Analyst: MSGE could use the money from the sale of Tao to finish Sphere.

To cover escalating MSG Sphere costs on the Las Vegas Strip, Madison Square Garden Entertainment may sell Tao Group.
The New York Post reported this week that MSGE hired Goldman Sachs to sell Tao to fund Sphere. In addition, Golden Nugget owner Tilman Fertitta may buy Tao. MSGE CEO James Dolan owns the Knicks. Fertitta owns the Rockets.

On Friday, Macquarie analyst Paul Golding predicted that Tao will be sold to fund Sphere. He stated Dolan wants 12x nightclub and restaurant EBITDA. Tao may cost Dolan $800,000,000.

Since buying Hakkasan, MSGE owns 67% and owes $84 million. Golding said MSGE may receive $480 million if Dolan gets his way.

Hakkasan, Marquee, OMNIA, and Wet Republic Ultra Pool are Tao Group’s Vegas venues. Most are at Strip resorts.

Plans for MSGE spin-offs go on.

In addition, MSGE owns Tao, Madison Square Garden, Hulu Theater, Radio City Music Hall, New York City’s Beacon Theater, and The Chicago Theatre. The business considered spinning out Sphere, which includes Tao, last year.

If Tao is not sold, MSG Networks, MSG Sphere, and Tao Group would all be publicly traded subsidiaries of MSG Sphere Corp.

The plan stipulates that stockholders of Madison Square Garden Entertainment would own two-thirds of the new entertainment firm, which would retain its name. In fact, A third of MSG Sphere Corporation would likewise be distributed to them.

Wall Street thinks that MSG Networks will be sold to pay for the Sphere.

“We tend to concur with The Post that if Tao is up for sale, it may be due to a lack of funds to complete the Sphere. Networks generated +$186m in FY22 AOI, compared to +$67m for Tao and a ($118m) loss for Entertainment “added Golding.

Spin-offs may alter the Tao Sale.

As was expected, selling Tao could cause the MSG Sphere split to be put off.

Moreover, Golding said that a firm’s sale proceeds and how taxes are handled could make this structure and estimating the value of shares after a spin-off more difficult.

Also, The analyst said that MSGE shares are cheap, but that the next two quarters could be “tough.” He wants to reach $65 per share.