In February 1959, former automobile manufacturer Graham-Paige purchased a 40% interest in the Madison Square Garden for $4 million and later gained control. In November 1960, Graham-Paige president Irving Mitchell Felt purchased from the Pennsylvania Railroad the rights to build at Penn Station. To build the new facility, the above-ground portions of the original Pennsylvania Station were torn down.
The new structure was one of the first of its kind to be built above the platforms of an active railroad station. It was an engineering feat constructed by Robert E. McKee of El Paso, Texas. Public outcry over the demolition of the Pennsylvania Station structure—an outstanding example of Beaux-Arts architecture—led to the creation of the New York City Landmarks Preservation Commission. The venue opened on February 11, 1968. Comparing the new and the old Penn Station, Yale architectural historian Vincent Scully wrote, "One entered the city like a god; one scuttles in now like a rat."
In 1972, Felt proposed moving the Knicks and Rangers to a then incomplete venue in the New Jersey Meadowlands, the Meadowlands Sports Complex. The Garden was also the home arena for the NY Raiders/NY Golden Blades of the World Hockey Association. The Meadowlands would eventually host its own NBA and NHL teams, the New Jersey Nets and the New Jersey Devils, respectively. The New York Giants and Jets of the National Football League (NFL) also relocated there. In 1977, the arena was sold to Gulf and Western Industries. Felt's efforts fueled controversy between the Garden and New York City over real estate taxes. The disagreement again flared in 1980 when the Garden again challenged its tax bill. The arena, since the 1980s, has since enjoyed tax-free status, under the condition that all Knicks and Rangers home games must be hosted at MSG, lest it lose this exemption. As such, when the Rangers have played neutral-site games—even those in New York City, such as the 2018 NHL Winter Classic, they have always been designated as the visiting team.