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MADISON SQUARE GARDEN SPORTS CORP. REPORTS FISCAL 2023 FOURTH QUARTER AND FULL-YEAR RESULTS

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Madison Square Garden Sports Corp. reported record revenues of $887.4 million for fiscal 2023, an increase of 8% compared to the prior year. Operating income was $85.2 million, a decrease of 1%, and adjusted operating income was $115.0 million, essentially unchanged. The Company returned approximately $250 million to shareholders in fiscal 2023.
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Record Revenues of $887.4 Million for Fiscal 2023
Fiscal 2023 Operating Income of $85.2 Million and Adjusted Operating Income of $115.0 Million(1)
Returned Approximately $250 Million to Shareholders in Fiscal 2023(2)

NEW YORK, Aug. 17, 2023 /PRNewswire/ -- Madison Square Garden Sports Corp. (NYSE: MSGS) (the "Company") today reported financial results for the fiscal fourth quarter and full-year ended June 30, 2023.  

The fiscal 2023 fourth quarter was highlighted by both the New York Knicks (the "Knicks") and New York Rangers (the "Rangers") participating in the playoffs following the conclusion of the 2022-23 regular seasons. This included a combined eight home playoff games at the Madison Square Garden Arena ("The Garden"), with the Knicks advancing to the Eastern Conference Semifinals. Throughout the fiscal fourth quarter and year, the Company continued to benefit from robust consumer and corporate demand for both its teams, with every key revenue category – tickets, media rights, suites and sponsorships, as well as food, beverage and merchandise – exceeding fiscal 2022's record full-year results.

For fiscal 2023, the Company reported revenues of $887.4 million, an increase of $66.1 million, or 8%, as compared to the prior year. In addition, the Company had operating income of $85.2 million, a decrease of $0.9 million, or 1%, as compared to the prior year, and adjusted operating income of $115.0 million, essentially unchanged as compared to the prior year.(1)  

For the fiscal 2023 fourth quarter, the Company reported revenues of $126.9 million, a decrease of $48.3 million, or 28%, as compared to the prior year quarter. The decrease in revenues was primarily due to fewer Knicks and Rangers regular season and playoff home games, as compared to the prior year period. In addition, the Company had an operating loss of $12.2 million and an adjusted operating loss of $7.8 million, as compared to operating income of $23.7 million and adjusted operating income of $29.5 million in the prior year quarter.(1)  

Madison Square Garden Sports Corp. Executive Chairman James L. Dolan said, "Our strong financial results in fiscal 2023 reflect the robust ongoing demand from our fans and corporate partners for the Knicks and Rangers. We believe we are well positioned to build on this momentum in the coming year and remain confident in our ability to generate long-term shareholder value."

Results from Operations
Results for the quarter and year ended June 30, 2023 and 2022 are as follows:



Three Months Ended






Twelve Months Ended







June 30,


Change


June 30,


Change

$ millions


2023


2022


$


%


2023


2022


$


%

Revenues


$      126.9


$       175.2


$     (48.3)


(28) %


$       887.4


$      821.4


$      66.1


8 %

Operating income (loss)


$       (12.2)


$         23.7


$     (35.9)


NM


$         85.2


$        86.1


$       (0.9)


(1) %

Adjusted operating
income (loss)(1)


$         (7.8)


$         29.5


$     (37.3)


NM


$       115.0


$      114.9


$        0.1


— %


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 financial measures not calculated in accordance with generally accepted accounting principles ("GAAP"). The Company has amended this definition so that the non-cash portion of operating lease costs (which was $1,439 and $26,096 for the three and twelve months ended June 30, 2023, respectively, and $3,715 and $27,305 for the three and twelve months ended June 30, 2022, 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.



2.

The return of capital consisted of a special cash dividend of $7.00 per share (approximately $173 million in aggregate) paid in October 2022 and a $75 million accelerated share repurchase ("ASR") program, which the Company completed in January 2023.

