NEW
YORK, May 2, 2024 /PRNewswire/ -- Madison
Square Garden Sports Corp. (NYSE: MSGS) today reported financial
results for the fiscal third quarter ended March 31,
2024.
During the fiscal 2024 third quarter, the New York Knicks
("Knicks") and New York Rangers ("Rangers") continued their 2023-24
regular seasons, with operating results reflecting increases in
average per-game paid attendance, average ticket prices and
ancillary per-capita spending, as well as strong demand for premium
hospitality offerings. This translated into growth in average
per-game revenues across tickets and suites, as well as food,
beverage and merchandise. Local and national media rights fees were
also higher, reflecting contractual rate increases. In addition,
fiscal 2024 third quarter results reflect the positive impact of
five additional Knicks home games played at The Garden, as compared
to the prior year period.
Subsequent to the end of the fiscal 2024 third quarter, both
teams concluded their regular seasons and are currently competing
in the NBA and NHL playoffs. In addition, the Company launched its
2024-25 Knicks and Rangers season ticket renewal initiative, which
has seen strong demand to date.
In the fiscal 2024 third quarter, the Company generated revenues
of $430.0 million, an increase of
$47.2 million, or 12%, as compared to
the prior year period. In addition, the Company reported operating
income of $79.7 million, a decrease
of $2.0 million, or 2%, and adjusted
operating income of $88.7 million, an
increase of $2.5 million, or 3%, both
as compared to the prior year period.(1)
Madison Square Garden Sports Corp. Executive Chairman
James L. Dolan said, "Our third
quarter results reflect solid operating performance across our
business, driven by ongoing enthusiasm for the Knicks and Rangers,
as both teams concluded successful regular seasons and qualified
for the playoffs. As we look ahead, we remain confident that we are
well positioned to generate long-term value for our
shareholders."
Results from Operations
Results for the three and nine
months ended March 31, 2024 and 2023 were as follows:
|
|
Three Months
Ended
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
|
March
31,
|
|
Change
|
|
March
31,
|
|
Change
|
$ millions
|
|
2024
|
|
2023
|
|
$
|
|
%
|
|
2024
|
|
2023
|
|
$
|
|
%
|
Revenues
|
|
$ 430.0
|
|
$ 382.7
|
|
$ 47.2
|
|
12 %
|
|
$
799.9
|
|
$
760.5
|
|
$ 39.4
|
|
5 %
|
Operating
income
|
|
$
79.7
|
|
$ 81.8
|
|
$
(2.0)
|
|
(2) %
|
|
$
93.7
|
|
$ 97.4
|
|
$ (3.6)
|
|
(4) %
|
Adjusted
operating
income(1)
|
|
$
88.7
|
|
$ 86.2
|
|
$
2.5
|
|
3 %
|
|
$
115.7
|
|
$
122.8
|
|
$ (7.1)
|
|
(6) %
|
|
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.
During the fourth quarter of fiscal 2023, the Company amended this
definition so that the impact of the non-cash portion of operating
lease costs (which was $13.0 million and $22.4 million for the
three and nine months ended March 31, 2024, respectively, and $11.9
million and $24.7 million for the three and nine months ended March
31, 2023, respectively) related to the Company's arena license
agreements with Madison Square Garden Entertainment Corp. ("MSG
Entertainment") is no longer excluded in all periods
presented.
|
Summary of Reported Results from Operations
For the
fiscal 2024 third quarter, revenues of $430.0 million increased $47.2 million, or 12%, as compared to the prior
year period. This increase was primarily due to higher
ticket-related revenues, suite revenues, food, beverage and
merchandise sales, local media rights fees and revenues from league
distributions. The Knicks played five more regular season home
games at The Garden in the current year period as compared to the
prior year period.
Ticket-related revenues increased $29.9 million, as compared to the prior year
period, primarily due to the Knicks playing additional games at The
Garden during the fiscal 2024 third quarter, and higher average
Knicks and Rangers per-game revenue.
