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Madison Square Garden Entertainment Corp. (MSGE)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue was $407.4M (+1% YoY) with Adjusted Operating Income (AOI) $164.0M (+2% YoY); diluted EPS was $1.56 vs $2.59 YoY, reflecting seasonality and a tougher comparison on taxes and concert mix .
  • The Christmas Spectacular delivered a record season: ~1.1M tickets across 200 shows and >$170M in revenue, with record per-cap spending and the strongest sell-through rate in 25 years; AOI growth for FY25 remains “mid- to high single-digit” and on track .
  • Management resumed buybacks ($25M in Q2) and repaid the $55M revolver; net leverage ~3x and $85M remains under authorization, supporting capital returns and de-leveraging .
  • Concert bookings pace behind for March/June at The Garden and theaters (near-term headwind), but FY26 bookings are pacing up vs record FY25 Q1, driven by multi-night runs and residencies (medium-term tailwind) .
  • Key catalysts: record holiday performance, premium hospitality strength, growing suite economics with MSG Sports, and sponsorship momentum (e.g., Waterloo and Abu Dhabi partnerships) .

What Went Well and What Went Wrong

What Went Well

  • Record-setting Christmas Spectacular: ~1.1M tickets, 200 performances, >$170M revenue; “average per show revenue increased by a low double-digit percentage” and “record per caps,” underscoring robust demand and pricing execution .
  • MSG Sports economics strengthened: arena license fees and other leasing revenue +16% YoY to $29.8M; higher suite license fees increased revenues shared with MSG Sports .
  • Balance sheet and capital allocation: revolver fully repaid ($55M); $25M buybacks; net leverage ~3x; quarterly principal payments $4.1M continue—returning capital while deleveraging .
  • Quote: “We remain confident in the strength of our business and expect to deliver solid adjusted operating income growth this fiscal year.” — James L. Dolan .

What Went Wrong

  • EPS decline YoY: diluted EPS $1.56 vs $2.59 prior year; income tax expense was $49.5M vs $1.1M YoY, pressuring net income despite operating strength .
  • Concert mix/headwinds: event-related revenues -$22.5M due to mix shift from promoted to rentals and fewer Garden concerts; SG&A +18% YoY partly from $4.5M executive transition costs .
  • Near-term bookings softness: The Garden pacing behind for March/June; theaters behind for March (up for June); earlier cancellations (now normalized) and spring scarcity in arena-level supply remain a headwind for Q3/Q4 .

Financial Results

Consolidated Comparison

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$186.1 $138.7 $407.4
Diluted EPS ($USD)$1.41 $(0.40) $1.56
Operating Income ($USD Millions)$(8.9) $(18.5) $139.0
Adjusted Operating Income ($USD Millions)$13.1 $1.9 $164.0
Operating Income Margin (%)(4.8%) (13.3%) 34.1%
Net Income ($USD Millions)$66.9 $(19.3) $75.9
Net Income Margin (%)36.0% (13.9%) 18.6%

Notes:

  • Q2 operating and AOI included executive transition costs ($4.5M and $3.1M); excluding these, operating income would have been $143.5M (+4% YoY) and AOI $167.2M (+4% YoY) .
  • AOI definition was amended in FY24 to include the non-cash portion of arena license revenues from MSG Sports in all periods .

Revenue Category and Cost Detail

Category ($USD Millions)Q4 2024Q1 2025Q2 2025
Entertainment Offerings Revenue$142.9 $115.1 $318.3
Food, Beverage & Merchandise Revenue$34.7 $19.0 $59.3
Arena License Fees & Other Leasing Revenue$8.5 $4.7 $29.8
Direct OpEx – Entertainment/Leasing$99.7 $86.5 $164.3
Direct OpEx – F&B/Merchandise$22.7 $11.2 $32.8
SG&A$55.8 $45.7 $57.2

Key drivers:

  • Entertainment revenues were “essentially unchanged” YoY in Q2 as lower concert revenue/mix was offset by Christmas Spectacular and higher suite economics shared with MSG Sports .
  • F&B revenues +1% YoY in Q2 (more Knicks/Rangers games and two additional Christmas shows), though lower at concerts, primarily at The Garden .
  • SG&A rose due to higher compensation/benefits and rent; included $4.5M executive transition costs .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted Operating Income Growth (%)FY 2025Mid- to high single-digit AOI growth Mid- to high single-digit AOI growth; “on track” Maintained
Arena License Fees – Cash Component ($)FY 2025~$44.0; grows 3% annually through FY2055 ~$44.0 (timing variance; Q2 had 3 more home games) Maintained
Share Repurchase Authorization Remaining ($)FY 2025~$110.0 at FY24 year-end ~$85.0 after $25.0 repurchase in Q2 Lower (utilized)
Revolver Balance ($)Q2 2025$55.0 drawn in Q1 Fully repaid in Q2 Lowered
Quarterly Principal Payments ($)FY 2025~$4.1 per quarter ~$4.1 per quarter Maintained
Net Debt Leverage (x)Q2 2025—~3x; expected to naturally delever as AOI grows New disclosure