Summary of Reported Results from Operations
For the fiscal 2023 fourth quarter, the Company generated revenues of $126.9 million, a decrease of $48.3 million, or 28%, as compared to the prior year period. The decrease was primarily due to the timing of the NHL 2021-22 regular season in the prior fiscal year, which resulted in the Knicks and Rangers playing a combined five regular season home games at The Garden in the fiscal 2023 fourth quarter as compared to thirteen in the prior year period. In addition, the Knicks and Rangers played a combined eight playoff home games at The Garden in the fiscal 2023 fourth quarter as compared to ten playoff home games in the prior year period. As a result, pre/regular season ticket-related revenues, playoff-related revenues, suite revenues, sponsorship and signage revenues, league distributions and local media rights fees were all lower as compared to the prior year period.

Pre/regular season ticket-related revenues decreased $19.4 million as compared to the prior year period, primarily due to the Knicks and Rangers playing eight fewer regular season home games at The Garden during the fiscal 2023 fourth quarter, partially offset by higher average per-game revenue.

Playoff-related revenues decreased $8.6 million as compared to the prior year period, primarily due to the Rangers playing ten home playoff games in the prior year period as the team advanced to the Eastern Conference Finals, which also resulted in higher per-game revenue in the prior year period, as compared to three home playoff games during the fiscal 2023 fourth quarter. This decrease was partially offset by the Knicks playing five home playoff games in the fiscal 2023 fourth quarter. 

Suite revenues decreased $7.7 million as compared to the prior year period, primarily due to the Knicks and Rangers playing eight fewer regular season games at The Garden during the fiscal 2023 fourth quarter, partially offset by higher sales of suite products.

Sponsorship and signage revenues decreased $5.3 million as compared to the prior year period, primarily due to the Knicks and Rangers playing eight fewer regular season games at The Garden during the current year period, partially offset by higher net sales of existing sponsorship and signage inventory.

League distributions decreased $3.5 million as compared to the prior year period, primarily due to the timing of the NHL 2021-22 regular season, which resulted in revenue being recognized over a longer time frame in the prior fiscal year, as well as lower other league distributions in the fiscal 2023 fourth quarter, partially offset by the impact of contractual rate increases for national media rights fees in the fiscal 2023 fourth quarter.

Local media rights fees decreased $1.9 million as compared to the prior year period, primarily due to the timing of the NHL 2021-22 regular season, which resulted in revenue being recognized over a longer time frame in the prior fiscal year, partially offset by the impact of contractual rate increases in the fiscal 2023 fourth quarter.

Direct operating expenses of $80.4 million decreased $12.5 million, or 13%, as compared to the prior year period. Operating lease costs under the arena license agreements with MSG Entertainment decreased $5.5 million and other team operating expenses decreased $5.3 million, both as compared to the prior year period, primarily due to the Knicks and Rangers playing eight fewer regular season games at The Garden during the fiscal 2023 fourth quarter. In addition, net provisions for league revenue sharing expense (net of escrow and excluding the playoffs) and NBA luxury tax decreased $4.1 million as compared to the prior year period. These decreases were partially offset by an increase of $4.6 million in net provisions for certain team personnel transactions as compared to the prior year period.

Selling, general and administrative expenses of $57.9 million increased $0.4 million, or 1%, as compared to the prior year period.

Operating income decreased $35.9 million to a loss of $12.2 million and adjusted operating income decreased $37.3 million to a loss of $7.8 million, both as compared to the prior year period, primarily due to the decrease in revenues, partially offset by lower direct operating 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
The Company has amended its definition of adjusted operating income (loss) so that the non-cash portion of operating lease costs related to the Company's arena license agreements with MSG Entertainment is no longer excluded 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



Grace Kaminer

Investor Relations

(212) 631-5076


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 August 24, 2023

 

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)




