Madison Square Garden CEO Steps Down AbruptlyBy and
Knicks owner doesn’t disclose reason for O’Connor’s departure
Stock has been up, sales have risen on TAO Group acquisition
Only two years ago, the Hollywood super-agent David “Doc” O’Connor stunned the entertainment world by decamping for Madison Square Garden Co., the home of the New York Knicks.
Now, without warning or public explanation, O’Connor is out as chief executive officer -- and James Dolan, overlord of the Garden, the Knicks and the Rangers, is stepping in.
The move, announced Monday, is the latest twist in the running saga of the Dolan family, cable-TV tycoons who acquired the Knicks and Madison Square Garden in a 1994 deal and have overseen years of basketball ineptitude and an ever-changing cast of head coaches.
“I’m shocked,” said Brandon Ross, an analyst at BTIG LLC. “Doc has done a very good job. He was brought in to be an operator, and operationally everything is going great. That makes me wonder: does Jim want to be CEO himself?’’
O’Connor’s Hollywood background was supposed to help Madison Square Garden boost revenue from its venues, including the landmark arena and sites such as New York’s Radio City Music Hall and Beacon Theatre. The CEO established residencies with entertainers such as Bill Joel and Jerry Seinfeld, an approach the company called “artist-first.”
O’Connor joined the company in July 2015 from the entertainment and sports talent group Creative Artists Agency LLC, where he had been a managing director since 1995. O’Connor was one of the Young Turks, the group of five new managing directors who took up leadership at CAA following founder Michael Ovitz’s decision to leave the agency to become president of Walt Disney Co.
Shares of Madison Square Garden fell 2.4 percent $224.24 at 2:11 p.m. in New York. The stock had been on a tear as other National Basketball Association teams such as the Houston Rockets have changed hands in multibillion-dollar deals, lifting the valuation of the Knicks. Two years ago, Madison Square Garden split off its cable networks into a separate company, MSG Networks Inc., which has been the subject of deal speculation.
O’Connor could get $47.6 million, based on Friday’s market close, if he wasn’t terminated for cause or if he left Madison Square Garden for a “good reason,” according to the company’s most recent proxy statement. Because he hasn’t reached his third anniversary, the amount only includes the equity he received when the company split with MSG Networks. He won’t get any payouts if he left the company voluntarily or was dismissed for cause.
As executive chairman of both companies, James Dolan is the most prominent family member in the business, though his 91-year-old father Charles is on the boards. The family controls both, plus AMC Networks Inc., through a collection of trusts and investment vehicles.
The company just completed a $1 billion renovation of the famous arena and plans to bring a new venue to Las Vegas. It recently bought stakes in a dining and hospitality group, a music festival producer and an esports company. Revenue from TV rights is expected to keep growing, and the Knicks and Rangers are playing to near-capacity crowds.
Last quarter, sales jumped 35 percent from a year earlier to $245 million, and the operating loss narrowed by half. The revenue increase was a result of the acquisition of a majority stake of TAO Group, a dining and nightlife company that owns restaurants such as Tao and Lavo in New York.
— With assistance by Brandon Kochkodin, Alicia Ritcey, and Jenn Zhao