MSG Sports surges 14% on plan to split Knicks, Rangers businesses
Tax-free spin-off would create two separate public companies, unlocking billions in value for shareholders
Madison Square Garden Sports Corp. shares surged 14% to $334.88 on Wednesday after the company announced it would explore separating its New York Knicks and Rangers franchises into two distinct publicly traded companies, a move that analysts say could unlock billions in shareholder value.
The board of directors unanimously approved the strategic review to pursue a tax-free spin-off that would distribute shares in the newly created entities to existing MSGS holders. The announcement sent the stock to record territory, adding $41.10 per share and pushing the market capitalization to approximately $7.02 billion.
"We are exploring the opportunity to further create value for our shareholders by separating our two professional sports franchises into distinct companies," said Jim Dolan, executive chairman and chief executive officer of MSG Sports. "Both the Knicks and Rangers are premier teams in their respective leagues, with storied histories and large and passionate fan bases. We believe this proposed transaction would provide each company with enhanced strategic flexibility, its own defined business focus, and clear characteristics for investors."
Under the proposed structure, the New York Knicks company would encompass the NBA franchise and its Westchester Knicks G League affiliate, while the New York Rangers company would include the NHL "Original Six" franchise and the Hartford Wolf Pack, its top American Hockey League affiliate. The split would give each team independent capital structures and dedicated management focus.
The move follows persistent pressure from investors who have argued that MSGS trades at a discount to the sum of its parts. The so-called "Dolan Discount"—named after the Dolan family that controls the company through super-voting shares—has been a point of contention among analysts who say the combined entity obscures the true value of each franchise.
In June 2025, activist investor Boyar Value Group urged the company to separate the teams, estimating the Knicks alone were worth $7.5 billion and the Rangers $3.5 billion, while MSGS traded at an enterprise value of $5 billion. Those estimates suggest a significant gap between the company's market value and the intrinsic worth of its assets.
The spin-off proposal arrives amid a broader trend of sports franchise divestitures and restructurings, as team owners seek to capitalize on surging valuations driven by media rights deals and global expansion opportunities. The NBA and NHL have both seen franchise values climb dramatically in recent years, with the Knicks consistently ranked among the most valuable basketball teams globally.
MSGS, which has a forward price-to-earnings ratio of 72.46 and trades at 6.55 times trailing twelve-month revenue, has seen its stock climb more than 90% over the past year. The company reported revenue of $1.07 billion for the trailing twelve months, with quarterly revenue growth of 12.8% year-over-year.
Analysts have an average target price of $329.60 on the stock, according to market data, with four analysts rating it a hold, three recommending buy, and one strong buy. Institutional investors hold approximately 92.7% of shares outstanding, suggesting significant Wall Street interest in the company's strategic direction.
The company cautioned that there is no assurance the transaction will be completed. Any spin-off would require league approvals from both the NBA and NHL, a favorable tax opinion from legal counsel, and final board approval. MSGS has not established a timeline for completing the process.
The separation would mark a significant corporate overhaul for the company, which has undergone multiple restructurings in recent years. In 2020, Madison Square Garden Entertainment split from the sports business, creating separate entities for venue operations and team ownership.
Investors will be watching closely for updates on the separation process and any potential changes to the dual-class share structure that has allowed the Dolan family to maintain control despite owning a minority of economic interests. The spin-off could provide an opportunity to address governance concerns that have contributed to the valuation discount.
With both franchises operating in the largest US media market and benefiting from rich local television deals, analysts say the separated companies could attract dedicated investor bases focused on professional sports franchise ownership, potentially commanding premium multiples in public markets.