Madison Square Garden Sets Target for Splitting Sports and Live Businesses

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Harry Styles performs onstage during Harry Styles: Live On Tour - New York at Madison Square Garden on June 21, 2018 in New York City. 

The Madison Square Garden Company's separation of its sports and entertainment units is expected to be completed during the first half of 2019 by way of a tax-free spin-of to all MSG shareholders, creating two publicly traded businesses, the New York City-based company said on Thursday.

If the proposed transaction goes through, the live company would include venues such as NYC's Madison Square Garden, Radio City Music Hall, Beacon Theatre and the Hulu Theater at MSG; the Forum in Inglewood, Calif.; the Chicago Theatre; and the Wang Theatre in Boston. The live entity would also include MSG's bookings business; productions featuring the Rockettes; majority interests in TAO Group and Boston Calling Events; and strategic joint ventures, Azoff-MSG Entertainment and Tribeca Enterprises.

Previously announced future venues under the MSG Sphere moniker -- one in Las Vegas and another in London -- will also be part of the live spin-off.

The live business would launch with approximately $1 billion in cash on hand and retain a one-third economic interest in MSG's pure-play sports company, which includes MSG tenants the Knicks (NBA), the Rangers (NHL) and the Liberty (WNBA), along with the esports franchise Knicks Gaming and a majority interest in Logic Gaming, also an esports organization. The sports unit also includes development teams for the Knicks and Rangers and a training center in Greenburgh, NY.

"The proposed separation... would enable investors to more clearly evaluate each company’s assets and future potential, while providing both companies with increased strategic flexibility to pursue their own distinctive business plan and capital allocation policy," the company said.

Additional details for the proposed spin-off were included in a recent confidential initial Form 10 registration statement with the U.S. Securities and Exchange Commission. Upon completion of the transaction, holders of common stock in the company would receive a pro-rata distribution expected to be equivalent to a two-thirds interest in the sports company. Remaining common stock would be retained by the live company and used to raise capital for the entertainment side or exchanged for the common stock of the entertainment company.

The Dolan family would retain majority voting control of both companies. The separation remains subject of various conditions, including final MSG Board approval, as well as actions by the SEC and the IRS and certain sports league approvals.