MSG Entertainment settles lawsuits linked to MSG Sphere
Madison Square Garden Entertainment Corp. announced last week it has settled a series of lawsuits from shareholders in connection with the rising cost of its MSG Sphere at The Venetian.
In a Securities and Exchange Commission filing, the company said it would pay $48.5 million to four shareholder groups that filed lawsuits in a class action in the Delaware Court of Chancery.
The company did not admit liability in the settlement. The plaintiffs alleged that the MSG Networks board of directors and controlling stockholders breached their fiduciary duties in negotiating and approving a merger with MSG Entertainment in a cost-saving move.
Four different shareholder groups filed actions beginning June 29, 2021, and the cases were consolidated October 29, 2021.
Since its groundbreaking in September 2018, the 17,500-seat MSG Sphere’s cost has nearly doubled to $2.2 billion and is expected to open in September with performances by U2. Construction of the project, which initially was expected to be completed in 2021, was delayed by the COVID-19 pandemic and supply chain disruptions.
According to the SEC filing, MSG Networks has a dispute with its insurers over whether and to what extent there is insurance coverage for the settlement. Unless those parties settle that insurance dispute, it is expected to be resolved in a pending Delaware insurance coverage action. In the interim, and subject to final resolution of the parties’ insurance coverage dispute, certain of MSG Networks’ insurers have agreed to advance $20.5 million to fund the settlement and related class notice costs.
The merger between MSG Networks and MSG Entertainment is different from a spinoff announced last month in which a new company, to be known as Sphere Entertainment Co., will oversee the MSG Sphere, MSG Networks and MSG’s Tao Group Hospitality businesses.
Contact Richard N. Velotta at rvelotta@reviewjournal.com or 702-477-3893. Follow @RickVelotta on Twitter.