June 26 (Bloomberg) -- Madison Square Garden Co., the sports and entertainment company that owns the New York Knicks, will acquire the former home of the Los Angeles Lakers and Kings for $23.5 million.
MSG is buying the Forum arena in Inglewood, California, from Forum Enterprises Inc., a church-owned corporation, according to a statement today. Acquiring the venue, which hosted the National Basketball Association’s Lakers and the National Hockey League’s Kings games until 1999, is part of a company strategy of renovating historic sites, MSG said.
The Forum extends MSG’s real estate and event-planning reach to the greater Los Angeles area and challenges Anschutz Entertainment Group, which operates the 19,000-seat Staples Center and 7,100-seat Nokia Theatre in the city’s downtown, for concerts and shows.
The purchase price was “in line with investors’ hopes” and “less than feared,” David Joyce, a New York-based analyst at Miller Tabak & Co., said in a note to clients. The purchase could result in a 7.5 percent annual return on investment, Joyce estimated.
MSG already owns Madison Square Garden, Radio City Music Hall, New York’s Beacon Theatre, the Chicago Theatre and Boston’s Wang Theater. MSG’s entertainment division made up 8.6 percent of the company’s total revenue for quarter ended March 31.
MSG renovated Radio City Music Hall in 1999 and the Beacon Theatre in 2009. The company is also currently modernizing Madison Square Garden.
The addition of the Forum will allow for cross-promotion of “Fuse,” MSG’s all-music television network, MSG CEO Hank Ratner said in the statement. The Forum held concerts for bands including the Rolling Stones, the Jackson 5 and Coldplay during the 1960s, ’70s, ’80s and ’90s.
The city of Inglewood, California, where the Forum is located, will give MSG an $18-million commercial rehabilitation loan as long as MSG spends $50 million on improvements, the Los Angeles Times reported. MSG has guaranteed to sell a set amount of tickets for events in the Forum each year as part of the deal.
“We are honored to be adding the Forum to our iconic list of venues, and to call Inglewood our West Coast home,” James Dolan, executive chairman of New York-based MSG, said in the statement.
AEG’s president Tim Leiweke questioned the security of the neighborhood surrounding the Forum and dismissed the venue as a “class B” venue, according to the Times.
Michael Roth, a spokesman for Los Angeles-based AEG, declined to comment.
MSG shares fell 0.9 percent to $36.76 at the close in New York. The stock has risen 28 percent this year.
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