Business of Hockey

MSG exploring Media/Sports and real estate split


Newsday is reporting that MSG Inc (spun off from Cablevision in 2010) is exploring the idea of splitting the company into two companies: MSG Sports and Entertainment and MSG Real Estate. Both companies would be publicly traded, much like the way MSG Inc. and Cablevision are publicly traded today. The goal of this split would be to unlock value in the New York Rangers and New York Knicks, while keeping the concert industry afloat.

Currently, MSG Inc includes the professional sports teams: Knicks, Rangers, New York Liberty, and the Hartford Wolf Pack; MSG Media, which includes the regional sports networks, and the real-estate concert venues (Madison Square Garden, Radio City Music Hall, the Beacon Theatre, the Chicago Theatre and the Forum in Inglewood, California).

The proposed split would merge MSG Media and MSG sports, while spinning off the real estate.

This doesn’t directly affect the Rangers or any of the sports teams, since they are technically publicly traded entities as is within the MSG umbrella. However, this helps the Dolan’s assess the value of the sports franchises more accurately.

The move was likely¬†brought on by the recent sale of the Los Angeles Clippers for $2 billion. The Knicks are believed to be worth significantly more, Newsday stating up to 50% more. That’s the Knicks alone, not the arena. The Rangers have been valued in the past around $400-$500 million. That puts the sports franchises at roughly $3.5 billion in worth, without including the Liberty and Wolf Pack.

*-Wow that’s a huge difference between the NHL and NBA. Yeesh.

The split will attempt to boost value in the sports franchises and with the real estate venues. But I highly doubt this move indicates that the Dolan’s will sell the clubs. Newsday mentions that the boost in value will help if the larger TV networks come calling (Comcast buying Time Warner, AT&T buying DirecTV). That’s a whole other industry that is still a grey area, since cable TV appears to be headed towards a wholesale change.

One other aspect to consider: By splitting MSG and the sports clubs, it gives the Dolan’s flexibility to sell off one or the other. I’m not saying that’s what they are lining up to do, but it makes it easier to do so.

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