $100 million in adjusted cash flow by the 2013-2014 season, he estimated.
NYC'S MOST MARKETABLE STAR
The Knick's rebirth will also be a boon to Mr. Stoudemire, who in short order has arguably become the most marketable sports star in the city. He's overcome a tough childhood in Lake Wales, Fla., and career-threatening injuries to play at an MVP-caliber level in the shadows of Madison Avenue.
“With a well-thought-out and strategic plan, he should be able to generate tens of millions in revenue off the basketball court,” said Andrew Stroth, a Chicago-based attorney who negotiated deals for Miami Heat superstar Dwyane Wade.
Mr. Stoudemire's agent, Happy Walters, said the idea is to be selective, to not burn out his client's brand. “More than any athlete I've known, I think Amar'e is an entrepreneur,” Mr. Walters said. “He looks at things differently, not just what they're worth now, but later.”
Mr. Stoudemire already has his own entertainment company, and has started taking notes for a potential script about his life story. He's got deals with Zico Coconut Water and energy drink EBoost. And he has his own foundation, which helps young athletes in Africa.
A fashion label is in the works and, in a bit of serendipity, his shoe contract with Nike expires after this season. Mr. Stoudemire plans to travel to China this summer, where, Mr. Walters spells out, local brands have expressed interest in a deal.
As on the fast breaks he's been finishing with authority, timing is everything.
