The Madison Square Garden Company Board of Directors Unanimously Approves Plan to Explore Possible Spin-Off
June 27 2018 - 4:15PM
Would Separate Sports Businesses from
Live Entertainment Businesses to Create Two
Distinct Public Companies
The Madison Square Garden Company (NYSE:MSG) today announced that
its board of directors has authorized the Company’s management to
explore a possible spin-off that would create a separately-traded
public company comprised of its sports businesses, including the
New York Knicks and New York Rangers professional sports
franchises.
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.
If the Company proceeds with the spin-off, it
would be structured as a tax-free transaction to all MSG
shareholders. Upon completion of the contemplated
separation, record holders of MSG common stock would receive a
pro-rata distribution, expected to be equivalent, in aggregate, to
an approximately two-thirds economic interest in the pure-play
sports company. The remaining common stock, expected to be
equivalent to an approximately one-third economic interest in the
sports company, would be retained by the live entertainment
company. These shares are expected to be used to raise
capital and/or exchange for the common stock of the entertainment
company. James L. Dolan is expected to be the Executive
Chairman and Chief Executive Officer of both companies.
Mr. Dolan said, “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.”
The pure-play sports company is expected to
include:
- The New York Knicks professional NBA sports franchise and its
development team, the Westchester Knicks;
- The New York Rangers professional NHL sports franchise and its
development team, the Hartford Wolf Pack;
- The New York Liberty professional WNBA sports franchise, for
which the Company is exploring a sale;
- Knicks Gaming, the official NBA 2K esports franchise of the New
York Knicks, and a majority interest in Counter Logic Gaming, a
leading North American esports organization; and
- A professional sports team Training Center in Greenburgh,
NY.
The live entertainment company is expected to
include:
- A diverse collection of iconic venues: New York’s Madison
Square Garden, The Hulu Theater at Madison Square Garden, Radio
City Music Hall and Beacon Theatre; the Forum in Inglewood, CA; The
Chicago Theatre; and the Wang Theatre in Boston;
- MSG Bookings, an established industry leader, which effectively
fills MSG’s venues with a wide variety of the most exciting and
unforgettable entertainment events. This business is expected
to also include the Company’s bookings of live sporting events such
as college basketball and professional boxing, the results of which
are currently reported as part of the Company’s Sports
segment. In fiscal 2017, the entertainment and sports
bookings businesses attracted more than 800 events, which drew
nearly 4 million people to MSG’s venues;
- MSG Productions – which includes the Radio City Rockettes and
the Christmas Spectacular, the nation’s number one live family
holiday show with over 1 million tickets sold this past holiday
season;
- Majority interests in TAO Group, a world-class hospitality
group, and Boston Calling Events, producer of New England’s
preeminent Boston Calling Music Festival;
- Strategic entertainment joint ventures -- Azoff-MSG
Entertainment and Tribeca Enterprises;
- An approximately one-third economic interest in the pure-play
sports company; and
- Approximately $1 billion in cash on hand.
The live entertainment company will also
continue to move forward with plans to create state-of-the-art
venues – called MSG Sphere. The goal is to open the first MSG
Sphere in Las Vegas by the end of calendar 2020, followed by a
second MSG Sphere in London approximately one year
later.
There can be no assurance that the proposed
transaction will be completed in the manner described above, or at
all. The Company has not set a timetable for completion of this
process. Completion of the transaction would be subject to various
conditions, including certain league approvals, a private letter
ruling from the IRS, receipt of a tax opinion from counsel and
final MSG Board approval. J.P. Morgan and PJT Partners are
serving as financial advisors and Sullivan & Cromwell LLP is
serving as legal advisor.
About The Madison Square Garden
CompanyThe Madison Square Garden Company (MSG) is a world
leader in live sports and entertainment experiences. The
company presents or hosts a broad array of premier events in its
diverse collection of iconic venues: New York’s Madison Square
Garden, The Hulu Theater at Madison Square Garden, Radio City Music
Hall and Beacon Theatre; the Forum in Inglewood, CA; The Chicago
Theatre; and the Wang Theatre in Boston. Other MSG properties
include legendary sports franchises: the New York Knicks (NBA), the
New York Rangers (NHL) and the New York Liberty (WNBA); two
development league teams – the Westchester Knicks (NBAGL) and the
Hartford Wolf Pack (AHL); and one of the leading North American
esports organizations, Counter Logic Gaming. In addition, the
Company features the popular original production – the Christmas
Spectacular Starring the Radio City Rockettes – and through Boston
Calling Events, produces New England’s preeminent Boston Calling
Music Festival. Also under the MSG umbrella is TAO Group, a
world-class hospitality group with globally-recognized
entertainment dining and nightlife brands: Tao, Marquee, Lavo,
Avenue, The Stanton Social, Beauty & Essex and Vandal.
More information is available at
www.themadisonsquaregardencompany.com.
Contact:
Kimberly KernsThe
Madison Square Garden Company212-465-6442 /
kimberly.kerns@msg.com |
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