Three Months Ended


Twelve Months Ended



June 30,


June 30,



2023


2022


2023


2022

Revenues


$     126,920


$     175,205


$     887,447


$     821,354

Direct operating expenses


80,377


92,866


548,811


500,564

Selling, general and administrative expenses


57,866


57,438


249,885


229,668

Depreciation and amortization


874


1,195


3,577


5,042

Operating income (loss)


(12,197)


23,706


85,174


86,080

Other income (expense):









Interest income


765


168


2,392


313

Interest expense


(6,489)


(2,577)


(22,884)


(11,735)

Miscellaneous income (expense), net


5,696


(536)


25,239


(726)

Income (loss) before income taxes


(12,225)


20,761


89,921


73,932

Income tax (expense) benefit


2,731


5,887


(44,293)


(25,052)

Net income (loss)


(9,494)


26,648


45,628


48,880

Less: Net loss attributable to nonredeemable noncontrolling
interests


(237)


(540)


(2,165)


(2,251)

Net income (loss) attributable to Madison Square Garden Sports
Corp.'s stockholders


$       (9,257)


$       27,188


$       47,793


$       51,131










Basic earnings (loss) per common share attributable to Madison
Square Garden Sports Corp.'s stockholders


$         (0.39)


$           1.12


$           1.90


$           2.11

Diluted earnings (loss) per common share attributable to Madison
Square Garden Sports Corp.'s stockholders


$         (0.39)


$           1.11


$           1.89


$           2.10










Basic weighted-average number of common shares outstanding


23,961


24,277


24,090


24,246

Diluted weighted-average number of common shares outstanding


23,961


24,487


24,194


24,405

 

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 (loss) to arrive at adjusted operating income (loss) 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


Twelve Months Ended



June 30,


June 30,



2023


2022


2023


2022

Operating income (loss)


$       (12,197)


$         23,706


$         85,174


$         86,080

Depreciation and amortization


874


1,195


3,577


5,042

Share-based compensation


3,144


5,067


25,203


24,245

Remeasurement of deferred compensation plan liabilities


377


(461)


1,091


(461)

Adjusted operating income (loss)(1)


$         (7,802)


$         29,507


$       115,045


$       114,906


____________________

(1)

The Company has amended its definition of adjusted operating income 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. Operating expense includes operating lease costs of (i) $2,290 and $41,524 of expense paid in cash for the three and twelve months ended June 30, 2023, respectively and $5,483 and $40,314 of expense paid in cash for the three and twelve months ended June 30, 2022, respectively, and (ii) a non-cash expense of $1,439 and $26,096 for the three and twelve months ended June 30, 2023, respectively, and $3,715 and $27,305 for the three and twelve months ended June 30, 2022, respectively.

 

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)




June 30,



2023


2022

ASSETS





Current Assets:





Cash and cash equivalents


$             40,398


$             91,018

Restricted cash


61


Accounts receivable, net


40,139


47,240

Net related party receivables


15,969


28,333

Prepaid expenses


24,768


18,810

Other current assets


27,898


19,868

Total current assets


149,233


205,269

Property and equipment, net


30,501


32,892

Right-of-use lease assets


715,283


686,782

Amortizable intangible assets, net



636

Indefinite-lived intangible assets


103,644


112,144

Goodwill


226,523


226,955

Investments


67,374


4,736

Other assets


22,459


32,552

Total assets


$        1,315,017


$        1,301,966

 

MADISON SQUARE GARDEN SPORTS CORP.

CONSOLIDATED BALANCE SHEETS (continued)

(In thousands, except per share data)




June 30,



2023


2022

LIABILITIES AND EQUITY





Current Liabilities:





Accounts payable


$                9,093


$             11,263

Net related party payables


5,842


19,624

Debt


30,000


30,000

Accrued liabilities:





