Shares of Madison Square Garden Sports, the parent of the basketball champion New York Knicks, surged Wednesday on reports that Bob Iger and venture capitalist Joshua Kushner plan to buy a majority stake in the Los Angeles Lakers for $12.5 billion.

Madison Square Garden Sports stock jumped 5%, to near $413.67, and were on pace for a new all-time closing high, according to Dow Jones Market Data.

MSGS is up 4.9% this month and 59.7% this year.

MSGS stock has rallied on higher NBA team valuations and the company's plan to create separate companies for the Knicks and New York Rangers, which could allow the potential sale of all or part of one of the teams. A sale of an entire team is unlikely, however given the opposition from CEO James Dolan, the leader of the Dolan family, which controls the company through supervoting stock.

The Lakers sold last year for $10 billion, and now a majority stake is being sold at a higher price to a group led by Iger, the former Disney CEO, and Kushner, as reported by various outlets including The Wall Street Journal.

MSG Sports trades below the estimated value of the Knicks and Rangers because of the Dolans' opposition to a sale. Some analysts had put the company's asset value at about $13 billion to $14 billion -- $10 billion plus for the Knicks and more than $3 billion for the Rangers.

Those estimates are likely to go higher with the Lakers sale, since the Knicks are seen as a very comparable franchise in the largest market in the country, with a passionate fan base and their first NBA championship season in over 50 years.

MSG Sports, however, doesn't make much money and the company doesn't pay a dividend or currently buy back stock. It earned about $19 million in the first nine months of its fiscal year ended in June. Sports franchises are trophy assets prized by billionaires and often generate modest profit at best.

The company reports its June quarter earnings on Thursday, and investors will be interested to hear what management says on the conference call.

The issue for investors is how much of a discount to ascribe to the stock for the control issue and the unwillingness of the Dolans so far to consider a sale of either team or the entire company.

Wednesday's news also comes after LeBron James last month announced he is leaving the Lakers and has signed a two-year, $8 million contract to play for the Philadelphia 76ers.

This is a developing story. Please check back for further updates.