NEW YORK, May 2, 2025 /PRNewswire/ -- Madison Square Garden Sports Corp. (NYSE: MSGS) today reported financial results for the fiscal third quarter ended March 31, 2025.(PRNewsfoto/MSG SPORTS, LLC)

Fiscal 2025 third quarter operating results reflected growth in average per-game revenues, including for tickets, sponsorship and premium hospitality offerings, across a combined two fewer New York Knicks ("Knicks") and New York Rangers ("Rangers") games played at the Madison Square Garden Arena ("The Garden") as compared to the prior year quarter. In addition, fiscal 2025 third quarter operating results reflected the impact of expected reductions in local media rights fees as a result of proposed amendments to the Knicks' and Rangers' local media rights agreements with MSG Networks Inc. ("MSG Networks") (as announced on April 25, 2025 and discussed in further detail in the Other Matters section of this earnings release), as well as the impact of the Knicks' and Rangers' rosters for the 2024-25 seasons.

In March, the Company launched its 2025-26 Knicks and Rangers season ticket renewal initiative, which has seen strong demand to date. Subsequent to the end of the fiscal 2025 third quarter, both teams concluded their regular seasons, with the Knicks currently competing in the NBA playoffs.

For the fiscal 2025 third quarter, the Company generated revenues of $424.2 million, a decrease of $5.8 million, or 1%, as compared to the prior year period. In addition, the Company reported operating income of $32.3 million, a decrease of $47.4 million, or 59%, and adjusted operating income of $36.9 million, a decrease of $51.8 million, or 58%, both as compared to the prior year period.(1)

Madison Square Garden Sports Corp. Executive Chairman and CEO James L. Dolan said, "Our third quarter results reflect growth in per-game revenues driven by continued robust demand for the Knicks and Rangers. And while the Company is now seeing the impact of the evolving landscape for local media rights, we remain as confident as ever in the value of owning marquee professional sports franchises."

Financial Results for the Three and Nine Months Ended March 31, 2025 and 2024:

Three Months Ended      Nine Months Ended  March 31,  Change  March 31,  Change $ millions  2025  2024  $  %  2025  2024  $  % Revenues  $     424.2  $     430.0  $     (5.8)  (1) %  $     835.3  $     799.9  $     35.4  4 % Operating income  $       32.3  $       79.7  $   (47.4)  (59) %  $       37.4  $       93.7  $    (56.4)  (60) % Adjusted operating income(1)  $       36.9  $       88.7  $   (51.8)  (58) %  $       54.9  $     115.7  $    (60.8)  (53) %

Note: Does not foot due to rounding 1. See page 4 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 third quarter, revenues of $424.2 million decreased $5.8 million, or 1%, as compared to the prior year period. The decrease was primarily due to lower local media rights fees and, to a lesser extent, lower food, beverage and merchandise sales, partially offset by higher sponsorship and signage revenues, suite revenues, revenues from league distributions and ticket-related revenue. The Knicks and Rangers played a combined two fewer regular season games at The Garden during the fiscal 2025 third quarter as compared to the prior year period.

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Local media rights fees decreased $18.6 million as compared to the prior year period, primarily due to a reduction in expected local media rights fees for the 2024-25 season as a result of proposed amendments to the Knicks' and Rangers' local media rights agreements with MSG Networks, which were announced on April 25, 2025 and are discussed in further detail in the Other Matters section of this earnings release.

Food, beverage and merchandise sales decreased $2.5 million as compared to the prior year period, primarily due to lower average per-game revenue, lower online sales of merchandise and the Knicks and Rangers playing fewer games at The Garden during the fiscal 2025 third quarter. Merchandise sales in the fiscal 2024 third quarter included the positive impact of new Rangers' jersey launches.

Sponsorship and signage revenues increased $8.9 million as compared to the prior year period, primarily due to higher net sales of existing sponsorship and signage inventory, partially offset by the Knicks and Rangers playing fewer games at The Garden during the fiscal 2025 third quarter.

