Could there really be an possession shake-up in the works for the Knicks and Rangers? On Tuesday morning, Madison Sq. Backyard Sports activities president/COO David Hopkinson mentioned on the corporate’s earnings name that they’d contemplate promoting off a share of the New York Knicks or Rangers.
So what does that imply?
For starters, Hopkinson was clear that MSG had no plans to promote the workforce themselves, however that “we would certainly not rule out selling a minority stake in the Knicks or the Rangers.” The plain questions are whether or not James Dolan would enable these minority house owners to have any say in the decision-making course of for both workforce and the way a lot say he may give them.
Dolan, who runs each MSG corporations and the groups, has acknowledged bluntly in the previous that, regardless of rumors on the contrary, he wouldn’t promote both workforce. Lately, he went on WFAN and reiterated the identical level saying, “I have no plans whatsoever to sell at this point…It’s a family-controlled asset, so someone in the family will eventually own it.”
Nevertheless, since an MSG govt talked about promoting off even a portion of the workforce, it’s value exploring what this may appear to be or imply for followers of the Knicks and Rangers.
MSG itself has already bought a minority stake in its firm to Silver Lake Group, L.L.C., which is an American world personal fairness agency targeted on investments in expertise, technology-enabled and associated industries. In December of 2018, Silver Lake filed an SC 13D/A kind with the Securities and Alternate Fee (SEC) “disclosing ownership of 939,996 shares of Madison Square Garden Sports Corp,” which represents 4.9 % possession of the corporate.
As of 2019, it was reported that Silver Lake was “looking to acquire significant stakes in the New York Knicks and Rangers.” A transfer like this is able to add to a rising variety of personal fairness corporations which are buying stakes in skilled sports activities franchises.
In a 2019 interview with CNBC, MLB commissioner Rob Manfred defined that “franchise values have escalated, and the capital structures in the clubs have become more complicated. The idea of having a fund that would essentially be a passive equity investor in a club or clubs is one that is helpful in terms of facilitating sale transactions in clubs.”
Within the NBA, personal fairness corporations can individually personal up to twenty% of a workforce.
CNBC reported that many of those huge personal fairness corporations have been shopping for minority stakes in groups not too long ago as a result of they’re “attracted to the economic moat around sports leagues, including the increasing value of media rights and global expansion.” Given the NBA’s world market and its growing enlargement into Africa and China, any of those corporations see shopping for into the NBA as a giant funding alternative.
Chris Lencheski, chairman of personal fairness consulting firm Phoenicia, added that “within the next 20 years, you’ll have supersonic travel, which will allow an NBA team to travel within three hours anywhere in the world. So, it’s easy to see a Madrid versus the New York Knicks. And the NBA, by the nature of their product, is perfectly suited for that.”
With all of this data, it stands to purpose that, if MSG was certainly promoting a minority stake in the Knicks and Rangers to Silver Lake or one other personal fairness agency, it wouldn’t impression the administration of the groups in any significant means for followers. Nevertheless, there’s at present no details about who potential patrons may be.
Ted Leonsis, who owns the Washington Capitals, Wizards, and Mystics seemed to suggest that the move to bring in a private equity firm is most beneficial if you plan to eventually sell the team: “The only way you could really [take advantage] is if you sell the team. There are some really big funds that can give you growth capital for you and your partners with some liquidity.”
Whereas Dolan has acknowledged that he has no plans to promote the Knicks and Rangers, it’s clear that his focus has turn into much more fastened on The Sphere, a efficiency venue he’s constructing in Las Vegas. Nevertheless, the project has hit some obstacles and “has seen its budget rise from $2 billion to $2.175 billion.”
In truth, Dolan not too long ago started exploring the sale of Tao nightclub and restaurant, allegedly to assist fund The Sphere challenge. If the challenge continues to develop in scale, could Dolan be tempted to promote a bigger portion of the groups regardless of his adamant denial that he would?
Once you do not forget that Hopkinson mentioned “we have no plans to sell the team ourselves” after which issue in that Leonsis claims together with personal fairness corporations is a helpful method to have them enable you see off the workforce, it’s attainable the MSG president is leaving open a window for a agency to be the one promoting off the Knicks.
Or we could be studying into it an excessive amount of.
For now, it seems to be extra hypothesis round the way forward for the Knicks and Rangers with little tangible impression. Nevertheless, because the hypothesis continues to mount and the items proceed to assemble, it’s attainable we could see an possession change in the longer term, regardless of Dolan’s claims on the contrary.