Suite revenues increased $10.9 million, as compared to the prior year
period, primarily due to the Knicks playing additional games at The
Garden during the fiscal 2024 third quarter, and higher net sales
of suite products, including revenue related to new premium
hospitality offerings which were made available at the start of the
2023-24 seasons.
Food, beverage, and merchandise sales increased $4.3 million, as compared to the prior year
period, primarily due to higher average per-game revenue, the
Knicks playing additional games at The Garden during the fiscal
2024 third quarter and higher online sales of merchandise.
Local media rights fees increased $1.3 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. In addition, revenues from league distributions
increased $0.6 million as
compared to the prior year period, primarily due to higher national
media rights fees, partially offset by lower other league
distributions and the absence of league distributions related to
Counter Logic Gaming ("CLG") in the current year period following
the Company's sale of its controlling interest in CLG in
April 2023.
Direct operating expenses of $273.0
million increased $34.0
million, or 14%, as compared to the prior year period,
primarily reflecting higher team personnel compensation of
$11.8 million and higher net
provisions for league revenue sharing expense (net of escrow and
excluding playoffs) and NBA luxury tax of $8.4 million, as well as an increase in
other team operating expenses of $5.1 million. In addition, operating lease
costs under the arena license agreements with MSG Entertainment
increased $4.4 million, expenses
associated with merchandise sales were higher by $2.2 million, and net provisions for certain
team personnel transactions increased $2.1 million, all as compared to the prior
year period.
Selling, general and administrative expenses of $76.4 million increased $15.3 million, or 25%, as compared to the prior
year period. This increase mainly reflects higher employee
compensation and related benefits of $12.2
million, primarily due to executive management transition
costs recognized in the current year period, as well as higher
other general and administrative expenses.
Operating income of $79.7 million
decreased $2.0 million, or 2%, 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 higher
revenues. Adjusted operating income of $88.7
million increased $2.5
million, or 3%, as compared to the prior year period,
primarily due to the increase in revenues, partially offset by
higher direct operating expenses and, to a lesser extent, an
increase in selling, general and administrative expenses.
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
During the fourth
quarter of fiscal 2023, the Company amended its definition of
adjusted operating income (loss) so that the impact of the non-cash
portion of operating lease costs related to the Company's arena
license agreements with MSG Entertainment is no longer excluded in
the calculation of adjusted operating income (loss) in all periods
presented.
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 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
(212)
465-6072
|
Justin
Blaber
Financial
Communications
(212)
465-6109
|
MADISON SQUARE
GARDEN SPORTS CORP. CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands, except per share
data) (Unaudited)
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
March
31,
|
|
March
31,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Revenues
|
|
$ 429,954
|
|
$ 382,744
|
|
$ 799,898
|
|
$ 760,527
|
Direct operating
expenses
|
|
273,026
|
|
239,051
|
|
508,771
|
|
468,434
|
Selling, general and
administrative expenses
|
|
76,398
|
|
61,102
|
|
195,020
|
|
192,019
|
Depreciation and
amortization
|
|
788
|
|
840
|
|
2,372
|
|
2,703
|
Operating
income
|
|
79,742
|
|
81,751
|
|
93,735
|
|
97,371
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest
income
|
|
477
|
|
704
|
|
1,549
|
|
1,627
|
Interest
expense
|
|
(6,921)
|
|
(7,004)
|
|
(21,269)
|
|
(16,395)
|
Miscellaneous
(expense) income, net
|
|
(1,403)
|
|
19,324
|
|
(11,077)
|
|
19,543
|
Income before income
taxes
|
|
71,895
|
|
94,775
|
|
62,938
|
|
102,146
|
Income tax
expense
|
|
(34,018)
|
|
(42,962)
|
|
(29,658)
|
|
(47,024)
|
Net income
|
|
37,877
|
|
51,813
|
|
33,280
|
|
55,122
|
Less: Net loss
attributable to nonredeemable noncontrolling interests
|
|
—
|
|
(566)
|
|
—
|
|
(1,928)
|
Net income attributable
to Madison Square Garden Sports Corp.'s stockholders
|
|
$
37,877
|
|
$
52,379
|
|
$
33,280
|
|
$
57,050
|
|
|
|
|
|
|
|
|
|
Basic earnings per
common share attributable to Madison Square Garden Sports
Corp.'s stockholders
|
|
$
1.58
|
|
$
2.19
|
|
$
1.39
|
|
$
2.28
|
Diluted earnings per
common share attributable to Madison Square Garden Sports
Corp.'s stockholders
|
|
$
1.57
|
|
$
2.18
|
|
$
1.38
|
|
$
2.27
|
|
|
|
|
|
|
|
|
|
Basic weighted-average
number of common shares outstanding
|
|
24,028
|
|
23,971
|
|
24,005
|
|
24,133
|
Diluted
weighted-average number of common shares outstanding
|
|
24,100
|
|
24,062
|
|
24,076
|
|
24,225
|
MADISON SQUARE GARDEN SPORTS
CORP.
ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS)
TO
ADJUSTED OPERATING INCOME (LOSS)
(In
thousands)
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
|
|
Nine Months
Ended
|
|
|
March
31,
|
|
March
31,
|
|
|
2024
|
|
2023
|
|
2024
|
|
2023
|
Operating
income
|
|
$
79,742
|
|
$
81,751
|
|
$
93,735
|
|
$
97,371
|
Depreciation and
amortization
|
|
788
|
|
840
|
|
2,372
|
|
2,703
|
Share-based
compensation
|
|
7,350
|
|
3,220
|
|
18,069
|
|
22,059
|
Remeasurement of
deferred compensation plan liabilities
|
|
821
|
|
368
|
|
1,556
|
|
714
|
Adjusted operating
income(1)
|
|
$
88,701
|
|
$
86,179
|
|
$
115,732
|
|
$
122,847
|
____________________
|
(1) During the fourth
quarter of fiscal 2023, the Company amended its definition of
adjusted operating income (loss) so that the impact of the non-cash
portion of operating lease costs related to the Company's arena
license agreements with MSG Entertainment is no longer excluded.
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. As a
result, operating lease costs is comprised of a contractual cash
component plus or minus a non-cash component for each period
presented. Adjusted operating income includes operating lease costs
of (i) $22,372 and $38,610 of expense paid in cash for the three
and nine months ended March 31, 2024, respectively, and
$19,013 and $39,234 of expense paid in cash for the three and nine
months ended March 31, 2023, respectively, and (ii) a non-cash
expense of $12,998 and $22,433 for the three and nine months ended
March 31, 2024, respectively, and $11,949 and $24,657 for the
three and nine months ended March 31, 2023,
respectively.
