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Madison Square Garden Sports Corp. (MSGS)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 FY2025 revenue was $424.2M, down 1% YoY, with operating income $32.3M (-59% YoY) and adjusted operating income (AOI) $36.9M (-58% YoY), reflecting robust per‑game demand offset by higher league revenue sharing, luxury tax, and reduced local media rights fees .
  • Revenue modestly missed Wall Street consensus ($427.4M*), while EPS delivered a significant miss: diluted EPS was -$0.59 versus +$1.48 consensus*; higher operating costs and a net tax expense drove the swing to a net loss .
  • Management highlighted continued strength in sponsorships, suites, ticket yield and per‑game revenues; however, RSN headwinds intensified after proposed amendments to local media rights (Knicks -28%, Rangers -18%) to support MSG Networks’ debt restructuring .
  • Near‑term catalysts include Knicks playoff participation and strong renewal demand launched for 2025‑26, while medium‑term drivers will include national media rights step‑ups and ongoing RSN restructuring outcomes .

Values retrieved from S&P Global*

What Went Well and What Went Wrong

What Went Well

  • Per‑game revenues across tickets, sponsorships and premium hospitality remained strong, with average per‑game results exceeding the prior year; “continued robust demand” supported growth despite two fewer home games at The Garden .
  • Sponsorship and signage +$8.9M YoY and suite revenues +$3.4M YoY in Q3, driven by higher net sales and premium hospitality initiatives; new partnerships (e.g., Experience Abu Dhabi patch, Lenovo/Motorola) and renewals (Verizon, Benjamin Moore) support momentum .
  • Management quote: “Our third quarter results reflect growth in per‑game revenues driven by continued robust demand for the Knicks and Rangers… we remain as confident as ever in the value of owning marquee professional sports franchises.” — James L. Dolan, CEO .

What Went Wrong

  • Local media rights fees decreased $18.6M YoY due to proposed amendments to MSG Networks agreements effective Jan 1, 2025, eliminating escalators and shortening expirations; RSN pressures remain a structural headwind .
  • Direct operating expenses rose +16% YoY (+$43.3M), primarily from higher net provisions for league revenue sharing and NBA luxury tax (+$33.8M), and higher team personnel compensation (+$14.7M); this compressed AOI despite stable top‑line .
  • Q3 diluted EPS of -$0.59 versus +$1.57 LY reflects higher operating costs and net tax expense; net income swung to -$14.2M from +$37.9M YoY .

Financial Results

Quarterly progression vs estimates

MetricQ1 2025 (Sep)Q2 2025 (Dec)Q3 2025 (Mar) ActualQ3 2025 Consensus*
Revenue ($USD Millions)$53.3 $357.8 $424.2 $427.4*
Operating Income ($USD Millions)-$8.3 $13.3 $32.3 N/A
Adjusted Operating Income ($USD Millions)-$2.3 $20.2 $36.9 N/A
Net Income ($USD Millions)-$7.5 $1.1 -$14.2 N/A
Diluted EPS ($)-$0.31 $0.05 -$0.59 $1.48*
Operating Margin (%)-15.5% (calc from -8.3/53.3) 3.7% (13.3/357.8) 7.6% (32.3/424.2) N/A
Net Income Margin (%)-14.1% (-7.5/53.3) 0.3% (1.1/357.8) -3.4% (-14.2/424.2) N/A

Values retrieved from S&P Global*

YoY comparison

MetricQ3 2024 (Mar)Q3 2025 (Mar)
Revenue ($USD Millions)$430.0 $424.2
Operating Income ($USD Millions)$79.7 $32.3
Adjusted Operating Income ($USD Millions)$88.7 $36.9
Net Income ($USD Millions)$37.9 -$14.2
Diluted EPS ($)$1.57 -$0.59
Operating Margin (%)18.5% (79.7/430.0) 7.6% (32.3/424.2)
Net Income Margin (%)8.8% (37.9/430.0) -3.4% (-14.2/424.2)

Category drivers (YoY deltas)

CategoryQ2 2025 YoY Δ ($USD Millions)Q3 2025 YoY Δ ($USD Millions)
Ticket-related+$14.3 +$0.5
Suites+$7.0 +$3.4
Sponsorship & Signage+$3.1 +$8.9
League Distributions+$2.6 +$2.4
Food, Beverage & Merchandise+$2.1 -$2.5
Local Media Rights Fees+$1.7 -$18.6

