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Madison Square Garden Approves Spinoff for Knicks, Rangers

HighLifeChannel November 8, 2019

Madison Square Garden Co. owner of the eponymous arena and other venues, approved a plan to spin off all of its sports business, including the New York Knicks  and Rangers.

The plan  would keep MSG’s entertainment operations as a publicly held company — with no equity interest in the sports business.

 Under a previous proposal, the entertainment division was going to own a third of the sports business. The revised transaction will be structured as a tax-free spinoff to all MSG shareholders and is expected to be completed in the first quarter of next year.
 The idea is to unlock value by separating the assets. The Knicks and Rangers are worth a combined $7.2 billion, according to Blue Harbour Group, which owns a 4% stake in MSG. That’s 10% higher than the market value of MSG as a whole.
 But the breakup shouldn’t affect the Dolan family’s control of both operations. Under the plan, shareholders will keep their current economic interest in the new businesses.

The shares have gained 4.4% this year, giving MSG a market valuation of $6.68 billion.

A total separation of the two entities — without the one-third stake — is expected to make the sports business more attractive to investors. In addition to the NBA’s Knicks and the NHL’s Rangers, the new sports company will include some video-gaming teams, two minor league franchises and a training center in Greenburgh, New York.

The entertainment company would have New York’s Madison Square Garden arena, the Hulu Theater, Radio City Music Hall and Beacon Theatre; the Forum in Inglewood, California; and the Chicago Theatre.

MSG announced last year that it planned to spin off its pro sports franchises. Rumors have circulated for years that the Dolan family might sell one or all of the teams. Jim Dolan has repeatedly said that while he has an obligation to consider offers, he isn’t interested.

The family has a net worth of $5.3 billion, according to theBloomberg Billionaires Index.

MSG also gave an update on its Sphere project in London. The entertainment venue is moving through the planning application process, which should run into 2020, MSG said. It’s also opening a Sphere in Las Vegas in 2021.

MSG, based in New York, separated  its media operations in 2015. That business — MSG Networks Inc., which broadcasts Knicks and Rangers games — is worth about $1 billion.


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