Madison Square Garden Co. filed a confidential initial Form 10 registration statement for the proposed spinoff of its sports business.
The proposed separation would be structured as a tax-free spinoff to all the company's shareholders. Upon completion of the transaction, record holders of Madison Square Garden common stock would receive a pro rata distribution, expected to be equivalent, in aggregate, to an about two-thirds economic interest in the pure-play sports company, the company said Oct. 4.
The remaining common stock would be retained by the live entertainment company and is expected to be used to raise capital and/or exchange for the common stock of the entertainment company. Also, the Dolan family would maintain majority voting control of both companies through their ownership of class B shares.
The proposed transaction is currently expected to close during the first half of calendar 2019, subject to certain conditions.
The pure-play sports company would include the New York Knicks professional NBA franchise and its development team, the Westchester Knicks; The New York Rangers professional NHL franchise and its development team, the Hartford Wolf Pack; The New York Liberty professional WNBA 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, N.Y.
The live entertainment company would include 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 also encompasses the company's bookings business; productions; majority interests in TAO Group; strategic entertainment joint ventures; an about one-third economic interest in the pure-play sports company; and about $1 billion in cash on hand.
Further, the live entertainment company would also continue to work on plans to create state-of-the-art venues, called MSG Sphere. The first MSG Sphere is expected to open in Las Vegas in fiscal 2021, followed by a second MSG Sphere in London about one year later.
The proposed separation of the sports and entertainment businesses would enable investors to evaluate each company's assets and future potential more clearly, while providing both companies with increased strategic flexibility to pursue their own distinctive business plan and capital allocation policy.
J.P. Morgan and PJT Partners continue to serve as financial advisers and Sullivan & Cromwell LLP continues to serve as legal adviser.