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Madison Square Garden Sports (MSGS) - 2025 Q4 - Annual Results

Fiscal 2025 Fourth Quarter and Full-Year Results Overview This section provides an executive summary and key financial highlights for Madison Square Garden Sports Corp.'s fiscal 2025 fourth quarter and full-year performance Executive Summary Fiscal 2025 saw a 1% revenue increase driven by per-game growth and Knicks' playoffs, but operating income declined significantly due to team investments and reduced media rights fees - Fiscal 2025 was highlighted by growth in per-game revenues and the Knicks' postseason run to the Eastern Conference Finals3 - The company expects continued strong demand for the Knicks and Rangers and remains confident in the value of owning two professional sports franchises3 Key Financial Highlights Fiscal 2025 revenues grew 1% to $1,039.2 million, but operating and adjusted operating income significantly declined for both the full year and Q4 Fiscal 2025 Key Financial Highlights (in $ millions) | Metric | Three Months Ended June 30, 2025 (in $ millions) | Three Months Ended June 30, 2024 (in $ millions) | Change ($ millions) | Change (%) | Twelve Months Ended June 30, 2025 (in $ millions) | Twelve Months Ended June 30, 2024 (in $ millions) | Change ($ millions) | Change (%) | | :---------------------- | :------------------------------- | :------------------------------- | :--------- | :--------- | :-------------------------------- | :-------------------------------- | :--------- | :--------- | | Revenues | $204.0 | $227.3 | $(23.3) | (10)% | $1,039.2 | $1,027.1 | $12.1 | 1 % | | Operating (loss) income | $(22.6) | $52.3 | $(74.9) | NM | $14.8 | $146.0 | $(131.2) | (90)% | | Adjusted operating (loss) income | $(16.8) | $56.5 | $(73.3) | NM | $38.2 | $172.2 | $(134.1) | (78)% | Operational Highlights and Business Context Q4 fiscal 2025 featured the Knicks' Eastern Conference Finals run, while full-year results benefited from per-game revenue growth but were impacted by reduced media rights fees - The New York Knicks participated in nine home playoff games in the fiscal 2025 fourth quarter, reaching the Eastern Conference Finals2 - Fiscal 2025 results reflect increases in average regular season per-game revenues, including tickets, sponsorship, and suites2 - Results were impacted by reductions in local media rights fees due to amendments to agreements with MSG Networks Inc2 Detailed Financial Results Analysis This section provides a detailed analysis of the company's financial performance for both the fourth quarter and the full fiscal year 2025, covering revenues, expenses, and operating income Fourth Quarter Financial Performance The fourth quarter of fiscal 2025 saw a 10% revenue decrease, primarily due to fewer playoff games and lower league distributions, leading to a substantial decline in operating income Revenue Analysis (Q4) Q4 revenues decreased by $23.3 million (10%) to $204.0 million, primarily due to fewer playoff games, reduced league distributions, and lower local media rights fees - Q4 revenues decreased by $23.3 million (10%) to $204.0 million6 - Playoff-related revenues decreased by $12.9 million, primarily due to the Rangers not qualifying for playoffs, partially offset by higher per-game Knicks playoff revenue and two additional Knicks home playoff games7 - Revenues from league distributions decreased by $6.8 million, mainly due to the absence of a non-recurring NHL territorial fee of approximately $7 million in the prior year quarter8 - Local media rights fees decreased by $1.1 million due to reductions for the 2024-25 season resulting from amendments to agreements with MSG Networks10 Expense Analysis (Q4) Direct operating expenses significantly increased by $47.1 million (44%) to $154.8 million, primarily due to higher team personnel transaction provisions and league revenue sharing - Direct operating expenses increased by $47.1 million (44%) to $154.8 million11 - The increase in direct operating expenses was primarily driven by higher net provisions for certain team personnel transactions ($42.8 million) and higher net provisions for league revenue sharing expense and NBA luxury tax ($9.8 million)11 - Selling, general and administrative expenses increased by $4.5 million (7%) to $70.9 million, mainly due to higher professional fees ($3.7 million) and playoff-related expenses ($1.5 million)12 Operating and Adjusted Operating Income (Loss) Analysis (Q4) Q4 operating income decreased by $74.9 million to a $22.6 million loss, and adjusted operating income decreased by $73.3 million to a $16.8 million loss, driven by increased