Sign in
MS

Madison Square Garden Sports Corp. (MSGS)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 FY25 revenue rose 9% YoY to $357.8M on stronger per‑game demand across tickets, suites, sponsorship, and in‑arena spend, but operating income fell 54% to $13.3M and AOI declined 45% to $20.2M on higher team personnel costs and luxury tax; diluted EPS was $0.05 .
  • Management highlighted robust season ticket renewals (~97%) and continued pricing power; however, media rights risk increased as MSG Networks seeks to renegotiate fees and Altice USA dropped MSGN on Jan 1, pressuring the RSN ecosystem .
  • No formal numeric guidance was provided; management noted FY25 sponsorship is “on track for solid growth,” ticket revenue is “on track to drive modest overall growth,” and Q3/Q4 will have three fewer home games vs last year, which could affect YoY comparisons .
  • Liquidity remains solid (cash ≈$108M; total debt $305M) with $250M borrowing capacity on the Rangers revolver; if MSGN were to file bankruptcy, waivers would be required to draw under team revolvers, but other funding sources are available, per management .

What Went Well and What Went Wrong

  • What Went Well

    • Per‑game revenue growth across every key category (tickets, suites, sponsorship, food/beverage/merch) versus Q2 FY24, reinforcing pricing power and demand durability .
    • Sponsorship momentum: new jersey patch with Experience Abu Dhabi and multi‑year deals with Lenovo/Motorola; renewals with Verizon and Benjamin Moore; C4 Energy named Official Energy Drink of the Knicks on Feb 4 .
    • Strong fan engagement: ~97% combined season ticket renewal rate; elevated in‑arena per‑cap spending; marquee collabs (Kith, New York or Nowhere) drove some of the highest single‑game merchandise sales in team history .

  • What Went Wrong

    • Profitability compression: OI down 54% YoY to $13.3M and AOI down 45% YoY to $20.2M as team personnel compensation, NBA luxury tax, and certain personnel transactions drove higher direct operating expenses .
    • RSN/Local media rights headwinds: MSG Networks is pursuing a workout and approached MSGS to renegotiate rights (potential reduction); Altice USA dropped MSG Networks, increasing distribution risk .
    • Mix/seasonality considerations: management flagged that Q3 and Q4 will have three fewer regular‑season home games combined vs prior year, creating potential revenue headwinds for YoY comps in 2H FY25 .

Financial Results

MetricQ4 FY2024Q1 FY2025Q2 FY2025
Revenues ($USD Millions)$227.3 $53.3 $357.8
Operating Income ($USD Millions)$52.3 $(8.3) $13.3
Adjusted Operating Income (AOI) ($USD Millions)$56.5 $(2.3) $20.2
Net Income ($USD Millions)$25.5 $(7.5) $1.1
Diluted EPS ($)$1.06 $(0.31) $0.05
Operating Margin (%)23.0% (52.3/227.3) (15.6%) (−8.3/53.3) 3.7% (13.3/357.8)
AOI Margin (%)24.9% (56.5/227.3) (4.3%) (−2.3/53.3) 5.6% (20.2/357.8)
  • YoY for Q2 FY25: Revenues +9% to $357.8M; OI −54% to $13.3M; AOI −45% to $20.2M; diluted EPS $0.05 vs $0.59 in Q2 FY24 .

Segment/Category Snapshot (Q2 FY25)

CategoryQ2 FY2025 Amount ($USD Millions)YoY Change
Event‑related (tickets, food/beverage/merch)$139.4+14% YoY
Suites and Sponsorship$79.4+15% YoY
National & Local Media Rights Fees$126.9+4% YoY

Key KPIs and Operating Indicators (Q2 FY25)

KPIQ2 FY2025
Combined season ticket renewal rate (Knicks + Rangers, 2024‑25)~97%
Per‑game ticket yieldUp YoY
Average paid attendance (per game)Up YoY
In‑arena F&B and merchandise per capsUp YoY
Cash and cash equivalents~$107.8M at quarter‑end
Total debt$305M (Knicks revolver $275M; NHL advance $30M)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Regular‑season home gamesQ3–Q4 FY25 vs FY24Not previously quantifiedQ3 and Q4 will reflect three fewer home games in total vs prior yearNew disclosure; potential 2H FY YoY headwind
SponsorshipFY25N/A“On track for solid growth”Positive qualitative outlook
Ticket revenueFY25N/A“On track to drive modest overall ticket revenue growth”Positive qualitative outlook
Local media rights feesFY25 onwardN/AMSG Networks approached to renegotiate (potential reduction); RSN distribution pressure persistsNegative risk flagged; no numeric range
Tax/Cash flow dynamicsIf local rights reducedN/A$1 revenue reduction ≠ $1 cash flow reduction due to lower revenue sharing expense and income taxesClarification on offsets

