Madison Square Garden Entertainment directors have reached a tentative $85 million settlement of investors’ challenge to a 2021 deal that combined the owner of the NBA’s New York Knicks with the company that broadcasts the team’s games, according to a court filing.
(Bloomberg) — Madison Square Garden Entertainment directors have reached a tentative $85 million settlement of investors’ challenge to a 2021 deal that combined the owner of the NBA’s New York Knicks with the company that broadcasts the team’s games, according to a court filing.
The settlement will be paid by insurance covering MSGE directors and will go back to the company rather than in the pockets of by suing shareholders, company officials said Wednesday in a securities filing. The accord also was made public in a Delaware Chancery Court filing late Wednesday.
“The board agreed to settle these claims without admitting any liability,” MSGE officials said in a statement Thursday. Claims by MSG Network shareholders over the combination are still slated to go to trial in Delaware next month, according to court filings. Both companies are owned by billionaire James Dolan.
The settlement comes on the heels of accusations by investors’ lawyers that officials of both companies ditched emails and texts that could have bolstered shareholders’ cases over what they’ve tagged as an insider transaction benefitting Dolan.
Dolan had said in the past MSGE’s and MSG Networks’ combination was designed to provide tax savings and more financial flexibility to the entertainment business, which was hammered when the pandemic shut down its concert venues.
Investors in the once-separate units accuse Dolan of ramming through combination designed primarily to benefit his family at the expense of other shareholders. MSG Network investors argue they didn’t receive enough for their shares while MSGE shareholders argued conflicts in deal negotiations hurt the value of that subsidiary’s stock.
Delaware Chancery Judge Kathaleen St. J. McCormick – who will preside over the MSG Network’s trial – must give final approval to the MSGE deal.
Dolan recently came under fire for banning lawyers for firms representing plaintiffs in the merger and other disputes from attending events at Madison Square Garden, Radio City Music Hall and other Dolan venues and for using facial recognition software to enforce the ban. In a November hearing on the MSG Networks case, McCormick called the ban “the stupidest thing” she had ever read.
The case is In Re Madison Square Garden Corp. Stockholders Litigation, 2021-0468, Delaware Chancery Court (Wilmington).
(Updates with company comment in third paragraph)
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