In the last two weeks, LeBron James has been pitched by billionaires, hip-hop moguls, celebrities and politicians who have attempted to persuade the free agent to bring his Midas touch to their NBA franchises and respective cities.
He's claimed his own hour-long spot on ESPN tonight to announce “The Decision.”
Yesterday and today, he moved the markets.
And eventually, he will actually play some basketball.
But after tonight, all of the rumors about where LeBron James will play next year will finally come to an end – and so will the ride that one stock has had over the last two days because of all the speculation over King James' next move.
Shares of Madison Square Garden Inc., which owns and operates the New York Knicks. Ticker:(MSG) closed at $21.57 yesterday – a 6.4% spike for the day – which registered as the company's highest closing price in more than a month. More than 1.7 million shares of MSG were also traded yesterday, the most active trading day for the stock in three months, and more than three times its daily average levels.
At the same time, trading of bullish MSG options surged to a record yesterday on speculation that Mr. James could announce that he'll join the New York Knicks tonight.
(View the chart of the day here.)
However, this morning, after reports surfaced on ESPN that Mr. James will likely sign with the Miami Heat, shares of MSG Madison fell 4.6% to $20.58 in pre-market trading and remained at that level through the most of the day. The stock closed at $20.37, a 5.6% drop for the day, after 2.3 million shares were traded throughout the day.
After that report, the chance that James will sign with the Knicks sank to 16% from more than 50% yesterday, according to trading on the prediction market run by Dublin-based Intrade. The Heat were at 55%and the Cavaliers 25%.
“Madison Square's action has been the ultimate in event- related trading,” said Michael Block, chief equities strategist at Phoenix
Partners Group LP in New York. “I'm not sure anyone thinks he's going anywhere but Miami right now.”
Mr. James' potential arrival in New York would boost the value of the franchise by "hundreds of millions of dollars," said Gabelli & Co. analyst Christopher Marangi.
(Read: Why one firm thinks LeBron should buy gold if he wants to be a billionaire.)
The team could see about 10% more in revenue, while the MSG network could get 10% more advertising revenue, he said.
"Would landing LeBron add to the economic value of the enterprise? The answer to that is unequivocally yes," he said. "The second question is ‘What are the Knicks' chances of actually getting him?' The market is saying it thinks better of the chances today than it did yesterday or before the weekend."
Wire reports contributed to this story
