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Attorneys for Madison Square Garden executive James Dolan are firing back at a lawsuit that alleges he pressured a masseuse into unwanted sex while his band was touring with the Eagles, calling his accuser an “opportunist” who is “looking for a quick payday.”
In a motion filed Monday in Manhattan federal court, Dolan’s lawyers asked a federal judge to dismiss the lawsuit, in which a woman named Kellye Croft claims that Dolan coerced her into “unlawful and unwelcome sex acts” on repeated occasions during the 2013 tour.
Arguing that the allegations were “completely manufactured,” Dolan’s attorneys told the judge that it is “an unfortunate truth that some men, by virtue of their status, have become targets for opportunists looking for a quick payday.”
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“If this case were to proceed … plaintiff would be exposed as such an opportunist, and her claims would be soundly rejected for the lies that they are,” Dolan’s attorney lead counsel E. Danya Perry wrote. “But this action should never reach that stage, as plaintiff’s complaint is entirely deficient.”
Dolan is the majority owner/CEO of Madison Square Garden Entertainment, a live music giant that operates the famed New York City arena in addition to Manhattan’s Radio City Music Hall, the Las Vegas Sphere and other prominent venues.
Croft sued him in January, claiming she had been hired to serve as a massage therapist for Glenn Frey during the 2013 tour, on which Dolan’s band (JD & The Straight Shot) opened for Eagles. She says she thought the job was the “opportunity of a lifetime,” but that she quickly realized the real reason she was there: “Dolan was extremely assertive, and pressured Ms. Croft into unwanted sexual intercourse.”
The lawsuit also claimed that Dolan later facilitated an incident in which Croft was assaulted by Harvey Weinstein, the disgraced film producer whose many sexual assault allegations helped spark the #MeToo movement in 2017. Dolan previously served as a director at The Weinstein Company, and the lawsuit claimed that the two moguls were “close friends and business partners.”
In Monday’s response, Dolan’s attorneys took particular exception to the Weinstein allegations, calling them “scandalous and irrelevant” claims that had been designed to compensate for flaws in the case: “This transparent reliance on headline-grabbing, yet legally baseless, accusations of liability-by-association cannot save plaintiff’s case.”
Dolan’s motion also argued that the inclusion of Weinstein was actually a “fatal” weakness in one part of the case. They claimed that bankruptcy proceedings for The Weinstein Company resulted in a court order releasing all former directors from allegations that they aided and abetted Weinstein’s conduct — one of the claims leveled against Dolan in the complaint.
In a response statement on Wednesday, Croft’s attorney Douglas Wigdor called Dolan’s argument “shameful” and said his client had not participated in or benefited from the Weinstein bankruptcy, or even been notified of it.
“To somehow suggest that Dolan should receive a ‘get out of jail free’ card for his alleged intentional acts of trafficking our client, shows the extent to which he is willing to go to avoid having to defend the facts of our case,” Wigdor wrote.
Separately on Monday, attorneys for companies owned by music executive Irving Azoff also filed their own response to the case. While the lawsuit mostly centered on Dolan’s alleged conduct, it also accused the Azoff Company of violating federal sex trafficking laws by “facilitating Dolan’s behavior.”
In their motion, Azoff’s attorneys demanded not only that the claims be dismissed, but that Croft and her lawyers be legally sanctioned for filing “frivolous and vexatious” allegations without any real evidence to support them.
“As was explained to plaintiff’s counsel before the suit was commenced, the Azoff entities have never participated in any sex trafficking venture, and the complaint does not allege a single fact plausibly or remotely suggesting otherwise,” wrote the Azoff Company’s attorney Daniel Petrocelli.
“The decision by plaintiff and her counsel to include [such claims] in a federal pleading with nodiligence or investigation in order to publicly and falsely charge the Azoff Entities with despicable, illegal conduct fully justifies the imposition of … sanctions.”
In one portion of Croft’s complaint, her lawyers included a photograph of Dolan, Azoff and Weinstein standing together in 2015, saying that “these men were close to one another, and thus almost certainly knew details about each other’s personal lives.”
But in Monday’s motion seeking to dismiss the case and punish Croft’s lawyers, Azoff’s attorneys called the inclusion of Weinstein in the complaint a “gratuitous and unavailing” tactic that had been designed to prove “guilt-by-association” in the absence of any real evidence.
“Grasping at straws, plaintiff tries to link Weinstein to the Azoff entities by a single photo of Dolan, Weinstein, and Irving Azoff at an advertising trade conference in 2015,” Petrocelli wrote. “Awarding the Azoff entities their reasonable attorneys’ fees and costs in bringing this motion would deter plaintiff’s counsel from asserting such baseless, bad faith claims in the future.”
