NEW YORK: The Madison Square Garden (MSG), one of the city’s iconic venues, announced on Wednesday that its company’s board of directors have unanimously okayed a plan that would help create a separately-traded public company comprising of several of its professional sports franchises such as NBA’s New York Knicks and NHL’s New York Rangers.
The thought behind dividing MSG’s sports and entertainment businesses is to empower shareholders to get clarity on evaluating each company’s assets and future potential as both the divisions will have their own business strategy and capital allocation policy.
The proposed separation of the sports and entertainment businesses 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.
Should the plan be implemented, shareholders are likely to have 67% of economic interest in the sports division, while 33% of the stock will be retained by the entertainment division.
James L. Dolan is expected to be the executive chairman and CEO of both companies.
“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 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.”, Dolan said.
Some of the other companies in MSG’s sports division include New York Liberty in the WNBA, Knicks Gaming (the official NBA 2K esports franchise of the New York Knicks), Counter Logic Gaming (a leading North American esports organization and a professional sports team training center in Greenburgh, New York).
MSG has not yet fixed a time frame to complete the move. J.P. Morgan will be backed by PJT Partners as financial advisors and Sullivan & Cromwell LLP is serving as legal advisor of the company in this regard.
