The Madison Square Garden Co. plans to give up its entire equity stake in the New York Knicks next year, while leaving MSG chief Jimmy Dolan in control of the losing team, The Post has learned.
MSG MSG, +1.57% , which also owns the New York Rangers and Radio City Music Hall, announced on Thursday that it’s giving up plans to retain an equity interest in its sports assets after spinning them off into a separate company early next year.
Previously, MSG had planned to spin off two-thirds of its economic interest in the teams to MSG’s current shareholders, while retaining a one-third stake for itself.
But Dolan — notoriously unpopular with fans of the losing Knicks and Rangers — isn’t going away, sources said.
The Cablevision founder’s son will continue to own and control the teams through his Class B shares, which come with supercharged voting powers, a person with direct knowledge of the process told The Post.
The spinoff, planned for the first quarter of 2020, will separate MSG’s sports teams from its entertainment assets, including the Tao nightclub empire and the futuristic, orb-like entertainment globes Dolan is building in Las Vegas and London.
Dolan on Thursday said that MSG no longer needs the proceeds it would have received from a potential sale of its one-third stake in the teams since the entertainment sphere it is building in London is still in the planning phase.
That seemed to cheer one large MSG investor, who doesn’t want the company to move forward with the costly project to build spheres equipped with high-speed internet access and high-resolution LED screens.
MSG’s shares fell 8.8 percent on Aug. 20, when it announced the sphere it’s building in Vegas could cost $500 million more than it had forecast.
“Maybe this is the end of the spheres,” the hedge fund manager told The Post.
On Thursday, the company said the Sphere London will not be open until 2023 at the earliest.
In getting rid of its one-third stake, MSG also boxed out Silicon Valley’s Silver Lake Capital from grabbing a bigger slice of the sports teams ahead of the spinoff.
As The Post exclusively reported on Nov. 3, the private equity firm had been pushing for a behind-the-scenes deal to grab a bigger stake of the sports teams than it would otherwise get with its nearly 10 percent stake in MSG.
By eliminating MSG’s one-third stake in the sports teams, MSG is telling investors like Silver Lake that if they want a bigger stake in the Knicks and the Rangers, they will have to buy shares on the open market, sources said.
The MSG hedge fund investor added that he’s glad MSG didn’t do a private deal with Silver Lake as it would mean less money for other shareholders if the teams are sold in the near future by Dolan.
Silver Lake declined to comment.