Madison Square Garden Entertainment Corp. (MSGE) stock intrinsic value fair value estimate & owner earnings analysis

What the business is. Madison Square Garden Entertainment owns and operates a small set of iconic live-entertainment venues: The Garden and the Infosys Theater at Madison Square Garden and The Chicago Theatre (owned), plus Radio City Music Hall and the Beacon Theatre (leased). It also produces the Christmas Spectacular with the Rockettes. All revenue is earned in the United States, mostly in New York City. Revenue comes from ticket sales, venue license fees paid by concert promoters, suite licences at The Garden, sponsorship and signage, food and beverage, and fixed annual fees from the Knicks and Rangers, whose 35-year Arena License Agreements run through 2055. What we measured. We start from cash the business generates after ordinary taxes, subtract stock-based compensation and the part of capital spending needed just to keep the venues running, and strip out swings in working capital. Fiscal 2026 (June year-end) working capital added about $181 million to operating cash flow, mostly because payments owed to promoters were timed later; we excluded it because it is a timing effect that can reverse. Owner earnings per share were about $2.04 (FY2023), $1.85 (FY2024), $2.26 (FY2025) and $2.35 (FY2026). Because lenders are paid before shareholders, we then add back cash interest (about $38 million in FY2026, estimated as reported interest expense less non-cash financing-cost amortisation, since the filing does not state cash interest separately) to get the cash the business itself produces: roughly $2.97, $2.98, $3.24 and $3.14 per share for FY2023 to FY2026. We use the median of those four years, about $3.06, and trim it to $3.00 because interest earned on the large cash pile is counted separately below. Earlier years are excluded: FY2022 was still hit by the pandemic and pre-dates the 2023 spin-off from Sphere Entertainment. Growth path check. Owner earnings grew about 3% in FY2026, but the pre-lender cash stream slipped about 3% because interest paid fell and restructuring cash costs rose to $14.0 million from $1.1 million. Operating income rose 16% to $141.5 million on revenue up 12.5% (Christmas Spectacular +$20.9 million, Arena License economics +$17.5 million, other events +$13.2 million, sponsorship, signage and suites +$10.9 million). Because that restructuring charge is the dated reason for the dip, all three cases start year one at or above flat rather than assuming a further decline. Revenue has grown much faster than this cash stream over three years, so we credit no revenue-driven growth in the base case: the cash stream has stayed near $3 per share since FY2023. Base case, about $35.3 per share. The $3.00 per share stream stays flat for 29 years, through 2055, then fades to zero over 20 years as the Knicks and Rangers contracts end and nothing named replaces them. Evidence: the fixed-fee Arena License Agreements to 2055, multi-year suite licences, the Christmas Spectacular's 92-year run and ownership of The Garden. The Garden's zoning permit (renewed in September 2023 for five years, and previously renewed after 1963) is assumed to be renewed. Business worth about $44.4 per share, less net debt of about $9.1 per share (term loan of $548 million, less about $113 million of cash we treat as truly excess; the rest of the $294 million cash balance is the promoter and deferred-revenue timing effect). Result about $35.3. Bear case, about $18.6 per share. The permit is renewed in 2028 only with concessions and higher required spending; the Penn Station redevelopment (a non-binding June 2026 agreement contemplates transferring the Infosys Theater to the developer) disrupts operations; and higher maintenance spending is needed (capital spending runs at about half of depreciation). The stream falls to $2.75, $2.35, then $2.00 per share and stays there to 2055, followed by a 10-year fade. Business worth about $29.6 per share; net debt about $11.0 per share, including only $60 million of excess cash and refinancing of the term loan due June 2030 at about 1.5 points above 6%. Debt is about $525 million equivalent, so the business is still worth about $18.6 per share after paying lenders; cash flow covers interest comfortably even here. Bull case, about $47.4 per share. The company's own levers execute: cash stream grows 3% a year for ten years (below the roughly 8% three-year revenue growth) as Christmas Spectacular attendance (1.2 million tickets versus 1.1 million), suite licence renewals and sponsorships keep expanding, then holds flat to 2055 and fades over 20 years. Business worth about $55.7 per share, less about $8.3 per share of net debt. What would make this wrong. A refusal or much harsher renewal of the Garden's permit in 2028, repeal of the Garden's property-tax exemption (the teams' licence fees would fall by an unquantified amount), a sharper pull-back in touring and events, or discovering that the venues need far more capital than the last five years suggest. The filing's risk section quotes total debt of $579 million, while the financial statements show $548 million at June 30, 2026; we used the financial statements. Cash interest paid is estimated, not reported. Accounting judgements. Stock compensation, impairments and deferred-tax items are treated per the cash-flow statement; owner earnings subtract stock compensation once. The $1.08 billion revenue base includes lease revenue from the Arena License Agreements. The company had no going-concern language and no listing concerns in its FY2026 annual report.