Jack DiDonato

Jack DiDonato, on behalf of Peter Supino from Wolfe Research, asked for an explanation of the elevated year-over-year SG&A expenses in the quarter and the outlook for the balance of fiscal 2026. He also requested an unpacking of the lower food and beverage (F&B) per caps, attributing it to event mix.

Answer

David Collins, EVP and Chief Financial Officer, explained that SG&A included $4 million in executive management transition costs and a $2 million prior-year expense true-up. Even excluding these, growth was elevated due to higher employee compensation. He noted an expected $8 million severance expense in Q3 from a voluntary exit program, with SG&A normalizing by Q4. Regarding F&B per caps, Collins clarified that fluctuations are due to artist/genre mix (e.g., rock acts higher F&B, pop acts higher merchandise). He stated that while F&B per caps were down at The Garden due to a broader genre mix, combined F&B and merchandise per caps were up overall.

Jack DiDonato, on behalf of Peter Supino, first asked for an explanation of the elevated year-over-year SG&A expenses and the outlook for SG&A for the remainder of the fiscal year. Secondly, he requested a breakdown of the lower food and beverage (F&B) per caps, which were attributed to event mix this quarter.

Answer

David Collins, EVP and Chief Financial Officer, explained that elevated SG&A included $4 million in executive management transition costs and a $2 million prior-year true-up, in addition to higher employee compensation. He expects higher labor costs in the March quarter, an $8 million severance expense from a voluntary exit program primarily in March, and SG&A normalization by the June quarter. Regarding F&B per caps, Collins clarified that per caps fluctuate based on artist genre mix (e.g., rock acts drive higher F&B, pop acts higher merchandise). In Q2, a broader genre mix at The Garden led to lower F&B but higher merchandise per caps, with combined F&B and merchandise per caps up overall.