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MSG moves forward with ents spin-off

Madison Square Garden Company hopes to complete the separation of its entertainment and sports businesses in the first quarter of 2020

By Anna Grace on 04 Dec 2019

MSG moves forward with ents spin-off

The Forum in Inglewood will form part of MSG's post spin-off entertainment company


image © Ritapepaj/Wikimedia Commons (CC BY-SA 3.0)

The Madison Square Garden Company (MSG) has announced that it has reached a “significant milestone” in the proposed spin-off of its entertainment business, set to take place in the first three months of 2020.

The venue giant filed an initial form 10 registration statement with US regulator the Securities and Exchange Commission (SEC) yesterday (3 December), detailing the terms of the spin-off, which would split MSG into two distinct companies – one focused on sports and the other on entertainment.

Structured as a tax-free spin-off to all MSG shareholders, those directly holding shares of common stock would maintain economic interest in both businesses, with MSG executive chairman and CEO James Dolan and his family retaining majority voting control of both companies.

MSG hopes the spin-off will enable investors to evaluate the assets and opportunities of each company more clearly, with the entertainment business in particular offering chances for growth through venue expansion.

MSG hopes the spin-off will enable investors to evaluate the assets and opportunities of each company more clearly

The entertainment company would feature venues including New York’s Madison Square Garden (20,789-cap.); Hulu Theater (5,600-cap.); Radio City Music Hall (6,015-cap.); the Forum in Inglewood (17,505-cap.); and The Chicago Theatre (3,600-cap.); as well as the state-of-the-art MSG Sphere venue in Las Vegas, due to open in 2021, and a second planned Sphere in London.

In addition to its venue portfolio, the post spin-off ents business would include MSG’s booking company, which will also programme sports events; the productions sector, which includes the Radio City Rockettes and the Christmas Spectacular; and majority interests in hospitality group Tao Group Hospitality and Boston Calling Events, which organises the Boston Calling Music Festival.

The New York Knicks (basketball) and Rangers (ice hockey) sports franchises, and the Knicks Gaming esports franchise, would make up the pure-play sports company.

MSG had previously explored a spin-off which would see the entertainment company retain a one-third stake in MSG sports, but later decided there was sufficient financing for venue expansion on the entertainment side without support from the sports division.

The completion of the spin-off remains subject to conditions including final MSG board approval.

 


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