Guidance Changes

MetricPeriodPrevious GuidanceCurrent Guidance/CommentaryChange
Operating expenses (team comp, luxury tax)FY2026None providedExpect higher team operating expenses; Knicks roster above luxury tax threshold Raised (qualitative)
In‑arena revenues (ticketing, sponsorship, suites)FY2026None provided“Poised to deliver revenue growth across all in‑arena categories” Raised (qualitative)
National media rightsFY2026 onwardNone providedNBA deals with Disney/NBCU/Amazon begin next season; step‑up expected Raised (structural tailwind)
Local media rights feesCalendar 2025+Prior escalators and higher feesAmended deals: Knicks -28%, Rangers -18%; escalators eliminated; expirations shortened to end of 2028‑29 seasons Lowered
Liquidity and cash impact from RSN reductionsNear‑termN/A$1 revenue reduction not $1 cash flow reduction due to lower revenue sharing and taxes; strong liquidity with cash >$100M, revolvers in place Clarified

Earnings Call Themes & Trends

TopicQ1 2025 (Nov PR)Q2 2025 (Feb call/PR)Q3 2025 (May PR)Trend
Ticket yield & attendance97% combined season ticket renewal; strong suites momentum Per‑game revenues up; ticket yield and paid attendance up YoY Ticket‑related revenue modestly up despite fewer games Up on per‑game basis
Sponsorship momentumNew Abu Dhabi patch; Lenovo/Motorola; Verizon & Benjamin Moore renewals Continued new deals and renewals; premium inventory emphasis Sponsorship & signage +$8.9M YoY Strengthening
RSN/local media rightsN/AMSG Networks refinancing; Optimum drop; renegotiation approached Proposed amendments reduce fees (-28%/-18%), eliminators removed Deteriorating economics
Team investment & luxury taxN/AKnicks expected significant luxury taxpayer based on roster Higher NBA luxury tax and league revenue sharing drove costs Higher cost burden
National media rights outlookN/ANBA new deals begin next season Reminder of structural media tailwind ahead Positive medium‑term
Merchandise/F&BStrong initiatives and collabs (Kith, NYON) Per‑cap spending up YoY F&B/merch -$2.5M YoY; last year benefited from Rangers jersey launches Mixed; lapped tough comp

Management Commentary

  • “Our third quarter results reflect growth in per‑game revenues… we remain as confident as ever in the value of owning marquee professional sports franchises.” — James L. Dolan .
  • “We believe our business is poised to deliver revenue growth across all in‑arena categories in fiscal 2026” — Victoria Mink (CFO) .
  • “Those amendments included 28% and 18% reductions in annual rights fees payable to the Knicks and Rangers… elimination of annual rights fee escalators” — Jamaal Lesane/Company disclosure .
  • Liquidity context: “A $1 reduction in revenue doesn’t translate into a $1 reduction in cash flow… strong liquidity… over $100M cash; revolvers in place” — Victoria Mink .

Q&A Highlights

  • Local media rights/RSN risk and distribution alternatives: Management is assessing best path forward, prioritizing shareholder value and local fan connection; no specifics on alternative distribution yet .
  • Liquidity planning amid potential RSN disruptions: Not one‑for‑one cash impact; strong cash and revolver capacity; potential need for waivers if MSG Networks bankruptcy .
  • Sponsorship trajectory: Premium inventory (jersey patch), multiyear partner renewals and new deals expected to support growth .
  • Ticket pricing philosophy: Annual and long‑term view; opportunistic pricing on packages and individual/group tickets to maximize long‑term value .

Estimates Context

  • Revenue: Actual $424.2M slightly below consensus $427.4M* (miss of ~$3.2M); per‑game strength was offset by RSN fee reductions and fewer home games .
  • EPS: Actual -$0.59 vs consensus +$1.48* — a significant miss driven by higher league revenue sharing, luxury tax, team personnel costs, and net tax expense .
  • Coverage breadth: 5 revenue estimates; 4 EPS estimates for Q3 FY2025*.

Values retrieved from S&P Global*

Key Takeaways for Investors

  • Despite resilient per‑game demand, cost inflation tied to league revenue sharing, NBA luxury tax, and team personnel expenses materially compressed profitability; watch AOI trajectory into FYQ4/FY26 .
  • RSN restructuring is a clear overhang: reduced local media rights revenue (-$18.6M YoY in Q3) and contract changes will weigh on near‑term earnings; monitor definitive documentation by June 27, 2025 .
  • Sponsorship and premium hospitality are outperforming and should continue to offset some RSN pressure; suite and signage strength is a key pillar of in‑arena growth .
  • Liquidity and cash flow buffers mitigate RSN downside risk (lower revenue sharing and taxes on reduced media rights); balance sheet shows adequate flexibility .
  • Medium‑term tailwinds from NBA national media rights step‑ups begin next season; combined with strong ticket renewals and pricing, top‑line should benefit in FY2026 .
  • Narrative driver: The magnitude of the EPS miss versus consensus is likely to focus investor attention on cost discipline and RSN resolution; any clarity or upside on media distribution could be a stock catalyst .
  • Focus for the next quarter: Knicks playoff revenue cadence, sponsorship sell‑through, and any update on MSG Networks definitive agreements and fee timing .