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 FY24, Q1 FY25)Current Period (Q2 FY25)Trend
RSN/media rightsQ4 FY24: record year; not RSN‑focused . Q1 FY25: operational highlights; patch, sponsorships; no RSN update .MSG Networks pursuing workout; approached MSGS to renegotiate local rights; Altice dropped MSGN Jan 1; assessing best path forwardDeteriorating RSN backdrop; visibility risk
Sponsorship momentumQ1 FY25: Experience Abu Dhabi patch; Lenovo/Motorola; renewals with Verizon/Benjamin Moore ; Rangers–Benjamin Moore renewal (Oct) .Added C4 Energy as Official Energy Drink of Knicks (Feb 4); continued strong sponsor renewals/new dealsPositive, expanding partner roster
Ticketing demand/pricingQ1 FY25: 97% renewals; suites expansion .Per‑game ticket yield and paid attendance up YoY; flexible plans; modest ticket revenue growth expectedStrong demand and pricing power
Luxury tax and costsQ4 FY24: playoff‑driven costs .Higher team comp and NBA luxury tax drove expense growth; Knicks expected to be significant luxury taxpayer in ’24‑’25Cost pressure weighing on AOI
Premium hospitalityQ4 FY24: new premium offerings added .Strong suite renewals/new sales; event‑level club expanded; renovated suites driving incremental revenueContinued tailwind
Liquidity/capital access—~$108M cash; $250M capacity on Rangers revolver; waivers required to draw if MSGN bankruptcy; other funding sources availableAdequate liquidity with contingency planning
NBA expansion/minority stake—Expansion fees would be shared equally; would drop to bottom line in year recognized; management open but no concrete minority stake plansOptionality; one‑time upside possible if expansion occurs

Management Commentary

  • “In the fiscal second quarter, fan enthusiasm and robust corporate demand helped drive growth in per‑game revenues across all key areas of our business. We remain confident in the fundamentals of our business and our ability to drive long‑term shareholder value.” — James L. Dolan, Executive Chairman & CEO .
  • “Per‑game revenues across every key category were up… we remain confident in the outlook for our business.” — Jamaal Lesane, COO .
  • “Adjusted operating income decreased… primarily due to an increase in direct operating expenses… these direct operating expenses reflect the company’s expectation that the Knicks will be a significant luxury taxpayer for the ’24‑’25 season.” — Victoria Mink, CFO .
  • “If there were a reduction in our local media rights fees… a $1 reduction in revenue doesn’t translate into a $1 reduction in cash flow… revenue sharing expense would decrease, as would our income taxes.” — Victoria Mink, CFO .

Q&A Highlights

  • RSN/local rights risk: Management confirmed MSG Networks approached to renegotiate local rights fees; company prioritizes maximizing shareholder value and maintaining local fan connection; no speculation on distribution alternatives provided .
  • Liquidity under RSN stress: Over $100M cash; $250M capacity on Rangers revolver; waivers would be needed to borrow if MSGN enters bankruptcy; confident in alternative funding if required .
  • NBA expansion/minority stake: Expansion fees are shared equally among NBA teams and would largely fall to the bottom line when recognized; management sees team values as under‑reflected in stock and does not rule out minority stake sales, but nothing concrete and no tax specifics provided .
  • Sponsorship and ticket pricing: FY25 sponsorship “on track for solid growth”; jersey patch deal offers international brand leverage; modest overall ticket revenue growth expected this year; ongoing annual review of season ticket pricing .

Estimates Context

  • S&P Global consensus for Q2 FY25 and next‑quarter estimates was not retrievable at the time of analysis due to API request limits; therefore, we cannot present numerical “vs. consensus” comparisons for revenue or EPS for this quarter or for next quarter. We will update when S&P Global data is accessible [GetEstimates errors].
  • Given RSN risk and cost inflation (team comp, luxury tax), Street models may revisit AOI/EBITDA and cash flow sensitivity; likewise, sponsorship/ticket resilience and premium hospitality strength could temper negative revisions. Management provided no formal guidance ranges to anchor estimates .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Home games (YoY)Q3–Q4 FY25—Three fewer total regular‑season home games vs prior yearNew disclosure
SponsorshipFY25—On track for solid growthPositive
Ticket revenueFY25—On track for modest growthPositive
Local media rightsFY25+—MSGN seeking fee reductions; RSN distribution pressureNegative risk

Key Takeaways for Investors

  • Demand remains robust across core revenue drivers (tickets, suites, sponsorship, in‑arena spend), supporting top‑line growth even as per‑game performance improved in every key category .
  • Profitability pressure from personnel costs/luxury tax is the key swing factor; AOI compression in Q2 reflects a higher‑cost roster environment (notably for the Knicks) .
  • RSN/local media rights negotiations and distribution changes (Altice/Optimum) elevate near‑term visibility risk; however, cash flow offsets (revenue sharing, taxes) reduce 1‑for‑1 flow‑through downside, and liquidity appears adequate .
  • Sponsorship growth is a notable bright spot (jersey patch, C4 Energy, Lenovo/Motorola, Verizon, Benjamin Moore), indicating continued corporate demand and brand monetization opportunities .
  • Seasonal/structural headwinds: three fewer home games in 2H FY25 versus last year will weigh on YoY optics; investors should normalize for game count and mix when assessing trends .
  • Optionality exists around potential NBA expansion fees (one‑time upside) and possible minority stake sale to crystallize asset value, though management provided no concrete timelines .
  • Near‑term trading: stock may be sensitive to headlines around MSGN/RSN outcomes and luxury tax/cost commentary; medium‑term thesis hinges on durable demand for premium live sports assets, continued sponsorship growth, and monetization optionality .

Additional Relevant Press Releases (Q2 FY25 timeframe)

  • C4 Energy named Official Energy Drink of the Knicks (Feb 4, 2025) — incremental brand partnership exposure across in‑arena and MSG Networks broadcasts .
  • Q2 FY25 results press release with detailed financials (Feb 4, 2025) — see Financial Results above .
  • Q2 FY25 call announcement (Jan 28, 2025) .

Notes:

  • All financial figures are GAAP unless noted; AOI is a non‑GAAP measure as defined in company materials, with reconciliations provided in the release .
  • Where “vs. estimates” would normally appear, S&P Global consensus data was unavailable at the time of analysis; we will refresh when accessible.