Earnings Call Themes & Trends

TopicQ4 2024 (Q-2)Q1 2025 (Q-1)Q2 2025 (Current)Trend
Concert bookings pacingRecord concert count at Garden; strong sell-outs and higher per caps Slowing pace; spring arena-level scarcity; cancellations spike (tour-level) Garden pacing behind for March/June; theaters behind March, up June; FY26 pacing up vs record FY25 Q1 Near-term softer; medium-term improving
Christmas Spectacular demand/pricing197 shows announced; advanced ticket revenue +18% YoY Advanced ticket sales +15% YoY; added shows to 199 200 shows, ~1.1M tickets, >$170M revenue; dynamic pricing raised yields Strong, expanding
Consumer demand & per capsHigher concert per caps in Q4 vs prior year Per caps down modest YoY due to mix; up vs FY24 average; ~90% sell-through Record per caps at Christmas; majority of concerts sold out; concert per caps up YoY Resilient-to-strong
Sponsorships & premium hospitalityExpanding event-level club; suite renovations; sponsorship pipeline Bringing sponsorships back in-house; new Lenovo/Motorola; Abu Dhabi; premiums strong Waterloo partnership; strong suite sales/renewals; Abu Dhabi activation continues Strengthening
MSG Sports economicsPlayoff tailwinds in Q4; shared F&B/merch increases Arena license cash ~$44M; 3% annual growth 3 more home games drove higher arena license/leasing; higher suite license fee revenues Positive momentum
Regulatory/legal (NY property tax)——Property tax exemption context; repeal requires state legislature action Watch risk
Penn Station redevelopment——Engagement with stakeholders; improved ingress/egress, area enhancements Ongoing improvements

Management Commentary

  • “We remain confident in the strength of our business and expect to deliver solid adjusted operating income growth this fiscal year.” — Executive Chairman & CEO James L. Dolan .
  • “We remain on track to deliver mid- to high single-digit AOI growth this year… we hosted nearly 2.7M guests at more than 440 events… average per show revenue increased… over $170M total revenue for the Christmas Spectacular.” — Interim CFO Lee Weinberg .
  • “Net debt leverage is now approximately 3x… quarterly principal payments are currently $4.1M per quarter… we repurchased $25M… $85M remaining under authorization.” — Ari Danes, SVP IR & Treasury .
  • AOI definition includes the non-cash portion of arena license revenues from MSG Sports (amended in FY24), improving comparability across periods .

Q&A Highlights

  • Bookings outlook: Garden pacing behind near-term; theaters mixed; FY26 bookings pacing up vs record FY25 Q1, driven by multi-night runs and residencies .
  • Dynamic pricing: Earlier, seat-by-seat, week-by-week tactics boosted yields for Christmas Spectacular; pricing still below Broadway, offering continued upside .
  • Cancellations: Returned to normal levels after Q1 spike; primary causes were artist health and tour-level demand issues .
  • Property tax exemption: MSG’s tax abatement well below peers; repeal would require both NY state legislative houses; MSG is a job creator .
  • Capital returns: $25M buyback in Q2; $85M remaining; flexibility to return capital given strong FCF and moderate leverage .

Estimates Context

  • Wall Street consensus estimates via S&P Global were unavailable at the time of this analysis due to data access limits, so a vs. estimates comparison is not provided. When available, we default to S&P Global for consensus metrics.

Key Takeaways for Investors

  • Seasonal strength: Q2 showed robust operational execution with AOI +2% YoY and record holiday performance; underlying operating metrics remain healthy despite concert mix shifts .
  • EPS dynamics: Diluted EPS fell YoY due to a materially higher tax expense versus prior year; investors should focus on AOI and operating income trends for core performance .
  • Bookings trajectory: Near-term bookings challenges at The Garden (March/June) temper Q3/Q4 visibility, but FY26 early pacing is encouraging—watch for multi-night runs/residency announcements .
  • Premium & sponsorship tailwinds: Suites, hospitality renovations, and sponsorship wins (e.g., Waterloo, Abu Dhabi) support revenue quality and mix resilience .
  • MSG Sports economics: Higher suite license revenues and more home games boosted shared economics; cash arena license fees locked at ~$44M with 3% annual growth through FY2055 .
  • Capital allocation: Active buybacks and revolver repayment demonstrate confidence; ~3x net leverage and $85M repurchase capacity provide optionality for further returns .
  • Risk check: Monitor New York property tax exemption debate and potential spring concert supply constraints; expect management to offset via pricing, special events, and diversified bookings .

KPIs (Operational)

KPIQ1 2025Q2 2025
Guests (Millions)~0.8 ~2.7
Events (#)>120 >440
Christmas Spectacular Tickets (Millions)—~1.1
Christmas Spectacular Performances (#)199 on sale 200 delivered
Christmas Spectacular Revenue ($USD Millions)—>$170.0

Additional Detail: Category Drivers (Q2 2025)

  • Entertainment offerings: -$22.5M event-related revenues from concerts due to mix shift and fewer Garden concerts; +$15.1M Christmas Spectacular; +$7.7M suite-license-related revenues shared with MSG Sports .
  • Arena license & other leasing: $29.8M (+16% YoY) driven by three more Knicks/Rangers home games and higher other leasing revenues .
  • F&B/Merchandise: $59.3M (+1% YoY) supported by more Knicks/Rangers home games and two additional Christmas shows; concerts F&B lower, primarily at The Garden .
  • SG&A: $57.2M (+18% YoY), including $4.5M executive transition costs and higher rent .
  • Liquidity/Leverage: $55M unrestricted cash; debt ~$618M; revolver fully repaid; buyback of ~682K shares at ~$36.68/share; $85M authorization remaining .

Non-GAAP Adjustments

  • AOI excludes D&A, share-based comp, restructuring, merger/spin-off/acquisition costs, cloud amortization, and deferred comp remeasurement; AOI now includes the non-cash portion of arena license revenue from MSG Sports in all periods .
  • Q2 AOI and operating income included $3.1M and $4.5M executive transition costs, respectively; excluding these increased AOI/operating income to $167.2M/$143.5M (+4% YoY each) .