MSG Sports President and CEO Andrew Lustgarten will step down at the end of the year, the team announced on Friday.
Lustgarten, 45, a childhood friend of MSG executive chairman James Dolan, has run the business side of the Knicks and Rangers since MSG spun off ownership of the sports teams from arenas and the cable television network in April 2020 .
“With the business on solid footing and the NBA and NHL seasons soon to begin, now is a good time for me to pursue other opportunities,” Lustgarten said in a written statement.
Dolan will continue to oversee team operations for the Knicks and Rangers, MSG said. David Hopkinson will be promoted to President and COO of MSG Sports.
“Andy’s leadership in our sports and entertainment companies has helped solidify MSG’s position as an industry leader,” Dolan said in a written statement.
“He has successfully led several strategic initiatives to grow and diversify our businesses.”
Lustgarten, who has held senior roles at MSG since 2014 and helped shape the split, will join the MSG Sports Board as a director at the end of the year.
“We have no doubt as he embarks on his next chapter that this is just the beginning of what he will achieve,” Dolan said.
Lustgarten’s father, Marc, was president of what was Dolan-controlled Cablevision MSG from 1997 until his death in 1999. Marc had worked in other capacities for the Dolans for many years.
MSG Sports posted record profits last quarter, and Lustgarten oversaw strategic moves such as the sale of Los Angeles’ Forum Arena for $400 million and MSG’s acquisition of Tao Hospitality Group, MSG said.
Lustgarten expressed frustration with MSG Sports’ stock price, which at the time of the spin-off was $161.15 and closed Friday, 30 months later, at $159.54.
MSG Sports’ value adding its net debt is $4.7 billion, while the Knicks and Rangers, if sold, would likely be worth around $7 billion combined, investment bankers said.
This means the stock is trading at a 33% discount to team values.
There has been speculation that Dolan could combine MSG Sports and MSG Entertainment again, but that now appears to be off the table.
MSG Entertainment is instead exploring the possibility of splitting its business in two, with MSG Arena and the cable television network in one company, and Las Vegas Sphere and Tao in the other, as it also tries to increase the price of its stock.
Internal NBA numbers show the Knicks in the 2021-22 season had the third-highest average gate, $2.98 million per game. This represents a 9.2% increase from the last non-COVID season of 2018-19.
That matches the league’s average increase of 10.2%, according to confidential NBA data.
The Knicks are adding about 24 seats this year replacing what was part of the scorer’s table for many games selling tickets between $5,000 and $15,000 depending on the opponent, according to a ticket industry source.
This alone could increase the gate’s net revenue by 3% if the tickets were sold for an average of $5,000 each.
A Knicks playoff run, like the Rangers did last year, would also help improve the bottom line.