MSG Considering Spinning Off Sports Teams, Shares Hit All-Time High


Madison Square Garden (MSG) is considering a tax-free spinoff of the Knicks, Rangers and other pro sports franchises (to be known as MSG Sports) from Madison Square Garden Arena, Radio City Music Hall and the balance of their concert-hosting and entertainment-venue operations. The proposed plan would give legacy shareholders 66% of MSG Sports. MSG would retain the remaining 33%. No timetable has been issued for the board to issue a decision. MSG shares hit an all-time high on Thursday, closing at $303.29.

Howie Long-Short: Should a split occur, MSG Sports would include the Knicks, Rangers, Westchester Knicks (G-League), Hartford Wolf Pack (AHL) and the Liberty (WNBA), though the team has been exploring a sale for that franchise on and off since November. The newly-formed entity would also include Knicks Gaming (NBA 2K League) and Counter Logic Gaming (esports).

MSG would hold on to Madison Square Garden and the Hulu Theatre, Radio City Music Hall, Beacon Theatre, the Forum in Inglewood, the Chicago Theatre and the Wang Theatre (Boston). The company’s hospitality group, a music festival producer, interests in Oak View Group development projects, stake in Tao Group (62.5%) and $1 billion in cash would also remain under the MSG umbrella.

JWS wrote about the need for a potential spinoff back in October and we again discussed how MSG’s market cap was lower than Forbes value of just the Knicks and Rangers in February; so, we’re on board with a spinoff that would bring full value of company’s assets to shareholders. We noted in October that there was speculation a spinoff could increase the value of the company by upwards of +25%; reports of the potential plan occurred on Wednesday evening, shares have skyrocketed +13.9% since.

Fan Marino: Sorry Knicks Fans, a spinoff doesn’t mean that James Dolan would finally relinquish control of the struggling NBA franchise; Dolan intends on serving as executive chairman and CEO of both companies.

Knicks fan looking for some good news? Kentucky HC John Calipari believes 1st round selection Kevin Knox is the league’s next Jason Tatum; “a tough, a skilled, long, tough player who’s a future All-Star.

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Author: John Wall Street

At the intersection of sports & finance.

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