In his statement Wednesday, Croft’s attorney Wigdor called those arguments “meritless” and reiterated the allegations against Azoff’s companies: “We look forward to defeating these motions and moving forward with this litigation.”
Abu Dhabi-based music streamer Anghami led all music stocks this week after gaining 17.6% to $0.82. On Thursday, the company announced through an SEC filing it had received a written notification from the Nasdaq Stock Market regarding its closing share price being below $1.00 for the previous 30 days. The Nasdaq gives companies 180 days to regain compliance or face de-listing from the exchange.
The warning appeared to spur a 16.5% gain on Thursday as investors saw signs the share price won’t remain under $1. In its SEC filing, Anghami stated if the share price remains under the $1 threshold it will “consider available options to cure the deficiency,” including a reverse share split (which would increase the share price by reducing the number of shares outstanding while the market capitalization remains unchanged).
SiriusXM gained 5.7% on Friday (Oct. 13) and finished the week up 11.8%. Its $4.85 closing price was the highest for the satellite radio company since Aug. 9. The typically steady stock has fallen 17% this year as self-pay satellite radio subscribers stagnated at or around 32 million for eight straight quarters. SiriusXM will host a Nov. 8 presentation to unveil a new streaming app and preview upcoming in-car innovations and new programming.
The 21-stock Billboard Global Music Index fell 1.3% to 1,355.65 this week as 13 stocks were in negative territory and only eight stocks gained ground. Year to date, the index has gained 16.1%. Led by SiriusXM’s gain and a 7.6% increase from Cumulus Media, the index’s three radio stocks had an average improvement of 5.5%. Eight record labels and publishers had an average weekly gain of 0.3%. HYBE improved 6.8% while Believe climbed 3.6% and Universal Music Group added 0.6%. Streaming companies were, on average, flat this week.
Live music stocks dropped an average of 4.8%. Shares of Sphere Entertainment Co. dropped 11.1%, effectively offsetting the 11% gain on Oct. 2 following U2’s debut performances at Sphere in Las Vegas. Live Nation dropped 3.9%, MSG Entertainment fell 3.5% and CTS Eventim shares fell 0.7%. If investors are curious what’s next for Sphere Entertainment, clues comes from an interview published Thursday. Executive chairman and CEO James Dolan said the company is “actively pursuing other markets” and “has six different kinds of spheres down to a 3,000-seater.” A Las Vegas-style Sphere may not work in London, where according to reports residents are concerned about the location and light pollution that could arise from a massive external display similar to the Las Vegas venue.
Music stocks underperformed numerous indexes. In the United States, the S&P 500 gained 0.1% and the Nasdaq composite fell 0.3%. In the United Kingdom, the FTSE 100 gained 1.4%. South Korea’s KOSPI composite index rose 2%.
Stocks faded after the release of consumer sentiment data for October by the University of Michigan showed a decline from September based on “a substantial increase” in concerns about inflation. Expectations for inflation in one year rose from 3.2% in September to 3.8% this month. That’s the highest mark since May 2023 and substantially above the 2.3% to 3% range seen in the two years before the pandemic.
Also a factor in stock prices, the U.S. Federal Reserve expects to raise interest rates one more time, according to minutes released from its September policy meeting. Interest rates have an inverse relationship with equity prices. Higher interest rates make borrowing more expensive and cut down on corporate profits.
Shares of Cumulus Media gained 9.7% this week, the leading stock in the Billboard Global Music Index and one of only four stocks in the 21-company index to end in positive territory Friday (June 23).
Overall, the Billboard Global Music Index declined 3.5% to 1,287.41 — more than double the 1.4% declines of the S&P 500 and Nasdaq. Music stocks were more in line with the Nasdaq when the overpowering effects of a small number of tech companies are removed, however. That’s because a few powerhouses — such as Microsoft, Apple, Alphabet and Amazon — often account for a large fraction of the Nasdaq’s gains. To that point, QQQE, an exchange-traded fund that gives equal weight to 100 Nasdaq stocks, declined 2.9% this week.
In the United Kingdom, the FTSE 100 declined 2.4%. South Korea’s KOSPI index fell 2.1%. Central banks in England, Turkey and Norway raised interest rates this week. Investors can reasonably expect more rates hikes in the United States, too. Federal Reserve chairman Jerome Powell said on Wednesday the central bank may continue to raise rates — there have been 10 since March 2022 — but “to do so at a more moderate pace.” When central banks raise interest rates, stocks tend to fall because businesses and consumers are expected to cut back on spending and higher rates make bonds relatively more attractive to stock returns.
