Sports teams are selling for record prices, but even some of the best-known franchises lose money-or earn relatively little.

That's something that individual investors ought to consider amid the growing popularity of private funds that buy into professional sports teams. The teams are the ultimate trophy properties for billionaires who can derive some tax benefits from ownership.

Madison Square Garden Sports owns the New York Knicks and New York Rangers, two of the premier franchises in pro basketball and hockey. The company recently provided financial information in a public filing on the Rangers ahead of a corporate breakup that allows investors to see the profitability of each team.

The company previously has lumped the two team's revenues and profits together in its financial statements.

It turns out that the Rangers, one of the marquee teams in the National Hockey League, were unprofitable in each of the past two fiscal years ending in June, losing $16 million on a pro forma basis in the latest year.

The Knicks had operating profits of just $75 million in the latest fiscal year even as the team enjoyed significant playoff-related revenues and profits from their run to their first NBA title in more than 50 years.

Despite meager overall profits, MSG Sports stock has doubled in the past year to nearly $400 a share because of soaring sports team valuations highlighted by a recent sale of a majority stake in the Los Angeles Lakers that valued the team at $12.5 billion - $2 billion more than the team fetched a year ago.

Wolfe Research analyst Peter Supino noted in a recent report that reported earnings don't matter much to sports team investors.

"MSGS and its assets trade on sales / trophy asset value, and not AOI / cash flow," he noted. AOI refers to adjusted operating income.

Investors like MSG Sports' move this year to create separate companies for the Knicks and Rangers. Wall Street prefers pure plays and the Rangers spinoff is due to be completed by the end of October. The new Rangers spinoff will be called MSG Rangers, while MSG Sports, which will hold the Knicks, will be renamed MSG Knickerbockers, based on the full name of the basketball team.

The Rangers spinoff could facilitate a partial or outright sale of either team by creating separate, more digestible companies.

It should be said that while MSG Sports has talked about potential partial sales of either team, CEO James Dolan, whose family controls the company through supervoting stock, has ruled out an outright sale of either team or the entire company.

The unwillingness of the Dolans to consider a sale is a key reason that MSG Sports, now valued at almost $10 billion, trades at a discount to the estimated combined value of the teams of $15 billion or more-$12 billion-plus for the Knicks and $3 billion-plus for the Rangers.

Supino has a Peer Perform or Neutral rating on MSG Sports because of the Dolans's stated unwillingness to sell.

"Sports assets remain hot and the Knicks championship might make it the hottest. Lakers team sale boosts Knicks valuation, but MSGS trades at 70% P/NAV which we see as necessary to factor in lack of control & low odds of majority sale," Supino wrote. P/NAV refers to the market value of the stock relative to Supino's estimate of net asset value of around $16.5 billion ($13.5 billion for the Knicks and $3 billion for the Rangers).

The Rangers company lost $16 million on revenues of $341 million based on adjusted pro forma financials in the fiscal year ending in June 2026. The team lost $14 million in the prior year after earning $37 million in fiscal 2024. Revenues were up 3% in the latest year but down from about $400 million in fiscal 2024.

It's notable that the Rangers lost money despite some of the highest ticket prices in the NHL, regular sellouts at Madison Square Garden where the team plays, a fanatic fan base and a position in the largest and most lucrative market in the country.

In the filing, MSG Sports said the Rangers lost money in the past two fiscal years in part because the team didn't qualify for the NHL playoffs and warned: "We are likely not to be profitable in the near term unless the Rangers make an extended playoff run."

Player salaries are an issue for the Rangers and other NHL teams, with the players getting roughly 50% of league revenues.

The Rangers also have been hurt by lower broadcasting fees from the cable network that carries their games in the New York area, reflecting financial pressure on regional sports networks from cable TV cord-cutting.

The Rangers don't plan to raise season-ticket prices for the coming season because of the team's weak showing this past season.

The trends haven't affected the estimated value of the Rangers, which keeps going up. Forbes and Sportico, the two main evaluators of sports teams, put the Rangers value at $4 billion and $3.65 billion, respectively, with the Forbes valuation up about 15% from the prior year's valuation.

The Rangers valuation is near the top of the NHL-along with the Toronto Maple Leafs.

MSG Sports shareholders will get a half a share of the Rangers spinoff for each share of MSG Sports, resulting in about 12 million shares outstanding. The company will have a strong balance sheet with about $30 million of net cash.

Assume a valuation of $3 billion and the Rangers stock could trade around $250 a share, or about $125 per MSG Sports share.

A public Rangers valuation will allow investors to get a better fix on the Knicks' value. The Knicks are worth considerably more than the Rangers because of higher revenues-about $800 million in the most recent fiscal year-and better profitability of the NBA relative to the NHL, and basketball's greater popularity.

The Lakers sold recently for an estimated 20 times estimated annual sales. Put a similar valuation on the Knicks and adjust for the playoff-related boost to revenues and that would imply a value of $14 billion or more.

That's quite a score for the Dolans, who bought both teams plus the Madison Square Garden arena and the MSG regional sports network for about $1 billion in the 1990s.