Under the latest plans to spin off its sports franchises, including the New York Knicks and New York Rangers, Madison Square Garden Co. will not keep an equity stake in the new sports company.
MSG has been planning to split its sports and entertainment businesses into separate ventures, with the Knicks and Rangers to fall under a new sports entity while the entertainment venture would oversee several venues, booking, productions such as the Radio City Rockettes, and more. Earlier plans called for the entertainment venture to retain a one-third equity stake in the new sports business, but that is now changing.
As part of a framework announced Thursday, plans are proceeding for a spin-off of MSG’s entertainment businesses into a separately traded public company that would not retain an equity interest in the sports entity. MSG Executive Chairman and CEO James Dolan would remain in control of the Knicks and the Rangers through his Class B shares, according to the New York Post:
MSG, which also owns the New York Rangers and Radio City Music Hall, announced on Thursday that it’s giving up plans to retain an equity interest in its sports assets after spinning them off into a separate company early next year.
Previously, MSG had planned to spin off two-thirds of its economic interest in the teams to MSG’s current shareholders, while retaining a one-third stake for itself.
But Dolan — notoriously unpopular with fans of the losing Knicks and Rangers — isn’t going away, sources said.
The Cablevision founder’s son will continue to own and control the teams through his Class B shares, which come with supercharged voting powers, a person with direct knowledge of the process told The Post.
The transaction is not final. It is expected to be completed in the first quarter of 2020, subject to certain conditions, according to an announcement Thursday from MSG.
“The spin-off would create two distinct companies for MSG shareholders, each with a defined business focus and clear investment characteristics,” Dolan said in a press statement. “One company would be a leader in live entertainment that would take advantage of significant opportunities to grow rapidly within the changing entertainment landscape. The other entity would be a sports company with marquee assets that would enjoy steady growth and strong free cash flow.”
The Knicks and the Rangers are not the only franchises that would fall under the new sports entity. Also included would be hockey’s Hartford Wolf Pack (AHL), the NBA Gatorade League’s Westchester Knicks, NBA 2K esports franchise Knicks Gaming, a majority interest in Counter Logic Gaming, and a professional sports team training center in Greenburgh, NY.
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