MSG moves forward with spin-off proposal

Madison Square Garden (MSG) Entertainment has filed plans with the US Securities and Exchange Commission to spin-off its live entertainment and MSG Networks divisions.

The proposed move, which remains subject to various conditions, would separate those businesses from the firm’s MSG Sphere and Tao Group Hospitality businesses, creating a separately-traded public company.

Alongside New York City’s 20,000-cap Madison Square Garden, the live entertainment and media firm is expected to include The Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre and The Chicago Theatre, along with the firm’s entertainment and sports bookings business and long-term arena licence agreements with the New York Knicks and New York Rangers.

MSG Entertainment would then comprise the MSG Sphere venues, a majority interest in TAO Group Hospitality, an approximately one-third economic interest in the live entertainment and media company; and the majority of the company’s cash on hand.

If the company proceeds with the separation, it would be structured as a tax-free spin-off to all MSGE shareholders. MSG previously completed the spin-off of its entertainment businesses from its sports company in 2020.

“Looking ahead, we expect fiscal 2023 to be a defining year as we make progress toward the completion of MSG Sphere in Las Vegas and our potential spin-off”

MSG revealed the latest development as part of its financial report for fiscal Q1 2023, the three-month period ending 30 September 2022.

The company reported revenues of $401.2 million, up 36% on the prior year quarter, and an operating loss of $44.8m (an improvement of 46%), and adjusted operating income of $2.8m, a decrease of $7.5m, or 73%, compared to the prior year period.

“We are pleased with our start to the year, with first quarter results reflecting robust ongoing demand for our portfolio of assets and brands,” says executive chairman and CEO James Dolan. “Looking ahead, we expect fiscal 2023 to be a defining year as we make progress toward the completion of MSG Sphere in Las Vegas and our potential spin-off, both of which we believe will deliver long-term value for our shareholders.”

The fiscal quarter was highlighted by a busy calendar of events at MSG venues, strength in Tao Group Hospitality’s key markets, including Las Vegas and New York, and robust sales and renewal activity within marketing partnerships and suites.

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