Madison Square Garden Company (MSG) has today (Friday) shed further light on the proposed spin-off of its entertainment businesses from its sports businesses, naming the intended leadership team for the new units.
MSG said it is continuing to make “important progress” on the spin-off, filing a publicly available Form 10 Registration Statement with the U.S. Securities and Exchange Commission (SEC) for the new entertainment company, which is expected to be called Madison Square Garden Entertainment Corp. (MSG Entertainment).
In addition, the Company announced that Andrew Lustgarten, currently MSG president, is expected to be named president and CEO overseeing all business operations for the pure-play sports company, which is set to be renamed Madison Square Garden Sports Corp. (MSG Sports).
Following the completion of the spin-off, MSG’s executive chairman and CEO James Dolan is expected to serve as executive chairman of the sports company and as executive chairman and CEO of the entertainment company. In addition to serving as president and CEO of the sports company, it is anticipated that Lustgarten will serve as president of the entertainment company.
The transaction remains subject to various conditions, including final league and MSG Board approval. MSG Sports is intended to become a pureplay sports company that would reflect the “strong and steady financial performance” of MSG’s sports businesses. MSG views MSG Entertainment as an entertainment company that would capitalise on opportunities for growth, most notably through venue expansion.
In December, MSG filed a registration statement with the SEC for the spin-off. In November, the board approved a revised plan for the proposed separation, while it was revealed that the planned MSG Sphere arena in London is expected to open later than initially planned.
The sports and entertainment giant, which owns the eponymous Madison Square Garden arena (pictured) in Manhattan, is planning new arenas in Las Vegas and London. MSG said in November that “significant” progress had been made on the Las Vegas project, which it hopes to open in 2021, but the London arena – set to be located near the Olympic Park in Stratford – continues to move through the planning application process.
MSG had previously been exploring plans to spin off around two thirds of its economic interest in its sports businesses to shareholders, with the entertainment company to retain an approximate one-third interest in the sports company. Under the revised plan detailed in November, the transaction would be structured as a tax-free pro rata spin-off to all MSG shareholders, through with each shareholder would continue to own their current economic interest in both the sports and entertainment businesses.
MSG owns the New York Knicks NBA team and the New York Rangers NHL ice hockey franchise, which both play at the Manhattan arena. MSG also owns The Forum, a multi-purpose arena in Inglewood, California. It was reported last week that Steve Ballmer, owner of the Los Angeles Clippers NBA franchise, is in talks to purchase The Forum, which is located near where the team plans on building a new arena.
In today’s statement, Dolan said: “We look forward to the pending separation of our sports and entertainment businesses, which will better enable the two companies to pursue their own unique strategies, while providing our shareholders with the ability to more clearly assess the value of each company.
“Over the last six years, Andy has helped guide MSG through an unprecedented period of change. I am confident that his considerable experience in developing strategic relationships and new opportunities will quickly help position the new sports company as one of the world’s leading sports organisations.”
The transaction remains subject to various conditions, including final league and MSG Board approval.