Monday, July 22, 2024
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Billionaire James Dolan Looks to Sell Tao Group Hospitality

Madison Square Garden Entertainment, owned by billionaire James Dolan, announced Tuesday that it’s looking to sell Tao Group Hospitality. 

The parent company in 2017 acquired a 62.5 percent majority interest for $181 million. Founders Jason Strauss, Noah Tepperberg, Marc Packer, and Rich Wolf kept a minority share. 

“MSG Entertainment regularly evaluates ways to maximize shareholder value and believes that now is the appropriate time to explore a potential sale of its interest in Tao Group Hospitality,” the company said in a statement. “There is no assurance this exploration process will result in a transaction.”

While under Madison Square Garden Entertainment’s ownership, Tao in 2021 purchased Hakkasan Group for $99 million, boosting the combined company to more than 70 branded locations in over 20 markets across five continents. Some examples include TAO, Beauty & Essex, Ling Ling, Wet Republic, and Little Sister. In December, Tao opened Sake No Hana, a New York City-based Japanese concept. 

Earlier this year, a Morgan Stanley analyst valued Tao at $524 million. The New York Post said Tao has $85 million in debt. After subtracting that, Madison Square Garden Entertainment’s majority share is valued at roughly $274 million. 

The Post reported in January that Dolan hired Goldman Sachs to explore a sale to fund an expensive project that’s part of a different entertainment venture. Dolan is reportedly facing a $600 million gap on construction costs for the MSG Sphere, an upcoming entertainment venue in Las Vegas, priced at $2.2 billion. The Post said Dolan is looking for a premium “well above” the Morgan Stanley estimate. 

A source told The Post that “Jim [Dolan] is looking at a 12 times EBIDTA multiple.” However, the same person said the multiple is likely to be in the single digits because many leases on Tao properties are expiring in the next five years. 

The publication also said Tilman Fertitta, owner of the Houston Rockets and Golden Nugget Casino, was interested in buying Tao. Madison Square Garden Entertainment operates the New York Knicks and New York Rangers, Radio City Music Hall, and the Rockettes.

Tao earned $132.7 million in revenue for the quarter ending September 30, up from $119.5 million during the previous year. Operating income was $5.9 million, down from $10.1 million. 

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