Suite revenues increased $3.4 million as compared to the prior year period, primarily due to higher net sales of suite products, partially offset by the Knicks and Rangers playing fewer games at The Garden during the fiscal 2025 third quarter.

Revenues from league distributions increased $2.4 million as compared to the prior year period, primarily due to higher national media rights fees.

Ticket-related revenues increased $0.5 million as compared to the prior year period, primarily due to higher average Knicks and Rangers per-game revenue, partially offset by the Knicks and Rangers playing fewer games at The Garden during the fiscal 2025 third quarter.

Direct operating expenses of $316.3 million increased $43.3 million, or 16%, as compared to the prior year period. This increase was primarily driven by higher net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax of $33.8 million and higher team personnel compensation of $14.7 million, both as compared to the prior year period. These increases were partially offset by lower net (credits) provisions for certain team personnel transactions of $2.8 million, lower operating lease costs under the arena license agreements with Madison Square Garden Entertainment Corp. ("MSG Entertainment") of $2.0 million, as well as other cost decreases.

Selling, general and administrative expenses of $74.7 million decreased $1.7 million, or 2%, as compared to the prior year period. This decrease was primarily driven by (i) lower employee compensation and related benefits of $12.4 million, mainly due to executive management transition costs recognized in the prior year period, partially offset by (ii) higher professional fees of $7.6 million, (iii) higher costs related to the Company's services agreement with MSG Entertainment of $1.8 million, and (iv) higher operating lease costs of $1.4 million.

Operating income of $32.3 million decreased $47.4 million, or 59%, and adjusted operating income of $36.9 million decreased $51.8 million, or 58%, both as compared to the prior year period, primarily due to the increase in direct operating expenses and, to a lesser extent, the decrease in revenues.

Other Matters On April 24, 2025, New York Knicks, LLC and New York Rangers, LLC entered into a Transaction Support Agreement (the "Transaction Support Agreement") with Sphere Entertainment Co., MSG Networks and certain subsidiaries of MSG Networks, pursuant to which the teams agreed to support certain proposed transactions to reduce and restructure MSG Networks' debt (collectively, the "Proposed Transactions"). As part of this debt restructuring, the teams agreed to certain amendments to the Knicks' and Rangers' local media rights agreements, effective as of January 1, 2025, as follows: (i) 28% and 18% reductions in annual rights fees for the Knicks and Rangers, respectively; (ii) an elimination of annual rights fee escalators; and (iii) a change to the contract expiration dates to the end of the 2028-29 seasons, subject to a right of first refusal in favor of MSG Networks. The Transaction Support Agreement also contemplates the issuance by MSG Networks of penny warrants to the Company exercisable for 19.9% of the equity interests in MSG Networks. The Proposed Transactions, including the proposed amendments to the local media rights agreements, are subject to the execution of definitive documentation, which is expected to be completed on or before June 27, 2025.

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

(212) 465-6072 Justin Blaber

Financial Communications

(212) 465-6109  Grace Kaminer

Investor Relations

(212) 631-5076

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, 2025  2024  2025  2024 Revenues  $     424,197  $     429,954  $     835,263  $     799,898 Direct operating expenses  316,335  273,026  600,299  508,771 Selling, general and administrative expenses  74,697  76,398  195,184  195,020 Depreciation and amortization  823  788  2,396  2,372 Operating income  32,342  79,742  37,384  93,735 Other income (expense):  Interest income  1,051  477  2,605  1,549 Interest expense  (5,020)  (6,921)  (16,662)  (21,269) Miscellaneous expense, net  (5,743)  (1,403)  (13,478)  (11,077) Income before income taxes  22,630  71,895  9,849  62,938 Income tax expense  (36,857)  (34,018)  (30,507)  (29,658) Net (loss) income  $     (14,227)  $       37,877  $     (20,658)  $       33,280  Basic (loss) earnings per common share attributable to Madison Square Garden Sports Corp.'s stockholders  $         (0.59)  $           1.58  $         (0.86)  $           1.39 Diluted (loss) earnings per common share attributable to Madison Square Garden Sports Corp.'s stockholders  $         (0.59)  $           1.57  $         (0.86)  $           1.38  Basic weighted-average number of common shares outstanding  24,103  24,028  24,084  24,005 Diluted weighted-average number of common shares outstanding  24,103  24,100  24,084  24,076

