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By now, it’s become plainly obvious that Jeremy Lin is more than your typical basketball player. The player emerged on the scene in early February, just as MSG got into a carriage fee war with Time Warner Cable. The phenomenon known as “Linsanity” is credited with helping resolve that dispute and since that February night when Lin began captivating the sports nation, James Dolan‘s MSG stock is up more than 20 percent.
It would be closer to 30 percent but Wall Street has been punishing MSG’s stock today. Some believe it’s in connection with the possibility that Lin might leave the New York Knicks.
The team has until midnight tomorrow to decide whether to match a three-year, $25 million deal that Lin signed with the Rockets — a decision point that is generating plenty of discussion.
Because the Knicks have matching rights to Lin, the Rockets were forced to make a whopping offer for a player who has really only shined in 25 games. The term sheet includes the “poison pill” of a heavy back-loaded contract that will mean the Knicks will be paying tens of millions of dollars in extra luxury tax penalties pursuant to the NBA’s rules for less-than-thrifty teams.
Still, some believe that no matter the cost, it makes financial sense for MSG to retain Lin.
“On the mere possibility that Lin might not be re-signed, MSG stock had lost about $50 million in market value,” notes Nate Silver of the New York Times. He points out that this is “roughly as much as the salary and luxury tax that the Knicks would need” to pay to keep Linsanity buzzing in the Garden for the next few years.
Chris Katje, a stock investor who runs the Jeremy Lin Fan Page, agrees, pointing out that the Knicks sold tickets at an “unusual pace” post-Linsanity, that the team lucked into an asset who has become an icon in Asia, and need Lin for a cable TV network whose ratings have been soaring.
“The trend here is pretty simple, Jeremy Lin helped Madison Square Garden make money,” writes Katje at Seeking Alpha.
What makes this situation all the more unusual is that the Knicks are coming to this decision, facing new competitive pressures in the form of a new team in the area. The Nets of New Jersey have now become the Nets of Brooklyn, and the the Knicks’ counterparts have had an exciting off-season with the re-signing of their own star point guard Deron Williams, the trade to get six-time All Star Joe Johnson, and rumors of the possible acquisition of NBA great Dwight Howard.
Still, not everyone believes that it’s in the interest of Dolan to bring Lin back. The Knicks have recently signed Jason Kidd and executed a sign-and-trade for Raymond Felton — two point guards who could help fill Lin’s departure — at least on the court. Just as importantly could be the risks involved for putting so much money into one largely untested player as well as the historical precedent weighing against such a move as matching Houston’s offer.
“Very few players can move the revenue dial on their own,” said Richard Peddie, the former CEO of Maple Leaf Sports and Entertainment, to Bloomberg News. “And besides, New York is already loaded with stars that will help sell tickets and sponsorships. Net, net, I would not do the deal for business reasons.”
E-mail: email@example.com; Twitter: @eriqgardner
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