Fun fact: the New York Knicks are owned by a publicly-traded company.
News: The Madison Square Garden company, which owns the New York Knicks, New York Rangers, and Madison Square Garden, among other assets, is thinking about breaking itself into two separate companies.
In an announcement late Monday night, MSG said its board approved a plan to explore a possible spin-off that would split its entertainment and sports & media businesses into two publicly traded companies.
In late afternoon trade on Tuesday, shares of MSG — which has a market cap of about $US5.5 billion — were up more than 10%.
Under MSG’s announced proposal, the entertainment company would include:
- MSG booking, which effectively fills MSG’s venues with events, concerts, family shows, and special events
- MSG’s productions, including the Radio City Christmas Spectacular
- MSG’s venue management capabilities, as well as its sponsorship, marketing, ticketing and promotional platforms
- MSG’s strategic entertainment joint ventures
And the sports and media company would include:
- The New York Knicks, New York Rangers, and New York Liberty, as well as developmental teams the Hartford Wolf Pack and Westchester Knicks
- MSG Network
- MSG’s interests in SiTV Media, which owns NUVOtv and Fuse networks
MSG also announced that activist investor Nelson Peltz, who runs Trian Fund Management, would join the company’s board.
And according to The Wall Street Journal, which cites a person familiar with the matter, James Dolan, MSG’s chairman, asked Peltz to join the board, “as the company readied its future plan.”
Peltz does not own a stake in MSG, the Journal added.
MSG also added Scott Sperling, co-president of PE firm Thomas H. Lee partners to its board.
The company said the spin-off would be structured as a tax-free transaction for existing shareholders, and is a split the company has been considering since July.
In a statement, Tad Smith, CEO of MSG said:
“We are exploring the opportunity to improve upon the excellent shareholder return created since MSG’s spin-off over four years ago by separating our business into two companies, each with its own distinct value proposition for investors… The first company would capitalise on significant opportunities to grow rapidly within the changing entertainment landscape. The second would enjoy steady growth and high cash flow that we expect will result in capital returns to shareholders.”
MSG also said it would repurchase $US500 million worth its stock.
The announcement from MSG comes at the very beginning of the NHL season and just ahead of Tuesday’s start of the NBA season.
The value of NBA franchises, and the league as a whole, has skyrocketed in the last year, with the Los Angeles Clippers selling for a record $US2 billion in August to former Microsoft CEO Steve Ballmer, while the league just signed a lucrative new television deal worth more than $US2 billion annually.
Here’s the chart showing Tuesday’s pop in Madison Square Garden shares.