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MSG to look into live entertainment division spin-off

The Madison Square Garden Company's board has OKed plans to separate its sports and entertainment divisions, the latter of which would include the new Sphere arenas

By IQ on 28 Jun 2018

Madison Square Garden, New York

image © Wally Gobetz

The board of directors of Madison Square Garden Company (MSG) has approved plans to explore a separation of its sports and entertainment businesses into two distinct public companies.

The proposed spin-off – which would be subject to regulatory approval, and as yet has no timetable for completion – would “enable shareholders to more clearly evaluate each company’s assets and future potential, while allowing both companies to pursue their own distinct business strategy and capital allocation policy”, according to a note sent to investors.

The sports company would include MSG’s basketball teams, New York Knicks and New York Liberty, its ice-hockey team New York Rangers and two esports organisations, Knicks Gaming and Counter Logic Gaming.

The dedicated live entertainment division, meanwhile, would comprise:

  • Venues Madison Square Gardenthe Hulu Theater at Madison Square GardenRadio City Music Hall and Beacon Theatre in New York, the Forum in Inglewood, California, the Chicago Theatre in Chicago and Wang Theatre in Boston
  • Booking arm MSG Bookings, which attracted more than 800 events and four million people to MSG’s venues last year
  • MSG Productions, which includes family shows Radio City Rockettes and the Christmas Spectacular
  • Majority interests in hospitality company Tao Group and Boston Calling Events, the producer of Boston Calling Music Festival
  • Joint ventures Azoff-MSG Entertainment and Tribeca Enterprises
  • An approximate one-third economic interest in the sports company
  • Approximately US$1 billion in cash on hand

The live entertainment company would also include the hotly anticipated new MSG Sphere venues in Las Vegas and London, which are expected to completed in 2020 and 2021, respectively.

MSG CEO James Dolan, who is expected to be CEO and executive chairman of both companies, comments: “We are exploring the opportunity to further create value by separating our businesses into two distinct companies. One company would be a leader in live entertainment with a growing portfolio of assets that will include the state-of-the-art music and entertainment-focused venues called MSG Sphere. The other entity would be a pure-play sports company driven by the strong financial performance of the storied Knicks and Rangers franchises.

“We believe this proposed transaction would provide each company with enhanced strategic flexibility, its own defined business focus and clear investment characteristics.”

 


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