Madison Square Garden Sports Corp. Reports Fiscal 2025 Second Quarter Results

NEW YORK, Feb. 4, 2025 /PRNewswire/ -- Madison Square Garden Sports Corp. (NYSE: MSGS) today reported financial results for the fiscal second quarter ended December 31, 2024.

During the fiscal 2025 second quarter, the New York Knicks ("Knicks") and New York Rangers ("Rangers") began their 2024-25 regular seasons, playing a combined three more games at the Madison Square Garden Arena ("The Garden") as compared to the prior year quarter. In addition to the positive impact of those additional home games, the Company's results also reflect ongoing strong demand for its teams. Fiscal 2025 second quarter average per-game revenues for every key revenue category - tickets, suites, sponsorship and food, beverage and merchandise - exceeded results for the prior year period. Operating income and adjusted operating income results also reflect the impact of the Knicks' and Rangers' rosters for the 2024-25 seasons.

For the fiscal 2025 second quarter, the Company generated revenues of $357.8 million, an increase of $30.9 million, or 9%, as compared to the prior year period. In addition, the Company reported operating income of $13.3 million, a decrease of $15.5 million, or 54%, and adjusted operating income of $20.2 million, a decrease of $16.8 million, or 45%, both as compared to the prior year period.⁽¹⁾

Madison Square Garden Sports Corp. Executive Chairman and CEO James L. Dolan said, "In the fiscal second quarter, fan enthusiasm and robust corporate demand helped drive growth in per-game revenues across all key areas of our business. We remain confident in the fundamentals of our business and our ability to drive long-term shareholder value."

Financial Results for the Three and Six Months Ended December 31, 2024 and 2023:

		Three Months Ended								Six Months Ended
		December 31,				Change				December 31,				Change
$ millions		2024		2023		$		%		2024		2023		$		%
Revenues		$ 357.8		$ 326.9		$ 30.9		9 %		$ 411.1		$ 369.9		$ 41.1		11 %
Operating income		$ 13.3		$ 28.8		$ (15.5)		(54) %		$ 5.0		$ 14.0		$ (9.0)		(64) %
Adjusted operating income (1)		$ 20.2		$ 37.0		$ (16.8)		(45) %		$ 18.0		$ 27.0		$ (9.1)		(33) %

Note:	Does not foot due to rounding
1.	See page 3 of this earnings release for the definition of adjusted operating income (loss) included in the discussion of non-GAAP financial measures.

Summary of Financial Results

For the fiscal 2025 second quarter, revenues of $357.8 million increased $30.9 million, or 9%, as compared to the prior year period. This increase was primarily due to higher ticket-related revenues, suite revenues, sponsorship and signage revenues, revenues from league distributions, food, beverage and merchandise sales and local media rights fees. The Knicks and Rangers played a combined three more regular season games at The Garden during the fiscal 2025 second quarter as compared to the prior year period.

Pre/regular season ticket-related revenues increased $14.3 million as compared to the prior year period, primarily due to the Knicks and Rangers playing additional games at The Garden during the fiscal 2025 second quarter and higher average Knicks and Rangers per-game revenue.

Suite revenues increased $7.0 million as compared to the prior year period, primarily due to the Knicks and Rangers playing additional games at The Garden during the fiscal 2025 second quarter and higher net sales of suite products.

Sponsorship and signage revenues increased $3.1 million as compared to the prior year period, due to the Knicks and Rangers playing additional games at The Garden during the fiscal 2025 second quarter and higher net sales of existing sponsorship and signage inventory.

Revenues from league distributions increased $2.6 million as compared to the prior year period, primarily due to higher national media rights fees.

Pre/regular season food, beverage and merchandise sales increased $2.1 million as compared to the prior year period, primarily due to higher average per-game revenue and the Knicks and Rangers playing additional games at The Garden during the fiscal 2025 second quarter, partially offset by lower online sales of merchandise.

