MSG Sports Files Rangers Spin-Off After $1.15B Fiscal Year

Madison Square Garden Sports filed a registration statement with the SEC to spin off its New York Rangers business, targeting completion by the end of October after a fiscal 2026 with $1.15 billion in revenue.

"The transaction would create two separately traded public companies, allowing shareholders to evaluate the assets and growth prospects of each business separately," said Jamaal Lesane, chief operating officer at MSG Sports.

The company confidentially filed the Form 10 in May and expects to publicly file an updated version this week. The spin-off would separate the Rangers from the Knicks, which won the NBA championship in fiscal 2026, driving fourth-quarter revenue up 37 percent to $278.7 million from $204.0 million a year earlier. Adjusted operating income reached $39.6 million in the quarter, compared with a $16.8 million loss in the prior-year period.

The separation would let investors value the two franchises independently, a structure that could unlock value given the Knicks' championship-driven momentum. MSG Sports also said it would not rule out future minority stake sales in either team, and expects tax-law changes to add approximately $60 million in income-tax expense in fiscal 2028.

Knicks Championship Drives $182M Playoff Revenue

The Knicks' title run generated $182.0 million in playoff-related revenue in the fourth quarter, up from $115.2 million a year earlier, according to CFO Paul DiCicco. The company hosted nine playoff games at Madison Square Garden in each quarter, with playoff revenue averaging about $20.2 million per game. Direct operating, marketing and administrative costs associated with the playoffs averaged approximately $11.2 million per game.

Event-related revenue, which includes ticketing, food, beverage and merchandise, increased 43 percent year over year to $200.7 million. Suites, sponsorship and signage revenue rose 23 percent to $39.1 million, while national and local media rights fees of $27.7 million were essentially unchanged. Lesane said the Knicks set NBA records for per-game gate revenue on multiple occasions during the postseason, and the team produced its highest-ever single day of merchandise sales within 24 hours of clinching the title.

Management expects revenue growth across all in-arena categories in fiscal 2027, including tickets, sponsorships, suites, food and beverage, and merchandise. Sponsorship revenue more than doubled year over year during the postseason, and the company signed multiyear marketing partnerships with PwC and Polymarket while renewing agreements with Lexus, Anheuser-Busch and Infosys.

However, fiscal 2027 results will reflect higher team compensation, luxury-tax expense and revenue-sharing costs. The NBA salary cap increased by $10.4 million for the 2026-2027 season, while the NHL salary cap rose by $8.5 million. The NBA luxury-tax threshold increased by $12.5 million to approximately $200.4 million. The Rangers will have one additional regular-season home game and one fewer preseason home game in fiscal 2027 under the NHL's new collective bargaining agreement, which is also expected to result in higher revenue-sharing expense.

At the end of the quarter, MSG Sports held approximately $164.5 million in cash and $258.5 million in debt, including $242.0 million outstanding under the Knicks senior secured revolving credit facility and $16.5 million advanced from the NHL.

The spin-off remains subject to board approval and other conditions. DiCicco said combined tax expense across the two companies would be higher if the separation is completed, with the final impact depending largely on team rosters at that time.

This article is for informational purposes only and does not constitute investment advice.