Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
The owner of the New York Knicks and the New York Rangers is considering splitting the storied professional sports franchises into two separate publicly traded companies, becoming the latest US group to weigh a corporate break-up.
Madison Square Garden Sports on Wednesday said its board of directors had approved a plan to explore a tax-free spin-off that would separate New York’s most popular National Basketball Association basketball team from its National Hockey League ice hockey franchise.
The move comes amid frenzied investor interest in marquee sports assets and a busy stretch for corporate break-ups as companies seek to boost their valuations with a view that the businesses would be worth more as separate entities than as a combined group.
The Knicks and Rangers, which play at the Madison Square Garden arena in midtown Manhattan, have been part of the same company since 1947. The arena business was spun off from the sports teams in 2020. The family of billionaire James Dolan is MSG Sports’ controlling shareholder.
MSG Sports’ decision to explore a split follows a busy stretch for corporate divorces and carve-outs. Last year, companies undertook nearly $1.2tn in asset sales and divestments, the highest level since 2021, according to data provider Dealogic.
Genuine Parts Company, which has a market capitalisation of $17bn, on Tuesday said it planned to separate its automotive and industrials divisions into two separate listed companies. But last week Kraft Heinz halted a plan to split in two and instead outlined an investment plan to turn around the company behind Heinz ketchup and Philadelphia cream cheese.
A split of MSG Sports would come at a time of surging valuations for sporting teams, as well as moves in recent years by the major professional leagues in the US to ease restrictions around private equity groups owning minority stakes in teams.
Last year, the Los Angeles Lakers NBA team were valued at $10bn when Guggenheim Partners chief executive Mark Walter bought a majority stake from the Buss family, while the Boston Celtics basketball team sold to a consortium led by private equity investor William Chisholm for $6.1bn.
And in a transaction also expected to attract a lofty valuation, the estate of Microsoft co-founder Paul Allen on Wednesday afternoon said it has commenced a formal sale process to sell the Seattle Seahawks football franchise, consistent with Allen’s “directive to sell his sports holdings and direct all estate proceeds to philanthropy”. The Seahawks were crowned Super Bowl champions earlier this month.
MSG Sports said there was no assurance that a transaction would materialise and there was no set timeline.
Its New York-listed shares rose 14.1 per cent in Wednesday afternoon trading, giving the company an implied market value of about $8bn.
After decades of underperformance, the Knicks made the Eastern Conference finals last year for the first time in a quarter century but were denied a route to the NBA finals by the Indiana Pacers.
Despite having not won an NBA championship since 1973, the Knicks with their well-known brand and loyal fan base are widely viewed as one of the most prized assets in global sports.
The company housing the Knicks will also comprise their affiliate Westchester Knicks “G-League” team, MSG Sports said. The Rangers, one of the NHL’s original six franchises, would be housed in the same company as their affiliate minor league hockey team, the Hartford Wolf Pack.
This article has been corrected to say that MSG Sports was separated from the arena business in 2020 and to clarify that the Dolan family is the controlling shareholder of MSG Sports.