Local media rights fees increased $1.7 million as compared to the prior year period, primarily due to contractual rate increases, partially offset by a reduction in rights fees due to a decrease in the number of games exclusively available to MSG Networks during the current year as compared to the prior year.

Direct operating expenses of $275.8 million increased $43.5 million, or 19%, as compared to the prior year period. This increase was primarily driven by higher team personnel compensation of $15.2 million and higher net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax of $14.9 million, both as compared to the prior year period. In addition, net provisions for certain team personnel transactions were $7.6 million in the current year period as compared to none in the prior year period.

Selling, general and administrative expenses of $67.9 million increased $2.8 million, or 4%, as compared to the prior year period. This increase was primarily driven by higher operating lease costs of $3.6 million and higher professional fees of $2.7 million, partially offset by lower employee compensation and related benefits of $2.6 million and lower other general and administrative expenses, all as compared to the prior year period.

Operating income of $13.3 million decreased $15.5 million, or 54%, and adjusted operating income of $20.2 million decreased $16.8 million, or 45%, both as compared to the prior year period, primarily due to the increase in direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses, partially offset by the increase in revenues.

About Madison Square Garden Sports Corp.

Madison Square Garden Sports Corp. (MSG Sports) is a leading professional sports company, with a collection of assets that includes the New York Knicks (NBA) and the New York Rangers (NHL), as well as two development league teams - the Westchester Knicks (NBAGL) and the Hartford Wolf Pack (AHL). MSG Sports also operates a professional sports team performance center - the MSG Training Center in Greenburgh, NY. More information is available at www.msgsports.com.

Non-GAAP Financial Measures

We define adjusted operating income (loss), which is a non-GAAP financial measure, as operating income (loss) excluding (i) depreciation, amortization and impairments of property and equipment, goodwill and other intangible assets, (ii) share-based compensation expense or benefit, (iii) restructuring charges or credits, (iv) gains or losses on sales or dispositions of businesses, (v) the impact of purchase accounting adjustments related to business acquisitions, and (vi) gains and losses related to the remeasurement of liabilities under the Company's Executive Deferred Compensation Plan. Because it is based upon operating income (loss), adjusted operating income (loss) also excludes interest expense (including cash interest expense) and other non-operating income and expense items. We believe that the exclusion of share-based compensation expense or benefit allows investors to better track the performance of our business without regard to the settlement of an obligation that is not expected to be made in cash. In addition, we believe that the exclusion of gains and losses related to the remeasurement of liabilities under the Company's Executive Deferred Compensation Plan provides investors with a clearer picture of the Company's operating performance given that, in accordance with U.S. generally accepted accounting principles ("GAAP"), gains and losses related to the remeasurement of liabilities under the Company's Executive Deferred Compensation Plan are recognized in Operating (income) loss whereas gains and losses related to the remeasurement of the assets under the Company's Executive Deferred Compensation Plan, which are equal to and therefore fully offset the gains and losses related to the remeasurement of liabilities, are recognized in Miscellaneous income (expense), net, which is not reflected in Operating income (loss).

We believe adjusted operating income (loss) is an appropriate measure for evaluating the operating performance of our Company. Adjusted operating income (loss) and similar measures with similar titles are common performance measures used by investors and analysts to analyze our performance. Internally, we use revenues and adjusted operating income (loss) as the most important indicators of our business performance, and evaluate management's effectiveness with specific reference to these indicators. Adjusted operating income (loss) should be viewed as a supplement to and not a substitute for operating income (loss), net income (loss), cash flows from operating activities, and other measures of performance and/or liquidity presented in accordance with GAAP. Since adjusted operating income (loss) is not a measure of performance calculated in accordance with GAAP, this measure may not be comparable to similar measures with similar titles used by other companies. For a reconciliation of operating income (loss) to adjusted operating income (loss), please see page 5 of this earnings release.

