Wait Till Next Year: MSG Spinoff Of Knicks And Rangers Pushed Back Again To Q1 2020

New York sports fans will once again have to wait a little bit longer to own a clean slice of the city’s most iconic teams. During its recent Q4 conference call, The Madison Square Garden Company (MSG) noted that the planned spinoff of its sports teams was ‘taking longer than expected’ and that as a result, the planned Knicks and Rangers spinoff is now slated for Q1 2020. This actually marks the second time that the timing has ‘slipped’ after having initially been pushed to the end of 2019.

Surprisingly, MSG President Andrew Lustgarten didn’t offer any additional details on the delay. This exchange with BTIG’s Brandon Ross pretty much sums it up:

Brandon A Ross

Great. And then just earlier in the call, you said that the — I think you said the timing of the spin would be pushed to calendar Q1 of ’20. Is there a specific reason or any more color that you could give for that?

Andrew S. Lustgarten

Brandon, so look, we acknowledge it’s taken a little longer than we would’ve liked. We’re fully committed to moving it forward. And it’s just a process and we’re working our way through it. But don’t read into anything further than we’re working our way through this process, and we’re anticipating to have it done first quarter.

It seems the message is that the spin is delayed, but still happening. Also, during the call Mr. Lustgarten revealed that aside from Jim Dolan stepping in as Chairman and CEO at both companies (big surprise), the other leadership positions remain TBD.

The big news on the call though was that the costs have exploded on MSG’s Vegas Sphere. This is one of two planned projects for the new live entertainment company and the company had previously been rather cagey on cost estimates. MSG now estimates a cost of $1.2b (the contractor thinks it might even be $1.7b) which is a lot more than analysts had forecasted. For some perspective, Bloomberg notes that Vegas’ 2016 T-Mobile arena only cost $375m.

The market didn’t like it and shares plunged over 9% on the news. The sports teams are well known to be train wrecks and the Knicks’ offseason didn’t exactly go as planned (let’s be nice). Mr. Dolan’s reputation as an owner couldn’t be worse and Bloomberg’s recent profile wondering whether he is the worst owner in sports is just the latest entry into the pantheon. He has historically always delivered for shareholders though and this is a rare stumble. With poor results at prior spin MSG Networks (MSGN), shareholders must be hoping that this isn’t the beginning of a new era.

Disclosure: Author holds no position in any stock mentioned.