DOLAN HEAD FAKE
Backs off plan to spin off Knicks, dashing hopes
Well, it was a great couple of days for Knicks fans.
For about 48 hours, New York hoops fans worked themselves into a state of giddy hopefulness — believing Wednesday’s announcement by Madison Square Garden that it was weighing a move to spin off the Knicks and its other sports teams was an oblique message that they would soon be on the block.
Sports fans seemed excited that James Dolan, the team’s championship-challenged owner, may soon be history.
“Not hyperbole — news breaking that Dolan MIGHT sell the Knicks is the greatest moment for Knicks fans in 19 years (since LJ’s 4-point shot),” tweeted noted sports commentator Bill Simmons. “That’s all you need to know about the James Dolan era.”
“James Dolan actually considering selling the NY Knicks. Our prayers may be answered #Knicks fans!” tweeted The Knicktator.
Alas, Dolan’s MSG ruined the party — announcing Friday afternoon, “There are no plans to sell the Knicks or the Rangers.”
For now, Wednesday’s move to consider splitting MSG’s sports teams from its brick-and-mortar assets was just another Dolan-inspired move to unlock shareholder value.
Wall Street loved the idea — adding as much as 20 percent to MSG’s value. The shares closed Friday at $310.19 — up 17 percent since the announcement.
Dolan believes MSG’s preannouncement market cap of $6 billion-plus doesn’t fully reflect the value of the entire company.
FBN Securities analyst Robert Routh, looking at the tax consequences of a possible team sale, noted that a sale isn’t coming anytime soon — if at all.
“It is difficult under tax law to spin something off and get something sold under a certain period of time,” he said, noting that it would take at least a year or two post spinoff for Dolan to avoid the tax.
Routh also noted Dolan’s ownership of MSG Networks, which owns the broadcast rights to the teams, as another reason he won’t sell.
“What they have is so good,” Routh said. “If they sell the teams, maybe the new owner won’t renew the rights.”
Amy Yong, an analyst at Macquarie, agreed: “I don’t think that the spinoff of the sports segment is the impetus to getting the Knicks or the Rangers sold,” she said. “If anything, they could sell a partial stake in it.”