Cumulus Media improved to $3.40 a week and a half after the company announced it will sell about 1.75 million Class A common shares — nearly 10% of outstanding shares — at $3.25 per share in a modified Dutch auction that closed on June 9. While the sale will gross about $5.7 million, not including fees and expenses, the final result was well below the company’s goal to sell up to $10 million of shares as part of a previously announced $50 million share repurchase plan.
Shares of French music streaming company Deezer gained 3.6% to 2.32 euros ($2.54), bringing the stock’s year-to-date loss to 20.5%. U.S. streaming company LiveOne gained 3.3% to $1.58. Year-to-date, LiveOne has gained 145.3%. The only other company with a week-over-week improvement was South Korea’s HYBE, which improved 1.2% to 301,000 KRW ($236.91).
The other three Korean music companies declined this week: SM Entertainment and YG Entertainment each fell 5.6% and JYP Entertainment dropped 3.5%. Still, K-pop has been a resounding success for investors in 2023. Led by JYP Entertainment’s 93.7% year-to-date gain, the four Korean companies’ stocks have risen an average of TK% in 2023.
One company, Anghami, was unchanged and the index’s other 16 stocks were in negative territory this week. MSG Entertainment had the Billboard Global Music Index’s largest decline after dropping 17.1%. Sphere Entertainment Co., which spun off MSG Entertainment in April, intends to sell part of its 33% stake in MSG Entertainment. The news dropped the live entertainment company’s share price 12.1% on Wednesday. At Friday’s closing price, Sphere Entertainment’s sale of 5.25 million shares would gross about $170 million that could help fund the state-of-the-art Sphere at The Venetian Resort in Las Vegas that’s set to open in September.
Sphere Entertainment Co., the company behind an expensive, state-of-the-art venue opening this fall in Las Vegas, is selling about a quarter of its stake in MSG Entertainment — 5.25 million shares of Class A common stock — in a secondary offering, the company announced Wednesday. That amount could grow by 787,500 shares if the offering’s […]
Madison Square Garden Entertainment chief executive James Dolan defended the use of facial recognition technology to bar entry to his company’s namesake venue to a handful of individuals on Thursday. In a televised interview on FOX 5 New York, Dolan also said he’s considering shutting down alcohol sales for a night at the Garden in response to lawmakers’ calls for the venue’s liquor license.
“Instead (of serving alcohol), where we serve liquor, we are going to put one of these up, which says, ‘If you would like to drink again, please call Sharif Kabir, chief executive officer’ … and tell him to stick to his knitting,” Dolan said, holding up a poster with the picture of the head of New York’s state liquor authority.
In defense of the Garden’s policy barring entry to a group of lawyers who work for a firm currently engaged in legal matters against Dolan’s company, he said, “If you’re suing us, we’re just asking you please don’t come until you’re done with your argument with us, and yes we’re using facial recognition to enforce that.”
MSG has been under scrutiny for blocking entry to the lawyers, and in recent weeks, some New York legislators have called for an investigation into whether the policy is in violation of its liquor license. On Wednesday, the New York State Attorney General Letitia James requested the company disclose how they are using the technology, citing media reports that about 90 law firms and thousands of lawyers are affected by the policy.
Lawmakers including New York State Senator Liz Kruger expressed concerns that MSG appears to be using the technology in “discriminatory and retaliatory” ways, and New York State Senator Brad Hoylman-Sigal introduced a bill this week that would ammend an existing state law to add “sporting events” to the list of public entertainment places that cannot bar entry to people with valid tickets.
Dolan was steadfast in his defense of the ban and the use of facial recognition technology at his venues, which also include Radio City Music Hall and The Sphere, currently under construction in Las Vegas.
Dolan called the proposed bill illegal, and when asked if his company would back down in enforcing these policies, he said, “Not at all.”
“The Garden has to defend itself,” he said.
In a letter sent yesterday, NY AG James urged MSG Entertainment to reverse the policy.
“MSG Entertainment cannot fight their legal battles in their own arenas,” James said in a statement included in a press release from her office on the matter. “Madison Square Garden and Radio City Music Hall are world-renowned venues and should treat all patrons who purchased tickets with fairness and respect. Anyone with a ticket to an event should not be concerned that they may be wrongfully denied entry based on their appearance.”
While use of facial recognition technology is legal in the state of New York, and MSG discloses it uses the technology on notices posted outside its venues, individuals suing MSGE argue the venues’ use goes beyond what is legally allowed. The New York AG’s office requested a response justifying the policy and detailing attempts to abide by the laws outlawing discrimination and retaliation by Feb. 13.
