The Madison Square Garden Company Provides Update on Potential Spin-Off Transaction
07 Novembre 2019 - 10:15PM
The Madison Square Garden Company (NYSE: MSG) today announced that
its board of directors has unanimously approved pursuing a revised
plan for the proposed separation of its sports and entertainment
businesses. The Company is now pursuing a spin-off of its
entertainment businesses into a separately traded public company
and, as part of this revised structure, the entertainment company
would not retain an equity interest in the sports company. The
proposed transaction is still expected to be completed during the
first quarter of calendar 2020, subject to certain conditions.
The Company had previously been exploring a plan
to spin-off approximately two-thirds of its economic interest in
its sport businesses to shareholders, with the entertainment
company retaining an approximate one-third interest in the sports
company.
The newly revised transaction would be
structured as a tax-free pro rata spin-off to all MSG shareholders.
Each shareholder would continue to own their current economic
interest in both the sports and entertainment businesses. The
Company continues to believe that the proposed separation of the
sports and entertainment businesses would enable shareholders to
more clearly evaluate each company’s assets and future prospects,
while allowing each company to have a capital structure and capital
allocation policy most appropriate for its business.
Executive Chairman and CEO James L. Dolan said,
“The spin-off would create two distinct companies for MSG
shareholders, each with a defined business focus and clear
investment characteristics. 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 pure-play sports company would reflect the
strong and steady financial performance of MSG’s sports businesses
driven by the Knicks and Rangers franchises, while the
entertainment company would capitalize on opportunities for growth,
most notably through venue expansion as the Company moves forward
with its MSG Sphere initiative.
MSG has made significant progress on its first
MSG Sphere in Las Vegas with the goal of opening the venue in
calendar 2021. For its second MSG Sphere in London, the Company is
continuing to move through the planning application process, which
is now expected to run into calendar 2020. The Company also remains
focused on incorporating learnings from its Las Vegas project in
London. For these reasons, it is no longer possible for the London
venue opening to be one year after the opening of MSG Sphere in Las
Vegas. As a result of the evolving timeline in London, the Company
now believes the standalone entertainment company would have
sufficient financial flexibility to pursue its venue expansion
plans without the need for the retained equity interest in the
sports company. In addition, the revised structure would eliminate
any potential tax leakage associated with the sale of the retained
interest in the Sports company.
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;
- 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
- The Company’s professional sports team Training Center in
Greenburgh, NY.
In addition to its planned MSG Sphere venues,
the entertainment company would include:
- World-class venues: New York’s Madison Square Garden, Hulu
Theater at Madison Square Garden, Radio City Music Hall and Beacon
Theatre; the Forum in Inglewood, CA; and The Chicago Theatre;
- The Company’s bookings business, which fills MSG’s venues with
a wide variety of the most exciting and unforgettable entertainment
events. This business would also include the Company’s bookings of
the Knicks and Rangers, as well as other sporting events such as
college basketball and professional boxing, the results of which
are currently reported as part of the Company’s MSG Sports
segment;
- Productions, which includes the Radio City Rockettes and the
Christmas Spectacular, the nation’s number one live family holiday
show;
- Majority interests in TAO Group, a world-class hospitality
group, and Boston Calling Events, producer of New England’s
preeminent Boston Calling Music Festival; and
- Approximately $1 billion in cash on hand.
Completion of the transaction would be subject
to various conditions, including league and final MSG Board
approval. J.P. Morgan Securities LLC and PJT Partners LP
continue to serve as financial advisors and Sullivan & Cromwell
LLP continues to serve as legal advisor.
About The Madison Square Garden
CompanyThe Madison Square Garden Company (MSG) is a world
leader in live sports and entertainment experiences. The company
presents or hosts a broad array of premier events in its diverse
collection of iconic venues: New York’s Madison Square Garden, Hulu
Theater at Madison Square Garden, Radio City Music Hall and Beacon
Theatre; the Forum in Inglewood, CA; and The Chicago Theatre. Other
MSG properties include legendary sports franchises: the New York
Knicks (NBA) and the New York Rangers (NHL); two development league
teams – the Westchester Knicks (NBAGL) and the Hartford Wolf Pack
(AHL); and esports teams through Counter Logic Gaming, a leading
North American esports organization, and Knicks Gaming, MSG’s NBA
2K League franchise. In addition, the Company features the popular
original production – the Christmas Spectacular Starring
the Radio City Rockettes – and through Boston Calling Events,
produces New England’s preeminent Boston Calling Music
Festival. Also under the MSG umbrella is Tao Group
Hospitality, a world-class hospitality group with
globally-recognized entertainment, dining and nightlife brands
including Tao, Marquee, Lavo, Avenue, Beauty & Essex and
Cathédrale. More information is available
at www.themadisonsquaregardencompany.com
This press release may contain statements that
constitute forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Investors are
cautioned that any such forward-looking statements are not
guarantees of future performance or results and involve risks and
uncertainties, and that actual results, developments and events may
differ materially from those in the forward-looking statements as a
result of various factors, including financial community and rating
agency perceptions of the Company and its business, operations,
financial condition and the industry in which it operates and the
factors described in the Company’s filings with the Securities and
Exchange Commission, including the sections titled “Risk Factors”
and “Management’s Discussion and Analysis of Financial Condition
and Results of Operations” contained therein. The Company disclaims
any obligation to update any forward-looking statements contained
herein.
Contacts:
Kimberly KernsEVP and Chief Communications OfficerThe Madison
Square Garden Company(212) 465-6442 / kimberly.kerns@msg.com |
Ari Danes, CFASenior Vice President, Investor Relations &
TreasuryThe Madison Square Garden Company(212) 465-6072 /
ari.danes@msg.com |
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