MSG shares drop after Knicks report

LeBron James' possible exit may heavily impact business

Shares of Madison Square Garden fell on Thursday after a report that LeBron James was leaning toward joining the Miami Heat NBA outfit rather than the New York Knicks.

The stock was down 4.4% at $20.62 as of noon ET.

The Knicks play at the MSG arena and are owned by the same company as the Garden.

The success of the Knicks does have "a meaningful impact" on Madison Square Garden's earnings, BTIG analyst Richard Greenfield said in a report Thursday. Suite sales, merchandising sales and MSG network ratings would all benefit from a stronger Knicks team if an all-star player like James were to join, he argued in a note entitled "Will LeBron drive the ROI (return on investment) of an $800 million Garden rebuild?"

Trailing 12-month operating cash flow for MSG is roughly $153 million, compared to $78 million in the prior year period, illustrating the improvement in MSG's business without any help from LeBron, he said.

With the Garden rebuild expected to cost over $800 million, the addition of James would have a positive impact on profitability levels across MSG's businesses, Greenfield said.

LeBron James is set to reveal what team he will be playing for tonight on ESPN.