New York Attorney General Letitia James has sent a letter asking Madison Square Garden Entertainment (MSGE) to explain its reported use of facial recognition technology to bar individuals involved in litigation against the company from its venues, the Attorney General’s office said Wednesday (Jan. 25).
The letter cites reports that approximately 90 law firms comprising thousands of lawyers are affected by a policy that MSG Entertainment allegedly put in place, in which the facial recognition tech has been used to identify and bar attorneys with legitimate tickets from venues including MSG and Radio City Music Hall. The letter says the office has “concerns that the Policy may violate the New York Civil Rights Law and other city, state, and federal laws prohibiting discrimination and retaliation for engaging in protected activity.” The letter also says that the office is concerned that such practices could run afoul of laws prohibiting retaliation and that the technology “may be plagued with biases and false positives against people of color and women.”
“MSG Entertainment cannot fight their legal battles in their own arenas,” James said in a statement included in a press release from her office on the matter. “Madison Square Garden and Radio City Music Hall are world-renowned venues and should treat all patrons who purchased tickets with fairness and respect. Anyone with a ticket to an event should not be concerned that they may be wrongfully denied entry based on their appearance, and we’re urging MSG Entertainment to reverse this policy.”
In a statement sent to Billboard, an MSG spokesperson responded to the letter, saying, “To be clear, our policy does not unlawfully prohibit anyone from entering our venues and it is not our intent to dissuade attorneys from representing plaintiffs in litigation against us. We are merely excluding a small percentage of lawyers only during active litigation. Most importantly, to even suggest anyone is being excluded based on the protected classes identified in state and federal civil rights laws is ludicrous. Our policy has never applied to attorneys representing plaintiffs who allege sexual harassment or employment discrimination.”
In the past few months, the New York Times has reported that MSG Entertainment, owned by James Dolan, has begun using facial recognition software to identify a list of attorneys representing clients that are involved in litigation against the company, and is barring not just those lawyers, but all lawyers from their respective firms, from attending concerts or other events at its venues, which include MSG, Radio City, the Hulu Theater, the Beacon Theatre and others. Events at which the policy has allegedly been utilized include games involving the NBA’s New York Knicks and NHL’s New York Rangers, both of which Dolan also owns.
The use of facial recognition technology is legal in the state of New York, though some lawyers who have sued the company claim that using it to bar a list of attorneys with open litigation against MSGE is not. The public outcry has caught the attention of the Attorney General, who is requesting a response both justifying the policy and detailing attempts to abide by the laws outlawing discrimination and retaliation by Feb. 13.
MSG Sphere, the long-awaited, globe-shaped venue under construction in Las Vegas, has been promised to revolutionize the concert-going experience. Before it even opens, however, MSG Sphere is transforming the corporate structure of its creator.
On Monday, MSG Entertainment announced new plans for an upcoming spin-off that will separate MSG Sphere, the next-generation music venue being built in Las Vegas, from the rest of its live music business.
The latest version of the proposed transaction results is a pure-play music company under the corporate name MSG Entertainment that includes venues such as Madison Madison Square Garden, Hulu Theater at Madison Square Garden, Radio City Music Hall, the Beacon Theatre and The Chicago Theatre. MSG Entertainment would also include the entertainment and sports booking business, the Radio City Rockettes and the Christmas Spectacular production, and long-term arena license agreements with New York Knicks and New York Rangers, which play their home games at Madison Square Garden.
The first iteration of the spin-off paired the live music business with MSG Networks, a regional sports network that carries live games of the Knicks, Rangers, New York Giants, New Jersey Devils, New York Islanders and Buffalo Sabres. That would have put the company’s two most mature divisions under one roof, separate from MSG Sphere and Tao Group Hospitality, the operator of restaurant and nightlife properties. MSG Entertainment would, however, combine the financially risky Sphere project with the more stable revenues of MSG Networks, which generated $608.2 million of revenue and $131 million of operating profit in the year ended June 30, 2022. The new plan “is optimal for maximizing shareholder value, while providing both companies with enhanced strategic and financial flexibility to drive long-term growth,” the company said in a statement.
The new spin-off plan puts MSG Networks with MSG Sphere and Tao Group Hospitality. The spin-off company will take the name MSG Sphere Corp and “would have enhanced flexibility to execute its business strategy and pursue global growth opportunities,” executive chairman and CEO James L. Dolan said in a statement.