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  Nine Months Ended March 31,  March 31, 2025  2024  2025  2024 Operating income  $           32,342  $           79,742  $           37,384  $           93,735 Depreciation and amortization  823  788  2,396  2,372 Share-based compensation  3,900  7,350  14,159  18,069 Remeasurement of deferred compensation plan liabilities  (134)  821  973  1,556 Adjusted operating income  $           36,931  $           88,701  $           54,912  $         115,732

MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

(Unaudited)  March 31,
2025  June 30,
2024 ASSETS  Current Assets:  Cash and cash equivalents  $             96,536  $             89,136 Restricted cash  8,500  5,771 Accounts receivable, net of allowance for doubtful accounts of $0 as of March 31, 2025 
 and June 30, 2024  110,044  33,781 Net related party receivables  29,149  32,255 Prepaid expenses  35,297  30,956 Other current assets  39,761  25,043 Total current assets  319,287  216,942 Property and equipment, net of accumulated depreciation and amortization of $52,813 
 and $52,281 as of March 31, 2025 and June 30, 2024, respectively  29,407  28,541 Right-of-use lease assets  763,469  694,566 Indefinite-lived intangible assets  103,644  103,644 Goodwill  226,523  226,523 Investments  53,425  62,543 Other assets  8,743  13,533 Total assets  $        1,504,498  $        1,346,292

MADISON SQUARE GARDEN SPORTS CORP. CONSOLIDATED BALANCE SHEETS (continued)

(In thousands, except per share data)

(Unaudited)  March 31,
2025  June 30,
2024 LIABILITIES AND EQUITY  Current Liabilities:  Accounts payable  $                6,948  $                9,900 Net related party payables  6,530  6,718 Debt  24,000  30,000 Accrued liabilities:  Employee related costs  138,962  133,930 League-related accruals  170,159  120,876 Other accrued liabilities  53,652  21,613 Operating lease liabilities, current  51,015  50,267 Deferred revenue  165,923  148,678 Total current liabilities  617,189  521,982 Long-term debt  267,000  275,000 Operating lease liabilities, noncurrent  848,534  749,952 Defined benefit obligations  944  4,103 Other employee related costs  47,257  43,493 Deferred tax liabilities, net  6,305  16,925 Deferred revenue, noncurrent  718  1,147 Total liabilities  1,787,947  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; 19,486 and 19,423 
 shares outstanding as of March 31, 2025 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 March 31, 2025 and June 30, 2024  45  45 Preferred stock, par value $0.01, 15,000 shares authorized; none outstanding as of 
 March 31, 2025 and June 30, 2024  —  — Additional paid-in capital  11,855  19,079 Treasury stock, at cost, 961 and 1,025 shares as of March 31, 2025 and June 30, 2024, 
 respectively  (158,826)  (169,547) Accumulated deficit  (135,816)  (115,139) Accumulated other comprehensive loss  (911)  (952) Total equity  (283,449)  (266,310) Total liabilities and equity  $        1,504,498  $        1,346,292

MADISON SQUARE GARDEN SPORTS CORP. SELECTED CASH FLOW INFORMATION

(In thousands)

(Unaudited)  Nine Months Ended March 31, 2025  2024 Net cash provided by (used in) operating activities  $           41,884  $          (16,220) Net cash used in investing activities  (5,349)  (5,689) Net cash (used in) provided by financing activities  (26,406)  26,234 Net increase in cash, cash equivalents and restricted cash  10,129  4,325 Cash, cash equivalents and restricted cash at beginning of period  94,907  40,459 Cash, cash equivalents and restricted cash at end of period  $         105,036  $           44,784Cision

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SOURCE Madison Square Garden Sports Corp.