Madison Square Garden boss James Dolan has long denied being interested in selling a majority stake of the New York Knicks or New York Rangers. But a minority stake in one of the franchises could be on the table.
That’s according to MSG Sports president and chief operating officer David Hopkinson.
“We have no plans to sell either team,” Hopkinson told investors during a conference call on Tuesday morning. “No current plans there, but we certainly won’t rule out the possibility of selling a minority stake in the Knicks or Rangers.”
Hopkinson pointed to new pools of capital available across the marketplace, which includes the NBA creating more liquidity for owners with the introduction of private equity and sovereign wealth funds.
Investment firm Sliver Lake owns roughly 10% stake in MSG Sports (NYSE: MSGS) and is the company’s largest outside investors. The private equity firm was once reportedly interested in acquiring a greater stake in the sports teams before the pandemic in 2019.
The Knicks and Rangers corporate lords may find themselves selling more interest to Sliver Lake or welcoming another outside investor as the league’s limited partner criteria widens. The extra cashflow from a new buyer could be helpful as the parent company is spending more than $2 billion on MSG Sphere, a 17,500-seat entertainment venue set to open later this year in Las Vegas. While MSG Sphere will be able to stage boxing and MMA matches, the ambitious project is part of the MSG Entertainment (NYSE: MSGE) portfolio.
The Knicks were valued at $6.5 billion, just behind the Golden State Warriors ($7.5 billion), in Sportico’s latest NBA valuations, while the Rangers were pegged at $2 billion in the NHL valuations. The Rangers, who are the NHL’s second most valuable team behind the Toronto Maple Leafs ($2.12 billion), helped their parent company reel in solid financials from October to December in 2022.
For 2023 second quarter earnings, MSG Sports reported a $29 million jump in preseason and regular season ticket-related revenue, which is attributed to MSG hosting six more regular season hockey games during the same period last year.
MSG Sports, which also owns the development clubs Westchester Knicks (G League) and the Hartford Wolf Pack (AHL), reported a 22% ($353.7 million) jump in revenue overall from the same period last year, while it posted a 43% increase in operating income ($51.5 million). On top of extra Rangers games, the increase was also in response to more revenue from ticket sales, sponsorship, and local media rights fees.
Direct operating expenses also increased by 17% to $225 million, which stems from greater franchise operating expenses and higher employee compensation and benefits. That was partly offset by a slight increase in NBA and NHL national media rights fees ($3.2 million).
MSGS stock gained 0.75% on Tuesday to close at $181.08.
(This story has been updated with MSGS’s closing price in the final paragraph.)