MSG Sports Plans to Separate Knicks and Rangers into Independent Companies
Madison Square Garden Sports has taken steps to divvy up the New York Knicks and New York Rangers, intending to establish them as two distinct publicly traded companies. Analysts suggest this could finally reveal the full multibillion-dollar worth trapped within James Dolan’s expansive sports empire.
In a recent communication, MSG Sports revealed they have submitted a First Form 10 Registration Statement and held talks with the Securities and Exchange Commission, gearing up for a proposed tax-free spinoff to separate the business operations of the Knicks and Rangers.
The Knicks’ operations will encompass the NBA team and their G League affiliate, the Westchester Knicks, while the Rangers’ division will include the NHL team and the Hartford Wolf Pack.
MarketWatch co-founder Derek Ricefield, a former CBS executive involved in NFL rights negotiations, remarked, “This move has been a long time coming.” He emphasized that there’s a noticeable gap between the stock value of MSG Sports and its private market valuation.
According to Forbes, the Knicks were valued at $9.75 billion last year, while CNBC recently estimated the franchise at over $10 billion, bolstered by anticipated increases in NBA media rights revenues.
On the other hand, Forbes valued the Rangers at $4 billion, making them the second most valuable team in the NHL, trailing only the Toronto Maple Leafs.
Despite these high valuations, MSG Sports’ current market valuation stands around $8.5 billion, significantly below the combined private market worth of the Knicks and Rangers. Investors have repeatedly stated that Dolan’s complicated corporate structure obscures the franchise’s actual value.
Upon finalizing the split, MSG Sports intends to create two distinct publicly traded companies, although there’s no assurance that this separation will indeed occur.
This announcement has prompted speculation regarding whether Dolan might finally consider selling one or both teams after years of declaring them off the market.
Ricefield noted, “It’s not clear whether either team will be sold. However, by establishing separate organizations, we could generate funds by selling shares of individual teams or even the entirety of one.”
Franchise valuations have dramatically surged in recent years, largely due to investments from billionaires and private equity firms in these unique and valuable assets. Ricefield pointed out that the teams’ relationship with MSG could complicate matters, especially considering the arena’s operating permit expires in 2028.
“Arenas are a significant component of the value and revenue stream for sports franchises,” he explained, adding that many teams today function as both sports franchises and real estate development entities.
The Garden is held under Madison Square Garden Entertainment Corporation, a structure that has raised concerns among investors regarding lease agreements and cash flows between Dolan-controlled entities.
Earlier this year, the company underwent a name change to Sphere Entertainment Co., spinning off traditional venue operations such as Madison Square Garden Arena into a newly formed entity, MSGE.
MSG Sports announced that this proposed split aims to enable investors to “better assess each company’s assets and growth prospects,” providing “enhanced strategic and financial flexibility.”
As of 2:00 PM ET on Monday, MSG Sports stock has increased by about 0.75%, while Sphere Entertainment’s shares dropped nearly 2%. In the final moments of Wall Street trading on Monday, MSGE stock saw a modest rise of 0.51%.
A spokesperson for MSG decided to refrain from further comments beyond the official statement.