The proposed transaction would be structured as a tax-free spin-off to all MSGE shareholders. Owners of MSGE Class A and Class B shares would receive a pro-rata distribution expected to amount to about a two-thirds economic interest in MSG Entertainment, the live entertainment company. The parent company, MSG Sphere, would retain approximately a one-third interest in MSG Entertainment.
The $1.8 billion MSG Sphere at The Venetian is slated to open in 2023 with a U2 residency. The spherical venue will provide a multi-sensory experience of audio and visuals for 20,000 standing spectators or 17,500 seated guests. It includes 160,000 square feet of video viewing space and an exterior exosphere with programmable LED technology.
Madison Square Garden Entertainment’s quarterly revenues surged by 36% to $401.2 million, an increase of nearly $107 million over last year, thanks to a packed calendar for its performance venues that included Harry Styles‘ 15 sold-out concerts at the company’s namesake venue in New York City.
However, those revenues were not enough to offset a total operating loss of $44 million and a 73% decline in adjusted operating income to $2.8 million, as expenses related to the return of live events and increased construction costs for MSG Sphere caused company-wide operating expenses to climb $88.1 million.
On a call with analysts on Wednesday, executives were optimistic saying that the company is moving into the lucrative holiday season– a boom time for MSG performances like Radio City Christmas Spectacular.
“This is expected to be the first full year of events at our venues since fiscal 2019,” James Dolan, executive chairman and chief executive, said. “The best months are coming up for our events business.”
Revenues from the company’s entertainment business quadrupled to $147.1 million in the first fiscal quarter of 2023, which ended Sept. 30. That is compared to $34.2 million last year.
Investors were not swayed by executives comments that the company hosted a record 1 million guests at events over the quarter. Madison Square Garden Entertainment Corp’s stock was down 10.47% to $40.43 by 11 a.m. in New York.
Executives disclosed that the cost of building MSG Sphere, the state-of-the-art venue under construction in Las Vegas, rose again to $2.75 billion from $2 billion on higher costs from inflation and global supply chain issues. The project has rougly 8-9 months of construction remaining.
Dolan briefly commented on the proposed spin-off of the company’s live entertainment and MSG Networks business. If the plan is approved, he said, the venues and networks business would be named Madison Square Garden Entertainment Corp, while the business encompassing MSG Sphere and Tao Group Hospitality, owner of TAO, Hakkasan, LAVO and Beauty & Essex, would be named MSG Sphere Corp.
MSG Entertainment’s board approved the plan in August, and it now faces review by the U.S. Securities and Exchange Commission. Under the plan, the new, publicly traded company would house MSG Entertainment’s venues — including Madison Square Garden, Radio City Music Hall, the Beacon Theatre and The Chicago Theatre — and MSG Networks, which broadcasts five basketball and hockey teams on MSG Network and MSG+. Also in that new company would be MSG Entertainment’s sports and entertainment booking business, the Radio City Rockettes and the Christmas Spectacular production and arena license agreements with the NBA Knicks and NHL Rangers.
Executives and analysts have said the spin-off could provide investors with more clarity on the company’s many businesses and a clearer choice between the type of investment they want to make. The venues and networks businesses have long-term track records as stable revenue generators, while the Sphere and Tao Group businesses are more speculative but provide an opportunity for higher returns.
Below is a greater breakdown of the company’s earnings for the quarter.
Q1 fiscal 2023 earnings for Entertainment division:
Revenues of $147.1 million, up $112.9 million from last year
Event related revenues rose $80.6 million
Arena license agreements with MSG Sports revenues rose $18.3 million
Suite license fee revenues rose $8.4 million
Direct operating expenses rose $65.5 million to $101.8 million from last year driven by expenses from events and arena license agreements with MSG Sports.
Selling, general, administrative costs rose 11% to $103.4 million on higher employee compensation, benefits.
Operating losses totaled $75.3 million for the quarter, a 34% improvement from the year-ago period when operating losses totales $114.7 million. Adjusted operating losses totaled $44.4 million.
Q1 fiscal 2023 earnings for MSG Networks division:
Revenues fell 13% to $122.5 million from last year on $19-million-decrease in affiliation fee revenues.
Direct operating expenses rose 10% to $75.4 million, driven by $5.9 million increase in rights fees and $1.1 million increase in other programming and production costs.
Selling, general and administrative expenses fell by 63% from a year ago to $17.8 million.
Q1 fiscal 2023 earnings for Tao Group division:
Revenues rose 11% to $132.7 million, including $7.5 from new venue openings.
Direct operating expenses rose 25% to $76.6 million driven by a $7.9-million-increase in employee compensation and related benefits.
Food and bevereage costs rose $4.1 milion on inflation, new venue openings
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