• by David Goetzl  @dgoetzl, July 6, 2010

Fans of the New York Knicks may have mixed views on the team's latest high-profile free-agent signing, but Wall Street expressed at least some initial excitement. The share price of the Knicks' parent company shot up near 6% early Tuesday on the inking of Amar'e Stoudemire -- before showing a weak defense against investor concern about the team's future.

Stoudemire, an accomplished power forward with the Phoenix Suns, signed a five-year, $100 million deal with the Knicks on Monday. But the move that could be a game-changer for Madison Square Garden, Inc. shares for years to come would be an agreement for LeBron James to leave Cleveland and join the team.

MSG shares opened at about $20 a share and rose sharply before fading. A late rally brought a close of up more than 1%.

One reason for investor concern: An ESPN report that James' team, Cleveland, could entice the reigning MVP to re-sign -- with a promise that it would also add top free agent Toronto's Chris Bosh.

As MSG's stock price jumped initially, Miller Tabak + Co. analyst David Joyce said investors felt, in part, that Stoudemire might persuade James to come to New York.

"The hope is that he would also be able to attract LeBron James," Joyce said. "That still remains to be seen ... that's what's driving it for now."

James could propel revenues throughout MSG, boosting ratings for its flagship TV network. His signing with the Knicks could increase sales of pricey suites in a remodeled Madison Square Garden arena and allow for higher ticket prices there. It could even boost rates for signage and sponsorships in and around the stadium.

An MSG representative had no comment in an email.

For years, MSG was part of Cablevision, but now operates independently. Despite the Knicks' unimpressive performance over the last decade, MSG saw revenue up 9% in the first quarter to $306.5 million, while net income came in at $17.4 million, after a loss in the same period a year ago.

Some Knicks fans believe that Stoudemire -- even without James -- could help reverse the team's fortunes. Others, to borrow from a promo on a New York radio station, believe the future is "LeBron or bust."