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MSG Board Approves Exploring Spinoff; Live Entertainment Company Would Include Madison Square Garden, Forum, Sphere
MSG – MSG Sphere London Rendering
The venue would be located in Stratford, close to London Stadium and not far from the O2
The Madison Square Garden Company’s board of directors has authorized the company’s management to explore a possible spinoff that would separate the company’s sports and live entertainment businesses.
James L. Dolan, who would be the executive chairman and CEO of both companies, 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.”
MSG says a 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.
An MSG live entertainment company would be expected to include venues such as New York’s Madison Square Garden, The Hulu Theater at Madison Square Garden, Radio City Music Hall and Beacon Theatre; the Forum in Inglewood, Calif., The Chicago Theatre; and the Wang Theatre in Boston.
It would also include MSG Bookings, which fills MSG’s venues with a variety of entertainment events, MSG Productions, which includes the Radio City Rockettes and Christmas Spectacular, majority interests in hospitality company the TAO Group, and Boston Calling Events, producer of New England’s preeminent Boston Calling Music Festival as well as strategic entertainment joint ventures such as Azoff-MSG Entertainment and Tribeca Enterprises. MSG also says the entertainment company would have an approximately one-third economic interest in the pure-play sports company, as well as $1 billion cash on hand.
Azoff-MSG Entertainment head Irving Azoff is a co-founder of Oak View Group, Pollstar’s parent company.
The live entertainment company will also continue to move forward with plans to create state-of-the-art venues – called MSG Sphere, with the goal of opening the first in Las Vegas by the end of calendar 2020, followed by a second MSG Sphere in London approximately one year later.
Among the company’s sports interests are the New York Knicks NBA team, New York Rangers NHL team and the WNBA’s New York Liberty, for which the company is exploring a sale.
Although detailing the process by adding that a spin-off would be structured as a tax-free transaction to all MSG shareholders, the announcement stresses: “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.”
Assuming the standalone live music company would be traded on the New York Stock Exchange, it would join Live Nation as one of very few core concert companies traded publicly.