expenses - Operating income decreased by $74.9 million to an operating loss of $22.6 million13 - Adjusted operating income decreased by $73.3 million to an adjusted operating loss of $16.8 million13 - The decreases were primarily due to the increase in direct operating expenses and, to a lesser extent, the decrease in revenues13 Full-Year Financial Performance For the full fiscal year 2025, revenues increased slightly by 1% to $1,039.2 million, but operating and adjusted operating income experienced substantial declines Revenue Analysis (Full-Year) Full-year fiscal 2025 revenues increased by $12.1 million (1%) to $1,039.2 million compared to the prior year - For fiscal 2025, the Company reported revenues of $1,039.2 million, an increase of $12.1 million (1%), as compared to the prior year3 Operating and Adjusted Operating Income (Loss) Analysis (Full-Year) Full-year operating income decreased by $131.2 million (90%) to $14.8 million, and adjusted operating income decreased by $134.1 million (78%) to $38.2 million - For fiscal 2025, operating income decreased by $131.2 million to $14.8 million (90% decrease)3 - Adjusted operating income decreased by $134.1 million to $38.2 million (78% decrease)3 Strategic and Operational Developments This section details key strategic and operational changes, including amendments to local media rights agreements and an overview of Madison Square Garden Sports Corp Local Media Rights Agreements Amendments Knicks and Rangers amended media rights agreements with MSG Networks, reducing annual fees by 28% and 18% respectively, eliminating escalators, and extending contracts to 2028-29 - Knicks and Rangers amended media rights agreements with MSG Networks on June 27, 202514 - Annual rights fees were reduced by 28% for the Knicks and 18% for the Rangers, effective January 1, 202514 - The amendments eliminated annual rights fee escalators and changed contract expiration dates to the end of the 2028-29 seasons14 - MSG Networks issued penny warrants to the Company exercisable for 19.9% of its equity interests14 About Madison Square Garden Sports Corp. MSG Sports is a professional sports company owning the New York Knicks (NBA) and New York Rangers (NHL), along with their development league teams and the MSG Training Center - MSG Sports owns the New York Knicks (NBA) and New York Rangers (NHL)15 - The company also owns development league teams: the Westchester Knicks (NBAGL) and the Hartford Wolf Pack (AHL)15 - MSG Sports operates the MSG Training Center in Greenburgh, NY15 Non-GAAP Financial Measures This section defines adjusted operating income (loss) as a non-GAAP measure, explaining its purpose and providing a reconciliation to GAAP operating income (loss) Definition and Purpose Adjusted operating income (loss) is a non-GAAP measure excluding non-cash and non-operating items, used internally and by investors to evaluate core operating performance - Adjusted operating income (loss) is a non-GAAP measure that excludes depreciation, amortization, impairments, share-based compensation, restructuring charges, gains/losses on business dispositions, purchase accounting adjustments, and remeasurement of Executive Deferred Compensation Plan liabilities16 - The exclusion of share-based compensation allows investors to better track business performance without regard to non-cash settlement obligations16 - Adjusted operating income (loss) is considered an appropriate measure for evaluating operating performance and is used internally as a key indicator17 Reconciliation to GAAP Measures This section provides a reconciliation of operating (loss) income to adjusted operating (loss) income, detailing adjustments for non-cash and non-operating items for both Q4 and full-year fiscal 2025 Adjustments to Reconcile Operating (Loss) Income to Adjusted Operating (Loss) Income (in thousands) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Twelve Months Ended June 30, 2025 (in thousands) | Twelve Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :------------------------------- | :------------------------------- | :-------------------------------- | :-------------------------------- | | Operating (loss) income | $(22,576) | $52,303 | $14,808 | $146,038 | | Depreciation and amortization | 822 | 792 | 3,218 | 3,164 | | Share-based compensation | 3,776 | 3,222 | 17,935 | 21,291 | | Remeasurement of deferred compensation plan liabilities | 1,222 | 193 | 2,195 | 1,749 | | Adjusted operating (loss) income | $(16,756) | $56,510 | $38,156 | $172,242 | - Adjustments include eliminating depreciation, amortization, impairments, share-based compensation expense, and the impact of gains