Forward-Looking Statements

This press release may contain statements that constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Investors are cautioned that any such forward-looking statements are not guarantees of future performance or results and involve risks and uncertainties, and that actual results, developments and events may differ materially from those in the forward-looking statements as a result of various factors, including financial community and rating agency perceptions of the Company and its business, operations, financial condition and the industry in which it operates, and the factors described in the Company's filings with the Securities and Exchange Commission, including the sections titled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained therein. The Company disclaims any obligation to update any forward-looking statements contained herein.

Contacts:

Ari Danes, CFA Investor Relations and Financial Communications [phone]	Justin Blaber Financial Communications [phone]
Grace Kaminer Investor Relations [phone]

Conference Call Information:

The conference call will be Webcast live today at 10:00 a.m. ET at investor.msgsports.com
Conference call dial-in number is 888-660-6386 / Conference ID Number 6996895
Conference call replay number is 800-770-2030 / Conference ID Number 6996895 until February 11, 2025

MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
		Three Months Ended				Six Months Ended
		December 31,				December 31,
		2024		2023		2024		2023
Revenues		$ 357,759		$ 326,898		$ 411,066		$ 369,944
Direct operating expenses		275,753		232,225		283,964		235,745
Selling, general and administrative expenses		67,900		65,066		120,487		118,622
Depreciation and amortization		791		790		1,573		1,584
Operating income		13,315		28,817		5,042		13,993
Other income (expense):
Interest income		690		619		1,554		1,072
Interest expense		(5,587)		(7,419)		(11,642)		(14,348)
Miscellaneous (expense) income, net		(6,609)		2,991		(7,735)		(9,674)
Income (loss) before income taxes		1,809		25,008		(12,781)		(8,957)
Income tax (expense) benefit		(698)		(10,784)		6,350		4,360
Net income (loss)		$ 1,111		$ 14,224		$ (6,431)		$ (4,597)
Basic earnings (loss) per common share attributable to Madison Square Garden Sports Corp.'s stockholders		$ 0.05		$ 0.59		$ (0.27)		$ (0.19)
Diluted earnings (loss) per common share attributable to Madison Square Garden Sports Corp.'s stockholders		$ 0.05		$ 0.59		$ (0.27)		$ (0.19)
Basic weighted-average number of common shares outstanding		24,100		24,017		24,074		23,994
Diluted weighted-average number of common shares outstanding		24,167		24,065		24,074		23,994

MADISON SQUARE GARDEN SPORTS CORP.
ADJUSTMENTS TO RECONCILE OPERATING INCOME TO
ADJUSTED OPERATING INCOME
(In thousands)
(Unaudited)

The following is a description of the adjustments to operating income in arriving at adjusted operating income as described in this earnings release:

• Depreciation and amortization. This adjustment eliminates depreciation, amortization and impairments of property and equipment, goodwill and other intangible assets in all periods.
• Share-based compensation. This adjustment eliminates the compensation expense related to restricted stock units and stock options granted under the Company's employee stock plan and non-employee director plan in all periods.
• Remeasurement of deferred compensation plan liabilities. This adjustment eliminates the impact of gains and losses related to the remeasurement of liabilities under the Company's executive deferred compensation plan.

		Three Months Ended				Six Months Ended
		December 31,				December 31,
		2024		2023		2024		2023
Operating income		$ 13,315		$ 28,817		$ 5,042		$ 13,993
Depreciation and amortization		791		790		1,573		1,584
Share-based compensation		5,991		6,570		10,259		10,719
Remeasurement of deferred compensation plan liabilities		142		839		1,107		735
Adjusted operating income(1)		$ 20,239		$ 37,016		$ 17,981		$ 27,031

____________________

(1)

Adjusted operating income includes operating lease costs which is comprised of a contractual cash component plus or minus a non-cash component for each period presented. Pursuant to GAAP, recognition of operating lease costs is recorded on a straight-line basis over the term of the agreement based upon the value of total future payments under the arrangement. Adjusted operating income includes operating lease costs of (i) $17,447 and $18,301 of expense paid in cash for the three and six months ended December 31, 2024, respectively, and $15,409 and $16,238 of expense paid in cash for the three and six months ended December 31, 2023, respectively, and (ii) a non-cash expense of $9,334 and $9,791 for the three and six months ended December 31, 2024, respectively, and $8,953 and $9,435 for the three and six months ended December 31, 2023, respectively.

MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) (Unaudited)
		December 31, 2024		June 30, 2024
ASSETS
Current Assets:
Cash and cash equivalents		$ 107,823		$ 89,136
Restricted cash		8,030		5,771
Accounts receivable, net of allowance for doubtful accounts of $0 as of December 31, 2024 and June 30, 2024		79,395		33,781
Net related party receivables		19,994		32,255
Prepaid expenses		61,462		30,956
Other current assets		20,423		25,043
Total current assets		297,127		216,942
Property and equipment, net of accumulated depreciation and amortization of $51,990 and $52,281 as of December 31, 2024 and June 30, 2024, respectively		27,890		28,541
Right-of-use lease assets		685,692		694,566
Indefinite-lived intangible assets		103,644		103,644
Goodwill		226,523		226,523
Investments		58,734		62,543
Other assets		12,838		13,533
Total assets		$ 1,412,448		$ 1,346,292

MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED BALANCE SHEETS (continued) (In thousands, except per share data) (Unaudited)
		December 31, 2024		June 30, 2024
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable		$ 6,396		$ 9,900
Net related party payables		7,468		6,718
Debt		30,000		30,000
Accrued liabilities:
Employee related costs		87,371		133,930
League-related accruals		143,484		120,876
Other accrued liabilities		10,630		21,613
Operating lease liabilities, current		49,854		50,267
Deferred revenue		267,783		148,678
Total current liabilities		602,986		521,982
Long-term debt		275,000		275,000
Operating lease liabilities, noncurrent		747,553		749,952
Defined benefit obligations		4,104		4,103
Other employee related costs		48,209		43,493
Deferred tax liabilities, net		6,813		16,925
Deferred revenue, noncurrent		919		1,147
Total liabilities		1,685,584		1,612,602
Commitments and contingencies
Madison Square Garden Sports Corp. Stockholders' Equity:
Class A Common Stock, par value $0.01, 120,000 shares authorized; 19,476 and 19,423 shares outstanding as of December 31, 2024 and June 30, 2024, respectively		204		204
Class B Common Stock, par value $0.01, 30,000 shares authorized; 4,530 shares outstanding as of December 31, 2024 and June 30, 2024		45		45
Preferred stock, par value $0.01, 15,000 shares authorized; none outstanding as of December 31, 2024 and June 30, 2024		-		-
Additional paid-in capital		9,776		19,079
Treasury stock, at cost, 972 and 1,025 shares as of December 31, 2024 and June 30, 2024, respectively		(160,647)		(169,547)
Accumulated deficit		(121,589)		(115,139)
Accumulated other comprehensive loss		(925)		(952)
Total equity		(273,136)		(266,310)
Total liabilities and equity		$ 1,412,448		$ 1,346,292

MADISON SQUARE GARDEN SPORTS CORP. SELECTED CASH FLOW INFORMATION (In thousands) (Unaudited)
		Six Months Ended
		December 31,
		2024		2023
Net cash provided by (used in) operating activities		$ 35,621		$ (20,257)
Net cash used in investing activities		(2,302)		(5,238)
Net cash (used in) provided by financing activities		(12,373)		26,268
Net increase in cash, cash equivalents and restricted cash		20,946		773
Cash, cash equivalents and restricted cash at beginning of period		94,907		40,459
Cash, cash equivalents and restricted cash at end of period		$ 115,853		$ 41,232

SOURCE Madison Square Garden Sports Corp.