MSG Officials Change Up Spinoff Strategy
Word the entertainment and sports division will now make a clean break comes as the New York Knicks are in last place.
Madison Square Garden officials have announced a major revision to how it plans to split the company's venue and concert division from its sports teams. The two companies will essentially make a clean break, it was announced last week, shifting previous strategy where the entertainment division would retain a minority stake in the new company owns the New York Knicks professional basketball team and the New York Rangers ice hockey team.
The original plan was announced in August and saw the entertainment division retaining a one-third interest in the sports teams to help finance construction of its Sphere projects in Las Vegas and London. But MSG officials said Thursday that the entertainment division -- which owns New York's Madison Square Garden, Radio City Music Hall and Beacon Theater, as well the Forum in Los Angeles and the Chicago Theater -- will now be spun off as a totally separate company and will not retain any ownership in the sports company.
That means a clean split for shareholders which "would continue to own their current economic interest in both the sports and entertainment businesses," according to a release from MSG. The change in the structure was unanimously supported by the company's board of directors and is expected to be completed during the first quarter of 2020.
The clean split approach comes as the opening date for MSG's Sphere project in London was pushed back -- something the company announced Friday during an earnings call. MSG president Andrew Lustgarten told investors the 2022 opening date was no longer realistic due to delays in "the planning application and design process," adding, "we do not have a target opening date at this time."
Explaining the decision to drop plans for the entertainment division to hold an interest in the sports company, MSG vice chairman Gregg Seibert said on the call the change in timing means "the entertainment company will have sufficient financial flexibility to pursue its venue expansion plans without the need for the retained interest."
Executive chairman and CEO James Dolan will retain controlling interests in both companies, although some fans are wondering if he might sell his ownership of the Knicks and Rangers, which has become a rallying cry for some fans frustrated by the teams' lackluster performance.
The Knicks' loss Sunday night to the Cleveland Cavaliers brought the team's starting record to a disappointing 2-8, putting them in last place in the NBA's Eastern Conference. The abysmal start prompted a rare mea culpa from team president Steve Mills, who told reporters after the game, "We think we collectively have to do a better job of delivering the product on the floor that we said we do at the start of this season."
If that wasn't bad enough, security officials were dispatched to the lower seating section after a fan started a "Fire Dolan" chant during the game's third quarter. A video posted to Twitter showed security officials escorting the fan from their seat, although a MSG spokesperson told Billboard that "no one was ejected from last night's game."
Dolan is no stranger to run-ins with fans. In March he suggested he might ban a man from the Garden for yelling at him to "sell the team," and he allegedly blocked another man from renewing his season tickets in 2017 after making similar comments. Dolan also had a well known run-in with former player Charles Oakley in 2017 that resulted in Oakley's arrest, and last year banned players from doing extended interviews with Entercom radio stations after a sports reporter at WFAN went on a lengthy rant about her dislike for the song "I Should've Known," which Dolan released through his band JD and the Straight Shot and was rumored to be about his friendship with Harvey Weinstein.
Dolan's unhappiness with the current team does bode well for coach David Fizdale, with many interpreting Mills' rare public comment as the team's version of hitting the panic button, signaling to angry fans that change is likely coming.