NEW YORK (CelebrityAccess) — The board of directors at Madison Square Garden Company voted unanimously to authorize the company’s management to consider spinning off its sports business into a standalone company.
The publicly-traded firm would include both the New York Knicks and New York Rangers professional sports franchises and would be independent of MSG’s existing entertainment unit.
“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,” MSG said in a press statement on Wednesday.
If the company does proceed with a spin-off, it would be structured as a tax-free transaction for shareholders, and the live entertainment company would retain about a 33% stake in the sports company.
The sports company would include The New York Knicks and the New York Rangers, as well as their development teams, the Westchester Knicks, and the Hartford Wolf Pack, and the company’s WNBA franchise the New York Liberty, though they are currently evaluating a potential sale for the team.
The sports company would also include MSG Sports eSports assets, including Knicks Gaming, and a majority interest in the prominent North American mutli-game eSports team Counter Logic Gaming.
The entertainment company would hold MSG’s portfolio of venues, including 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.
The entertainment company would also retain MSG Booking, which handles more than 800 events at the company’s venues, including concerts and sports events such as college basketball and professional boxing, and which are currently reported under its sports financials. MSG Productions, which includes the Radio City Rockettes and the Christmas Spectacular and a majority stake in the Tao Group, which operates a chain of nightclubs.
As well, the MSG’s strategic ventures such as Azoff-MSG Entertainment, Tribeca Enterprises, and Boston Calling Events, producer of the Boston Calling Music Festival would all end up in the new entertainment company.
James L. Dolan is expected to be the Executive Chairman and Chief Executive Officer of both companies after the split, MSG 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,” Dolan said in a press statement.
“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,” he added.
MSG noted that no timetable has been established for the completion of a separation, and any such deal would be subject to approval from both the government and various sports leagues, as well as the company’s board of directors.