Madison Square Garden buys majority stake in Tao Group for $181 million

The future Madison Square Garden Arena to be built at Koval and Sands avenues behind Sands Convention Center is one of the reasons why MSG has acquired a 62.5 percent equity interest in Tao Group for $181 million, with a potential performance earn-out of as much as an additional $25.5 million.

The acquisition puts a $400 million valuation on Tao Group, which last year generated revenue and operating income of $235 million and $43 million, respectively. I first reported that the deal was underway several weeks ago, but nobody at Tao Group would comment at the time.

Here in Las Vegas, Tao Group, under the direction of founder Jason Strauss and founder partners Marc Packer, Rich Wolf and Noah Tepperberg, has grown into a sprawling hospitality company since opening at The Venetian in the former Walt Disney space.

Tao Restaurant and Nightclub, pictured here, led to the launch of Lavo at The Palazzo, then Marquee and Beauty & Essex at The Cosmopolitan of Las Vegas. Tao Group has a nightclub operation in Sydney, Australia, and also runs The Stanton Social and Vandal in New York.

Plans for a global expansion of all the properties are underway, with projects already in the construction and design stage in Los Angeles and Chicago. “Over the last 16 years, we’ve seen tremendous growth as we’ve successfully created some of the most enduring brands in the hospitality industry,” said Rich.

“Our partnership with MSG enables us to continue down this path as we advance our plans to build a global hospitality platform now backed by an organization with an unparalleled position as one of the world’s leading live entertainment companies. We are thrilled to be joining the MSG family and look forward to working with them on creating exceptional experiences.”

New York sources confirmed that MSG is shelling out the big bucks for a majority stake in the celebrity-driven nightlife company with the four principal partners retaining “a substantial stake and continuing to run day-to-day operations.”

Tao Group and MSG will join forces to create VIP premium hospitality experiences at MSG’s live events and venues including MSG, Radio City Music Hall, The Beacon Theater and The Forum in Inglewood, California.

Also, at MSG’s planned state-of-the-art new entertainment venue in Las Vegas slated for off-Strip land behind the Wynn Las Vegas employee parking structures at the rear of Sands Convention Center on Koval and Sands avenues.

MSG Chairman James Dolan commented: “Tao Group is a unique and attractive business that furthers our focus on the ‘live experience’ while also exposing us to new areas of growth. Tao Group is creating the most innovative premium experiences in the entertainment, dining and hospitality industry — no one does it better.

“We now have a tremendous opportunity to utilize that expertise across our live offerings while leveraging each other’s strengths to drive value and growth for both businesses.”

New York operations of Tao Group brands include Avenue, Beauty & Essex, Lavo Italian Restaurant and Nightclub, Marquee Nightclub, The Stanton Social, Tao Asian Bistro Uptown, Tao Asian Bistro Downtown and Vandal.

Additionally, Tao Group operates all of the food-and-beverage outlets of The Dream Downtown hotel, including room service, PHD Rooftop, Electric Room Lounge and Bodega Negra, as well as lounge spaces at The Dream Midtown hotel, including PHD Rooftop, The Fishbowl and The Rickey.

Las Vegas operations include Beauty & Essex; Tao Asian Bistro, Nightclub & Beach at The Venetian; Lavo Italian Restaurant & Lounge at The Palazzo; and Marquee Nightclub & Dayclub at The Cosmopolitan. Marquee Nightclub at The Star – Sydney represents the company’s first international offering.

MSG also owns The New York Knicks, The New York Rangers and “The Radio City Rockettes’ Christmas Spectacular.”