and losses related to the remeasurement of liabilities under the Company's executive deferred compensation plan23 Consolidated Financial Statements This section presents the company's consolidated financial statements, including statements of operations, balance sheets, and selected cash flow information for fiscal 2025 Consolidated Statements of Operations Fiscal 2025 saw a full-year net loss of $(22,438) thousand, a significant decline from prior year net income, driven by increased expenses despite slight revenue growth Consolidated Statements of Operations (in thousands, except per share data) | Metric | Three Months Ended June 30, 2025 (in thousands) | Three Months Ended June 30, 2024 (in thousands) | Twelve Months Ended June 30, 2025 (in thousands) | Twelve Months Ended June 30, 2024 (in thousands) | | :-------------------------------------------------------------------------------- | :------------------------------- | :------------------------------- | :-------------------------------- | :-------------------------------- | | Revenues | $203,957 | $227,251 | $1,039,220 | $1,027,149 | | Direct operating expenses | 154,819 | 107,743 | 755,118 | 616,514 | | Selling, general and administrative expenses | 70,892 | 66,413 | 266,076 | 261,433 | | Depreciation and amortization | 822 | 792 | 3,218 | 3,164 | | Operating (loss) income | $(22,576) | $52,303 | $14,808 | $146,038 | | Net (loss) income | $(1,780) | $25,491 | $(22,438) | $58,771 | | Basic (loss) earnings per common share | $(0.07) | $1.06 | $(0.93) | $2.45 | | Diluted (loss) earnings per common share | $(0.07) | $1.06 | $(0.93) | $2.44 | Consolidated Balance Sheets As of June 30, 2025, total assets increased to $1,472,974 thousand, and total liabilities increased to $1,754,413 thousand, leading to a larger accumulated deficit and negative total equity Consolidated Balance Sheets (in thousands) | Asset/Liability/Equity | June 30, 2025 (in thousands) | June 30, 2024 (in thousands) | | :-------------------------------- | :------------ | :------------ | | ASSETS | | | | Cash and cash equivalents | $144,617 | $89,136 | | Total current assets | $251,095 | $216,942 | | Right-of-use lease assets | $760,456 | $694,566 | | Deferred tax assets, net | $34,821 | — | | Total assets | $1,472,974 | $1,346,292 | | LIABILITIES AND EQUITY | | | | Total current liabilities | $563,523 | $521,982 | | League-related accruals | $196,567 | $120,876 | | Operating lease liabilities, noncurrent | $841,050 | $749,952 | | Total liabilities | $1,754,413 | $1,612,602 | | Total equity | $(281,439) | $(266,310) | Selected Cash Flow Information For fiscal 2025, net cash from operating activities remained stable at $91,607 thousand, with a net increase in cash, cash equivalents, and restricted cash of $58,281 thousand Selected Cash Flow Information (in thousands) | Metric | Twelve Months Ended June 30, 2025 (in thousands) | Twelve Months Ended June 30, 2024 (in thousands) | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Net cash provided by operating activities | $91,607 | $92,131 | | Net cash used in investing activities | $(6,920) | $(8,898) | | Net cash used in financing activities | $(26,406) | $(28,785) | | Net increase in cash, cash equivalents and restricted cash | $58,281 | $54,448 | | Cash, cash equivalents and restricted cash at end of period | $153,188 | $94,907 | General Information This section provides important general information, including forward-looking statements and contact details for investor relations and conference call information Forward-Looking Statements This section highlights that the press release contains forward-looking statements, subject to risks and uncertainties, and actual results may differ materially from projections - This press release may contain forward-looking statements that are not guarantees of future performance or results and involve risks and uncertainties18 - Actual results, developments, and events may differ materially due to various factors, including financial community perceptions and factors described in SEC filings18 - The Company disclaims any obligation to update any forward-looking statements18 Contacts and Conference Call Details This section provides contact information for Investor Relations and Financial Communications, along with details for the conference call webcast and replay - Investor Relations and Financial Communications contacts are Ari Danes, Grace Kaminer, and Justin Blaber19 - A conference call webcast was held live on August 12, 2025, at 10:00 a.m. ET at investor.msgsports.com19 - A conference call replay is available until August 19, 2025, using Conference ID Number 699689519