Madison Square Garden Entertainment, parent of famed performance venues including New York’s iconic Madison Square Garden and Radio City Music Hall, is free to explore a potential spinoff that would separate its live entertainment and media business from its other segments including Tao Group Hospitality, a dining and nightlife operator.
The company’s board on Thursday authorized its management to look into a potential spinoff that would create two public companies, which MSG said will give shareholders more investment choice and visibility into each company’s growth prospects while allowing the entities to pursue their respective business and capital spending strategies.
The live entertainment and media company is expected to include Madison Square Garden, the Hulu Theater at Madison Square Garden, Radio City Music Hall and the Beacon Theatre, as well as the Chicago Theatre in Chicago. It also will include MSG’s entertainment and sports bookings business, which includes the Radio City Rockettes and the “Christmas Spectacular” production; long-term arena license agreements with the New York Knicks and New York Rangers, both of which play their home games exclusively at Madison Square Garden; and MSG Networks, which owns two regional sports and entertainment networks, MSG said.
After the proposed spinoff of the live entertainment and media company, MSG is expected to include MSG Sphere, a venue concept that it said will combine “cutting-edge technology with multi-sensory storytelling to deliver immersive experiences.” The first MSG Sphere, under construction in Las Vegas, is expected to open in the second half of 2023. Also in this proposed company is MSG’s majority interest in Tao Group, which has over 70 branded locations within 60 venues in more than 20 markets across five continents. It would also hold about a 30% stake in the live entertainment and media company as well as the majority of MSG’s cash on hand.
“This potential transaction would create two companies, each with a distinct value proposition for investors,” MSG CEO James Dolan said in a statement. The live entertainment and media company would “generate substantial free cash flow” while MSG Sphere and Tao Group “would be focused on unique shared experiences, innovation and global opportunities for growth,” he said.