Shares of Madison Square Garden Sports Corp. jumped 16% on Wednesday after its board of directors unanimously approved a plan to explore a tax-free spinoff that would separate its New York Knicks business from its New York Rangers business to create two publicly traded companies.
“We are exploring the opportunity to further create value for our shareholders by separating our two professional sports franchises into distinct companies,” MSG Sports CEO and chairman Jim Dolan said in a statement. “Both the Knicks and Rangers are premier teams in their respective leagues, with storied histories and large and passionate fan bases. We believe this proposed transaction would provide each company with enhanced strategic flexibility, its own defined business focus, and clear characteristics for investors.”
If the company proceeds with a spinoff, the company’s Class A and B shareholders of record would receive a pro-rata distribution of 100% of the common stock in the newly created public company.
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Following the proposed spinoff, the New York Knicks company would include the Knicks franchise, with a history of eight trips to the NBA Finals and two NBA Championships, as well as the Westchester Knicks, the team’s exclusive NBA G League affiliate.
Meanwhile, the New York Rangers company would include the Rangers, the NHL franchise whose 100-year history includes four Stanley Cup Championships, and the Hartford Wolf Pack, a minor-league hockey team in the AHL and the top affiliate team for the Rangers .
MSG noted that there can be no assurance that a possible transaction will be completed. It has not set a timetable for completion of the process, which is subject to conditions including league approvals, board approval and receipt of a tax opinion from counsel.