Employee related costs


144,310


119,279

League-related accruals


106,926


75,269

Other accrued liabilities


17,561


6,796

Operating lease liabilities, current


49,745


43,699

Deferred revenue


157,051


132,369

Total current liabilities


520,528


438,299

Long-term debt


295,000


220,000

Operating lease liabilities, noncurrent


746,437


699,587

Defined benefit obligations


4,526


5,005

Other employee related costs


49,070


43,411

Deferred tax liabilities, net


24,024


8,917

Deferred revenue, noncurrent


12,666


31,122

Other liabilities



1,002

Total liabilities


1,652,251


1,447,343

Commitments and contingencies





Madison Square Garden Sports Corp. Stockholders' Equity:





Class A Common stock, par value $0.01, 120,000 shares authorized; 19,364 and 19,697
shares outstanding as of June 30, 2023 and 2022, respectively


204


204

Class B Common stock, par value $0.01, 30,000 shares authorized; 4,530 shares
outstanding as of June 30, 2023 and 2022


45


45

Preferred stock, par value $0.01, 15,000 shares authorized; none outstanding as of
June 30, 2023 and 2022



Additional paid-in capital


16,846


17,573

Treasury stock, at cost, 1,084 and 751 shares as of June 30, 2023 and 2022,
respectively


(179,410)


(128,026)

Accumulated deficit


(173,910)


(35,699)

Accumulated other comprehensive loss


(1,009)


(1,186)

Total Madison Square Garden Sports Corp. stockholders' equity


(337,234)


(147,089)

Nonredeemable noncontrolling interests



1,712

Total equity


(337,234)


(145,377)

Total liabilities and equity


$        1,315,017


$        1,301,966

 

MADISON SQUARE GARDEN SPORTS CORP.

SELECTED CASH FLOW INFORMATION

(In thousands)

(Unaudited)




Twelve Months Ended



June 30,



2023


2022

Net cash provided by operating activities


$         152,473


$         178,056

Net cash used in investing activities


(17,759)


(2,932)

Net cash used in financing activities


(185,273)


(156,142)

Net (decrease) increase in cash, cash equivalents and restricted cash


(50,559)


18,982

Cash, cash equivalents and restricted cash from beginning of period


91,018


72,036

Cash, cash equivalents and restricted cash at end of period


$           40,459


$           91,018

 

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SOURCE Madison Square Garden Sports Corp.

FAQ

What were Madison Square Garden Sports Corp.'s fiscal 2023 revenues?

Madison Square Garden Sports Corp. reported revenues of $887.4 million for fiscal 2023.

What was the operating income for fiscal 2023?

Madison Square Garden Sports Corp. had operating income of $85.2 million for fiscal 2023.

What was the adjusted operating income for fiscal 2023?

Madison Square Garden Sports Corp. had adjusted operating income of $115.0 million for fiscal 2023.

How much did Madison Square Garden Sports Corp. return to shareholders in fiscal 2023?

Madison Square Garden Sports Corp. returned approximately $250 million to shareholders in fiscal 2023.

What was the change in revenues for the fiscal 2023 fourth quarter compared to the prior year period?

Revenues for the fiscal 2023 fourth quarter decreased by $48.3 million, or 28%, compared to the prior year period.

Why did revenues decrease in the fiscal 2023 fourth quarter?

The decrease in revenues was primarily due to fewer Knicks and Rangers regular season and playoff home games compared to the prior year period.

How did pre/regular season ticket-related revenues change in the fiscal 2023 fourth quarter?

Pre/regular season ticket-related revenues decreased by $19.4 million compared to the prior year period, primarily due to fewer regular season home games.

How did playoff-related revenues change in the fiscal 2023 fourth quarter?

Playoff-related revenues decreased by $8.6 million compared to the prior year period, primarily due to fewer home playoff games for the Rangers.

How did suite revenues change in the fiscal 2023 fourth quarter?

Suite revenues decreased by $7.7 million compared to the prior year period, primarily due to fewer regular season games.

How did sponsorship and signage revenues change in the fiscal 2023 fourth quarter?

Sponsorship and signage revenues decreased by $5.3 million compared to the prior year period, primarily due to fewer regular season games.

Madison Square Garden Sports Corp.

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