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Forum deal sets up MSG for alliance with Live Nation

by Richard Morgan  |  Published June 27, 2012 at 1:13 PM
Madison-Square-Garden_227x128.jpgMadison Square Garden Co. added another piece to what could be a large puzzle with its acquisition Tuesday, June 26, of the Forum in suburban Los Angeles for $23.5 million.

The 18,000-seat indoor arena, known in its heyday as the Fabulous Forum, was constructed by Jack Kent Cooke in 1967 and housed the Los Angeles Lakers and Kings before losing the professional teams to the Staples Center upon the latter arena's 1999 opening in downtown Los Angeles. The Forum has also played host over the past 45 years to such musical acts as Bob Dylan, Coldplay, The Jackson 5 and The Rolling Stones.

As part of the MSG deal, the city of Inglewood, where the Forum sits three miles east of the Los Angeles International Airport, will give the venue's new owner a commercial rehabilitation loan of $18 million. That loan, however, is conditioned on at least $50 million of MSG investments in what was termed "a comprehensive renovation."

New York-based MSG acquired the Forum from Faithful Central Bible Church, a ministry that puts its congregation at "several thousand." Faithful Central held services at the Forum after buying it in 2000, while also making it available for rental through for-profit entity Forum Enterprises Inc., but abandoned the space as a house of worship in 2009.

"We are honored to be adding the Forum to our iconic list of venues and to call Inglewood our West Coast home," said MSG executive chairman James L. Dolan. "We look forward to building on the Forum's outstanding legacy in music and to utilizing our expertise to ensure it once again becomes a thriving destination for both artists and music fans, as well as an active member of the Inglewood community."

Added MSG president and CEO Hank J. Ratner: "The addition of the Forum is a perfect complement to the Madison Square Garden Arena; it now allows us to have world-class venues in both New York and Los Angeles, linking the top two entertainment markets in the country."

The Forum joins an MSG arena portfolio that not only includes Madison Square Garden, currently in the second year of a three-year transformation, but Radio City Music Hall, the Beacon Theatre on Manhattan's Upper West Side and the Chicago Theatre. MSG also has an exclusive booking arrangement with Boston's Wang Theatre.

In addition, MSG pointed to its "proven track record of successfully restoring and renovating our historic venues," citing the makeovers given Radio City Music Hall in 1999 and the Beacon Theatre in 2009. Its ability to snag acts was touted as well, with claims that combined bookings at its most recent takeovers -- the Beacon, the Chicago and the Wang -- have risen 140% under MSG ownership.

Taking a longer view, the Forum's purchase could figure into a puzzle being shaped by MSG and Live Nation Entertainment Inc., the world's largest live entertainment company. Last year, when Live Nation bought out what it called "substantially all" of the equity in artist-management firm Front Line Management Group Inc. that it didn't already own, partial Front Line owner MSG opted for shares rather than cash.

Robert Routh, an analyst with Phoenix Partners Group LP, found it noteworthy that MSG accepted those shares, calling the 2.1% ownership stake it conferred in Live Nation a possible "harbinger." Working together, the analyst said, MSG and Live Nation could break in acts on the mostly smaller MSG circuit and then move the most successful of them into Live Nation arenas. He further noted that MSG, a subsidiary of Cablevision Systems Corp. until 2010, could turn to Live Nation for a financial assist after exercising its option to buy the Forum.

On actually exercising that option, MSG received real estate advice from a Cushman & Wakefield Inc. team headed by chairman of the board John C. Cushman III and chairman of global brokerage Bruce Mosler. Legal advice was provided by Ruth Fisher and Amy Forbes of Gibson, Dunn & Crutcher LLP.

Forum Enterprises, Faithful Central's for-profit arm that served as the Forum's official seller, received legal advice from Jonathan Curtis of Allen Matkins Leck Gamble Mallory & Natsis LLP and real estate advice from Larry Kosmont, president and CEO of Kosmont Realty Corp.
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Tags: Fabulous Forum | Madison Square Garden Co.

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