MSG Co. expects to complete the spin-off of its entertainment businesses from its sports businesses in mid-April. When the deal is completed, MSG will be a sports-focused company renamed as Madison Square Garden Sports Corp. (MSG Sports), and the new entertainment company will be named Madison Square Garden Entertainment Corp. (MSG Entertainment). The spin-off was structured to qualify as a tax-free distribution to MSG stockholders and MSG for U.S. federal income tax purposes.
The company also announced it is temporarily halting the construction of its MSG Sphere project in Las Vegas due to the affect the global coronavirus pandemic has had on construction and its supply chain. MSG still plans to open the theater sometime in '21.
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With the spin-off, MSG Entertainment will have the exclusive right to license and manage suites and club memberships at its flagship arena, with some exceptions, during Knicks and Rangers games. A portion of the revenues from the licenses and club memberships will be paid to the teams. MSG Entertainment also will have the right to sell -- and the Knicks and the Rangers the right to keep -- a percentage of revenue from fixed signage or entitlements at MSG. The teams will have exclusive rights to sell and keep the revenue from certain team sponsorship assets, such as courtside/rinkside advertising and other team or event-specific sponsorships. The Knicks and Rangers will have the exclusive right to sell tickets and keep all revenues from ticket sales and resales.
Two execs from the sports business world will join the company’s BOD in former Knicks President & GM Steve Mills and Joseph Cohen, a former USA Network, NHL Kings and MSG Networks exec who is now President of Sports at The Switch. They will take their places on the boards once the spin-off is completed.
