MSG Entertainment Explores Tao Group Sale, Fertitta Supposed Buyer: Report

Posted on: January 4, 2023, 8:58 a.m.

Last update: January 4, 2023, 9:05 a.m.

Madison Square Garden Entertainment Corp. (NYSE:MSGE) has hired Goldman Sachs to explore a sale of its majority stake in nightclub and restaurant empire Tao Group, according to a report in the New York Post. According to Post. And the rumored pony favorite is Tilman Fertitta.

The report, which relies on information from two unnamed insiders, said the billionaire hospitality titan – whose empire includes Golden Nugget casinos in Nevada, Louisiana, Mississippi and New Jersey, as well as the NBA’s Houston Rockets — reportedly already submitted a first-round bid for Tao Group.

MSG Sphere
The MSG Sphere – pictured in this undated photo – has already overtaken Allegiant Stadium as the costliest entertainment venue in Las Vegas. Its budget overruns could force the owner MSG Entertainment to sell its stake in the Tao Hospitality group. (Image: Associated Press)

Tao Group’s Sin City venues alone include Asian and Italian restaurants, namesake day clubs, and Hakkasan, Marquee Nightclub, OMNIA Nightclub, and Wet Republic Ultra Pool nightclubs. Most of these sites are located in resorts on the Strip.

Last month, a Morgan Stanley analyst valued Tao Group at $524 million. According to this estimate, MSGE’s 67% stake would be worth $274 million – after subtracting Tao Group’s $85 million debt. However, the PostMSGE sources said MSGE owner, billionaire James Dolan, wants nearly $800 million as Tao Group expands beyond its Las Vegas and New York base to the Middle East. (In April 2021, Tao Group acquired Hakkasan Group, which operates four locations there, for $99 million.)

According to Post, Dolan is desperate to fill a $600 million gap caused by budget overruns to build the MSG Sphere. The price of the spherical Las Vegas entertainment venue – which is slated to open in the second half of 2023 behind the Venetian, possibly with U2 as its first home – nearly doubled to $2.175 billion.

problem in the garden

In 2017, MSGE acquired its stake in Tao Group for $181 million, with Tao founders Noah Tepperberg, Jason Strauss, Marc Packer and Rich Wolf retaining a minority stake in the company. Even before the pandemic shutdown, however, Tao Group caused problems for the Garden. In 2019, he risked defaulting on his debt when his income halved and Tao lender JPMorgan refused to roll over his $100 million loan into a new one. MSGE therefore decided to lend $49 million to Tao Group, according to the Post article.

On December 6, MSGE announced that it would separate its live entertainment business – including its namesake arena, Radio City Music Hall and the Beacon Theater in New York – from the MSG Sphere and Tao Group, which would be combined with MSG Networks. . into a single publicly traded company known as MSG Sphere Corp. (MSG Networks owns two regional and national entertainment networks, as well as a related streaming service, and exclusively broadcasts live local games from five NBA and NHL franchises.)

On December 22, the MSG Sphere project announced that it had borrowed $275 million from a group of lenders led by JPMorgan.

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