MSG Sports Splits Into Knicks and Rangers Stocks on Oct. 27

Madison Square Garden Sports shareholders of record at today's close, Oct. 20, will receive one share of the new MSG Rangers Corp. for every two MSG Sports shares they own. The distribution lands Oct. 26, subject to final league approval, and both companies start regular-way trading under new tickers on Oct. 27 — MSGK for the Knicks business, MSGR for the Rangers.

The split arrives as the Knicks open defense of their first NBA championship in 53 years tonight against LeBron James and the Philadelphia 76ers. Resale tickets have averaged about $2,600 on SeatGeek. The Knicks beat the San Antonio Spurs in five games in June, a title run Fortune reported was worth at least $380 million to New York City.

How does the split actually work?

The board approved final terms on Sept. 30. The parent becomes MSG Knickerbockers Corp., trading as MSG Knicks, holding the defending champions and the G League's Westchester Knicks. The spun-off MSG Rangers Corp. holds the NHL club — Stanley Cup-less since 1994 — plus the AHL's Hartford Wolf Pack and the MSG Training Center in Greenburgh, N.Y.

The structure is an intended tax-free distribution. Shareholders keep the same number of shares in the renamed Knicks entity. When-issued trading in MSG Rangers begins tomorrow under the symbol "MSGR WI." James Dolan serves as executive chairman and CEO of both companies, and the Dolan family retains control of both.

The separation could make it easier to sell either team down the road. At minimum, it gives investors clearer visibility into what each franchise is worth.

Do spin-offs really beat IPOs?

Jay Ritter, a finance professor at the University of Florida and director of The IPO Initiative, shared data with Fortune covering 1980 through 2024. Spun-off stocks beat the total return of the Morningstar value-weighted market index by 6% over their first three years of trading. The average IPO trailed the market by 4.6% from its offer price. That is a 10.6-percentage-point edge for spin-offs.

Much of that outperformance comes on the first day of independent trading, Ritter found. Size and stability drive the gap: 70% of spin-offs had inflation-adjusted sales of $100 million or more, against 41.4% of IPOs. Spin-offs tend to be established businesses. IPOs are often nascent growth companies with riskier profiles.

Ritter's outlook for sports stocks specifically is measured. "I would expect that most publicly traded sports teams will be priced to offer investors a competitive financial return," he said. "There is less chance of a complete failure (compared to IPOs), but also less chance of huge upside potential than is true with other businesses—especially compared to the pharmaceutical business or tech." A hit drug or tech product can lift revenue and profits "enormously," he noted, in a way sports teams are unlikely to match.

What are the teams worth?

MSG Sports carries a market capitalization of roughly $9.8 billion — a steep discount to the estimated values of its parts. Sportico values the Knicks at $12.8 billion, nearly twice the NBA average of $6.64 billion, and the Rangers at $4.15 billion. Both rank second in their leagues, behind the Golden State Warriors and the Toronto Maple Leafs.

Those are estimates, not asking prices. But bankers and buyers note that supply of Big Four teams is finite and demand outstrips it. The Khosla family closed its $9.612 billion purchase of the Seattle Seahawks in September. Bob Iger and Josh Kushner agreed in August to buy the Los Angeles Lakers for $12.5 billion, pending league approval. Private equity's move into ownership groups has underpinned the record prices.

The Ross-Arctos Sports Franchise Index tracks the trend: franchise values across the NFL, NBA, MLB and NHL have compounded at 13% a year for more than six decades.

What are the risks for buyers?

The stock has run. MSGS hit all-time highs during the Knicks' title run and has gained more than 50% this year, leaving valuations stretched. Higher inflation could stymie revenue growth, and regional cable fees — a core revenue line for both franchises — keep shrinking.

Investors can now buy either team as a pure-play stock, both, or pass. The structure prices that choice starting Oct. 27.