Knicks' Lin-sane Trade Could Prove a Financial Air Ball for MSG

Before you go, we thought you'd like these...
Jeremy Lin
Say you own a struggling business and out of nowhere -- as if fallen from the heavens -- appears a savior. Overnight, your company is transformed. Sales are through the roof. The media, not just here but across the globe in China, have made you a sensation. Your brand is suddenly injected with meaning not seen in nearly a generation; it's all people are talking about.

What do you with this man who so swiftly reversed your fortunes?

If your name is James Dolan and you're the chairman of Madison Square Garden (MSG), apparently you just shrug and let him walk away.

Sorry, Kiddo, It's Time to Say Goodbye

That's what Dolan did last week when he passed on an option to keep Jeremy Lin with the New York Knicks, and under the auspices of Madison Square Garden, which owns the team.

Lin, of course, is the young Taiwanese-American who went from a basketball nobody sleeping on his brother's couch to an international celebrity. His rise was epic, leading the flailing Knicks on an improbable seven-game winning streak, dazzling fans with a game-winning three-pointer against Toronto, and dropping 38 points on Kobe Bryant's Lakers during the dramatic run.

Despite Lin's heroics, the Knicks felt they had better ways to spend their money. The historically profligate front office called the decision a financial one, and a look at the numbers might explain why.

It's All About the Benjamins

The Houston Rockets, Lin's new team, had signed him to an offer sheet for $25.1 million over three years, which the Knicks would have had to match in order to keep their sudden superstar. But doing so would mean New York would have to cough up much more than that, because the Rockets designed the contract to blow up the Knicks' salary cap, with a third-year balloon payment of $14.9 million that would've cost the Knicks an additional $35 million in salary cap penalties.

Some called it a basketball version of the poison pill.

Sponsored Links
Of course, the Knicks could have initially signed Lin for much less, but told him to find a competing offer. The team could have also made room under the salary cap, for example, by putting one of their big-money players like Carmelo Anthony, Amare Stoudemire, or Tyson Chandler on the trading block, or through any number of other financial contortions.

Knicks fans, who have been waiting a decade for a winner, quickly took to the Internet to blast the decision, calling management stupid and renouncing their support of the team.

Booing and hissing on the Street
Investors seemed equally disgusted, sending MSG shares down 13% as rumors of Lin's departure turned into reality. That drop accounts for a loss of about $314 million in market value; before that fall, MSG stock had climbed 35% since Lin came on the scene.

Yet analysts were indifferent to the market reaction, with most saying the move will only have a marginal effect on MSG's profits.

Knicks' Lin-sane Trade Could Prove a Financial Air Ball for MSG

Educational Route: A Bachelor's degree in sports management. Coursework includes a basic business foundation with classes in accounting, marketing, communications, and finance, as well as coursework in the role of sports in society.

Entry Level Jobs: Most new grads don't start at the majors. Instead, they'll work at sports organizations, nonprofit sports organizations, stadiums and fitness health clubs.

Job Description: Managing the day-to-day operations of an organization including developing and approving budgets. Coordinate strategy with heads of departments like public relations, sales and the team itself.

Salary: Average annual salary for any general and operations managers in May 2011 were $114,490 according to the Bureau of Labor Statistics.

Looking for a sports management job? Click here to get started.

Educational Route: A master's degree or other certification in the sciences with a focus on nutrition, physiology, anatomy or biomechanics. The professional gigs will go to those with master's degrees. Seven in ten trainers earn a masters degree or higher, according to the National Athletic Trainers' Association.

Job Description: Trainers help prevent and treat injuries. The experience with athletes proves valuable to pick up work with others who partake in physical activity, like industrial workers.

Salary: Average annual wages for athletic trainers were $44,640 in May 2011, according to the BLS. That figure can go up dramatically when working with big-market professional sports organizations. Famed Yankee head athletic trainer is reported to have an annual salary of $3 million.

Looking for an athletic training job? Click here to get started.

Educational Route: A degree in either journalism with an emphasis on broadcasting, or a communications-related discipline. Advanced degrees like an MBA are required for station management and technical positions. The latter will require continuous education to stay on top of the latest technologies.

Entry-Level Jobs: If you're not a retired professional player, the combination of good schooling and "work your way up" experience starting at the local level is what it will take. Volunteering or internships at local stations can offer a foot in the door.

Job Description: In addition to doing on-air commentary, any broadcast will need a full production staff with writers, sound technicians and audio engineers.

Salary: Average annual salary for all full-time broadcasters in the news industry was $76,360 in May 2011, according to the BLS.

Looking for a sports broadcaster job? Click here to get started.

Educational Route: Doctoral degree in clinical or counseling psychology. Students can specialize in sports sciences to get an early start in the field that gives them immediate exposure to athletes.

Entry-Level Jobs: You can't practice without doing internships, which are usually arranged through psychology departments.

Salary: Average annual salary for all industrial-organizational psychologists was $124,160 in May 2011, according to the BLS.

Looking for a sports psychologist job? Click here to get started.

Educational Route: Bachelor's or master's degree in statistics, computer science, or math.

Entry-Level Jobs: Jobs in government, insurance carriers, or health care. Any work that requires analysis of surveys and studies. A vast knowledge of sports is also necessary.

Job Description: To provide useful stats to both coaches and broadcasters. Training in statistical theory is not necessarily a requirement, but with the rise of "moneyball"-like statistical analysis in baseball, it is becoming more common.

Salary: Average annual salary for all statisticians was $77,820 in May 2011, according to the BLS. But the salary is often far lower for sports statisticians, and many enter the field on a pro bono basis.

Looking for a sports statistician job? Click here to get started.

Educational Route: Bachelor's and law degree, as well as admission to the Bar Association. Legal coursework with an emphasis on contracts, labor laws, antitrust and estate issues athletes might seek counsel on.

Entry-Level Job: It is most common for a sports lawyer to gain a background in corporate law before specializing in sports law.

Job Description: Sports lawyers can work at both the amateur and professional levels. The field is a relatively new one, an outcome of the 1967 decision by the National Labor Relations Board to allow athletes to form unions. The result is the profession requires much more labor negotiation. It is rare for a sports lawyer to deal with steroid issues. Many go on to become agents for individual players.

Salary: The average annual salary for all lawyers was $130,490 in May 2011, according to the BLS.

Looking for a sports lawyer job? Click here to get started.

of
SEE ALL
BACK TO SLIDE
SHOW CAPTION +
HIDE CAPTION
What the Wall Street number-crunchers seem to be forgetting is that sports teams are littered with overpaid flops. It always pays to be a winner though, and Lin's intangible value also needs to be factored into the equation.

A Harvard grad, Lin's rise is as an unlikely a story as any, and with his injury-shortened season last year, many were anxious to see if his sophomore effort could top the first. Lin's jersey led the league in sales, an honor usually held by perennial all-stars and a rough proxy for the league's biggest ticket draw. He doubled the Knicks TV ratings, forced an end to a dispute with Time Warner Cable (TWC), and made the franchise a favorite in China.

With the decision to let Lin go, Madison Square Garden management may be alienating its customers at the most untimely moment. As the Nets arrive in Brooklyn this year, New York's basketball aficionados will have a new team to root for just a short subway ride from the Knicks' home.

Somewhere, Nets owners Jay-Z and Mikhail Prokhorov are surely smiling.

Motley Fool contributor Jeremy Bowman holds no positions in the companies in this article. The Motley Fool owns shares of Madison Square Garden.

Read Full Story

People are Reading

The Latest from our Partners
1 - 3 of 15