John Rogers, founder of Ariel Investments and manager of the Ariel and Ariel Appreciation funds, was interviewed by Morningstar analyst Christopher Davis regarding opportunities he’s finding in the stock market.
Rogers revealed he has a passion for sports and his past experience includes being a vendor at Wrigley field and Sox Park and playing basketball at Princeton University.
Rogers talked about Ariel’s investment in Madison Square Garden (MSG) which had sunk under the cloud of the NBA lockout. Rogers stated, “we came to the conclusion that eventually someday that strike would end or the lockout would end. The Knicks would be back playing in the Garden again, and all the other teams that will be there, the Rangers, the Liberty as well as the concerts and things like that, would fill that arena on a regular basis.”
Rogers commented on the pricing power at MSG and how it fit into Warren Buffett’s concept of having a wide moat. There aren’t any similar venues in the area, he added.
The Jeremy Lin sensation occurred right at the midst of them renegotiating their television contract with the local cable networks, and they were able to leverage that to get the kind of pricing that was so valuable to the overall value of Madison Square Garden, Rogers said.
Rogers moved on to discuss their investment in International Speedway (ISCA), which is closely affiliated with NASCAR. ISCA has large tracks with seat capacities of up to 100,000 around the country, one of which Rogers visited in Daytona, Florida. Rogers stated these venues are very difficult to replicate, or duplicate, along with its valuable relationship with NASCAR. Rogers commented on the value of live sports events in the age of TiVo. “People don’t want to TiVo their basketball game or their race that’s going on. They want to watch it live and not miss a moment, and so that’s why these contracts are so valuable and why they keep going up in price and surprising people,” Rogers added.
The interview continued with Rogers discussing how the problems in Greece are being blown out of proportion and why he believes the European crisis won’t effect the U.S. and why he is selling perceived safer stocks to invest in higher beta names like CBRE Group, Inc (CBG), Jones Lang LaSalle Incorporated (JLL), Royal Caribbean (RCL), and Gannett (GCI).
Disclosure: I currently own shares of Gannett and Royal Carribean.