The Madison Square Garden Co. said its board of directors has approved a plan to separate the company into two distinct entities -- one focused on entertainment, the other on sports -- setting an April 17 deadline for the transaction.
Madison Square Garden first announced its plans to separate into MSG Entertainment (which would include iconic venues like Madison Square Garden, Radio City Music Hall and the Beacon Theater) and MSG Sports (including its professional sports teams the New York Knicks and the New York Rangers) in 2018.
According to MSG, the spin-off is a tax free distribution to shareholders. On April 17, MSG shareholders of record as of April 13 will receive one share of MSG Entertainment Class A or Class B common stock for every share of MSG Class A or Class B common stock they own, respectively.
The decision to go ahead with the spin-off comes as companies and sports leagues are grappling with the COVID-19 virus, which has hit entertainment venues and sports arenas hard as Americans are urged to stay at home to prevent the spread of the virus. MSG, while noting the unprecedented times, said it was confident the transaction will be completed successfully.
“While our industry is currently going through a difficult period, we are confident in the enduring strength and value of our businesses,” Madison Square Garden executive chairman and CEO James Dolan said in a press release. “Today’s approved spin-off is the result of many months of preparation, and we believe it will set the stage for long-term success for both MSG Sports and MSG Entertainment.”
After the spin-off is complete Dolan will serve as executive chairman of MSG Sports and as executive chairman and CEO of MSG Entertainment. Andrew Lustgarten is expected to serve as president and CEO of MSG Sports and as president of MSG Entertainment.
MSG also offered an update on the ongoing construction of its MSG Sphere complex in Las Vegas. Construction on the venue has been temporarily suspended due to the coronavirus outbreak.
“The company remains committed to building a state-of-the-art venue in Las Vegas and looks forward to quickly and efficiently resuming construction as soon as practicable,” MSG said in a press release. “As a result of this delay, the company does not expect to achieve its goal of opening the venue in calendar year 2021.”