|
MADISON SQUARE
GARDEN SPORTS CORP. CONSOLIDATED BALANCE
SHEETS (In thousands, except per share
data)
|
|
|
|
March 31,
2024
|
|
June 30,
2023
|
|
|
(Unaudited)
|
|
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
40,033
|
|
$
40,398
|
Restricted
cash
|
|
4,751
|
|
61
|
Accounts receivable,
net of allowance for doubtful accounts of $0 as of March 31,
2024
and June 30, 2023
|
|
76,843
|
|
40,139
|
Net related party
receivables
|
|
23,190
|
|
15,969
|
Prepaid
expenses
|
|
31,800
|
|
24,768
|
Other current
assets
|
|
74,028
|
|
27,898
|
Total current
assets
|
|
250,645
|
|
149,233
|
Property and equipment,
net of accumulated depreciation and amortization of $51,490
and $49,117 as of March 31, 2024 and June 30, 2023,
respectively
|
|
29,062
|
|
30,501
|
Right-of-use lease
assets
|
|
697,464
|
|
715,283
|
Indefinite-lived
intangible assets
|
|
103,644
|
|
103,644
|
Goodwill
|
|
226,523
|
|
226,523
|
Investments
|
|
61,443
|
|
67,374
|
Other assets
|
|
19,690
|
|
22,459
|
Total
assets
|
|
$
1,388,471
|
|
$
1,315,017
|
MADISON SQUARE
GARDEN SPORTS CORP. CONSOLIDATED BALANCE SHEETS
(continued) (In thousands, except per share
data)
|
|
|
|
March 31,
2024
|
|
June 30,
2023
|
|
|
(Unaudited)
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
5,906
|
|
$
9,093
|
Net related party
payables
|
|
5,107
|
|
5,842
|
Debt
|
|
30,000
|
|
30,000
|
Accrued
liabilities:
|
|
|
|
|
Employee related
costs
|
|
151,731
|
|
144,310
|
League-related
accruals
|
|
117,472
|
|
106,926
|
Other accrued
liabilities
|
|
49,075
|
|
17,561
|
Operating lease
liabilities, current
|
|
50,376
|
|
49,745
|
Deferred
revenue
|
|
116,888
|
|
157,051
|
Total current
liabilities
|
|
526,555
|
|
520,528
|
Long-term
debt
|
|
330,000
|
|
295,000
|
Operating lease
liabilities, noncurrent
|
|
756,871
|
|
746,437
|
Defined benefit
obligations
|
|
4,333
|
|
4,526
|
Other employee related
costs
|
|
48,569
|
|
49,070
|
Deferred tax
liabilities, net
|
|
14,894
|
|
24,024
|
Deferred revenue,
noncurrent
|
|
1,204
|
|
12,666
|
Total
liabilities
|
|
1,682,426
|
|
1,652,251
|
Commitments and
contingencies
|
|
|
|
|
Madison Square Garden
Sports Corp. Stockholders' Equity:
|
|
|
|
|
Class A Common
Stock, par value $0.01, 120,000 shares authorized; 19,416 and
19,364
shares outstanding as of March 31, 2024 and June 30,
2023, respectively
|
|
204
|
|
204
|
Class B Common
Stock, par value $0.01, 30,000 shares authorized; 4,530 shares
outstanding as of March 31, 2024 and June 30,
2023
|
|
45
|
|
45
|
Preferred stock, par
value $0.01, 15,000 shares authorized; none outstanding as of
March 31, 2024 and June 30, 2023
|
|
—
|
|
—
|
Additional paid-in
capital
|
|
18,004
|
|
16,846
|
Treasury stock, at
cost, 1,031 and 1,084 shares as of March 31, 2024 and
June 30, 2023,
respectively
|
|
(170,583)
|
|
(179,410)
|
Accumulated
deficit
|
|
(140,635)
|
|
(173,910)
|
Accumulated other
comprehensive loss
|
|
(990)
|
|
(1,009)
|
Total
equity
|
|
(293,955)
|
|
(337,234)
|
Total liabilities and
equity
|
|
$
1,388,471
|
|
$
1,315,017
|
MADISON SQUARE
GARDEN SPORTS CORP. SELECTED CASH FLOW
INFORMATION (In
thousands) (Unaudited)
|
|
|
|
Nine Months
Ended
|
|
|
March
31,
|
|
|
2024
|
|
2023
|
Net cash (used in)
provided by operating activities
|
|
$
(16,220)
|
|
$
114,801
|
Net cash used in
investing activities
|
|
(5,689)
|
|
(10,366)
|
Net cash provided by
(used in) financing activities
|
|
26,234
|
|
(129,618)
|
Net increase (decrease)
in cash, cash equivalents and restricted cash
|
|
4,325
|
|
(25,183)
|
Cash, cash equivalents
and restricted cash at beginning of period
|
|
40,459
|
|
91,018
|
Cash, cash equivalents
and restricted cash at end of period
|
|
$
44,784
|
|
$
65,835
|
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SOURCE Madison Square Garden Sports Corp.