Record Revenues of $887.4 Million for Fiscal
2023
Fiscal 2023 Operating Income of $85.2 Million and Adjusted Operating Income of
$115.0
Million(1)
Returned
Approximately $250 Million to
Shareholders in Fiscal 2023(2)
NEW
YORK, Aug. 17, 2023 /PRNewswire/ -- Madison
Square Garden Sports Corp. (NYSE: MSGS) (the "Company") today
reported financial results for the fiscal fourth quarter and
full-year ended June 30, 2023.
The fiscal 2023 fourth quarter was highlighted by both the New
York Knicks (the "Knicks") and New York Rangers (the "Rangers")
participating in the playoffs following the conclusion of the
2022-23 regular seasons. This included a combined eight home
playoff games at the Madison Square Garden Arena ("The Garden"),
with the Knicks advancing to the Eastern Conference Semifinals.
Throughout the fiscal fourth quarter and year, the Company
continued to benefit from robust consumer and corporate demand for
both its teams, with every key revenue category – tickets, media
rights, suites and sponsorships, as well as food, beverage and
merchandise – exceeding fiscal 2022's record full-year results.
For fiscal 2023, the Company reported revenues of $887.4 million, an increase of $66.1 million, or 8%, as compared to the prior
year. In addition, the Company had operating income of $85.2 million, a decrease of $0.9 million, or 1%, as compared to the prior
year, and adjusted operating income of $115.0 million, essentially unchanged as compared
to the prior year.(1)
For the fiscal 2023 fourth quarter, the Company reported
revenues of $126.9 million, a
decrease of $48.3 million, or 28%, as
compared to the prior year quarter. The decrease in revenues was
primarily due to fewer Knicks and Rangers regular season and
playoff home games, as compared to the prior year period. In
addition, the Company had an operating loss of $12.2 million and an adjusted operating loss of
$7.8 million, as compared to
operating income of $23.7 million and
adjusted operating income of $29.5
million in the prior year quarter.(1)
Madison Square Garden Sports Corp. Executive Chairman
James L. Dolan said, "Our strong
financial results in fiscal 2023 reflect the robust ongoing demand
from our fans and corporate partners for the Knicks and Rangers. We
believe we are well positioned to build on this momentum in the
coming year and remain confident in our ability to generate
long-term shareholder value."
Results from Operations
Results for the quarter and
year ended June 30, 2023 and 2022 are as follows:
|
|
Three Months
Ended
|
|
|
|
|
|
Twelve Months
Ended
|
|
|
|
|
|
|
June
30,
|
|
Change
|
|
June
30,
|
|
Change
|
$ millions
|
|
2023
|
|
2022
|
|
$
|
|
%
|
|
2023
|
|
2022
|
|
$
|
|
%
|
Revenues
|
|
$
126.9
|
|
$
175.2
|
|
$ (48.3)
|
|
(28) %
|
|
$
887.4
|
|
$ 821.4
|
|
$
66.1
|
|
8 %
|
Operating income
(loss)
|
|
$
(12.2)
|
|
$
23.7
|
|
$ (35.9)
|
|
NM
|
|
$
85.2
|
|
$
86.1
|
|
$
(0.9)
|
|
(1) %
|
Adjusted
operating
income (loss)(1)
|
|
$
(7.8)
|
|
$
29.5
|
|
$ (37.3)
|
|
NM
|
|
$
115.0
|
|
$ 114.9
|
|
$
0.1
|
|
— %
|
|
Note: Does not foot due
to rounding
|
|
|
1.
|
See page 3 of this
earnings release for the definition of adjusted operating income
(loss) included in the discussion of financial measures not
calculated in accordance with generally accepted accounting
principles ("GAAP"). The Company has amended this definition so
that the non-cash portion of operating lease costs (which was
$1,439 and $26,096 for the three and twelve months ended June 30,
2023, respectively, and $3,715 and $27,305 for the three and twelve
months ended June 30, 2022, respectively) related to the Company's
arena license agreements with Madison Square Garden Entertainment
Corp. ("MSG Entertainment") is no longer excluded in all periods
presented.
|
|
|
2.
|
The return of capital
consisted of a special cash dividend of $7.00 per share
(approximately $173 million in aggregate) paid in October 2022 and
a $75 million accelerated share repurchase ("ASR") program, which
the Company completed in January 2023.
|
Summary of Reported Results from Operations
For the
fiscal 2023 fourth quarter, the Company generated revenues of
$126.9 million, a decrease of
$48.3 million, or 28%, as compared to
the prior year period. The decrease was primarily due to the timing
of the NHL 2021-22 regular season in the prior fiscal year, which
resulted in the Knicks and Rangers playing a combined five regular
season home games at The Garden in the fiscal 2023 fourth quarter
as compared to thirteen in the prior year period. In addition, the
Knicks and Rangers played a combined eight playoff home games at
The Garden in the fiscal 2023 fourth quarter as compared to ten
playoff home games in the prior year period. As a result,
pre/regular season ticket-related revenues, playoff-related
revenues, suite revenues, sponsorship and signage revenues, league
distributions and local media rights fees were all lower as
compared to the prior year period.
Pre/regular season ticket-related revenues decreased
$19.4 million as compared to the
prior year period, primarily due to the Knicks and Rangers playing
eight fewer regular season home games at The Garden during the
fiscal 2023 fourth quarter, partially offset by higher average
per-game revenue.
Playoff-related revenues decreased $8.6
million as compared to the prior year period, primarily due
to the Rangers playing ten home playoff games in the prior year
period as the team advanced to the Eastern Conference Finals, which
also resulted in higher per-game revenue in the prior year period,
as compared to three home playoff games during the fiscal 2023
fourth quarter. This decrease was partially offset by the Knicks
playing five home playoff games in the fiscal 2023 fourth
quarter.
Suite revenues decreased $7.7
million as compared to the prior year period, primarily due
to the Knicks and Rangers playing eight fewer regular season games
at The Garden during the fiscal 2023 fourth quarter, partially
offset by higher sales of suite products.
Sponsorship and signage revenues decreased $5.3 million as compared to the prior year
period, primarily due to the Knicks and Rangers playing eight fewer
regular season games at The Garden during the current year period,
partially offset by higher net sales of existing sponsorship and
signage inventory.
League distributions decreased $3.5
million as compared to the prior year period, primarily due
to the timing of the NHL 2021-22 regular season, which resulted in
revenue being recognized over a longer time frame in the prior
fiscal year, as well as lower other league distributions in the
fiscal 2023 fourth quarter, partially offset by the impact of
contractual rate increases for national media rights fees in the
fiscal 2023 fourth quarter.
Local media rights fees decreased $1.9
million as compared to the prior year period, primarily due
to the timing of the NHL 2021-22 regular season, which resulted in
revenue being recognized over a longer time frame in the prior
fiscal year, partially offset by the impact of contractual rate
increases in the fiscal 2023 fourth quarter.
Direct operating expenses of $80.4
million decreased $12.5
million, or 13%, as compared to the prior year period.
Operating lease costs under the arena license agreements with MSG
Entertainment decreased $5.5 million
and other team operating expenses decreased $5.3 million, both as compared to the prior year
period, primarily due to the Knicks and Rangers playing eight fewer
regular season games at The Garden during the fiscal 2023 fourth
quarter. In addition, net provisions for league revenue sharing
expense (net of escrow and excluding the playoffs) and NBA luxury
tax decreased $4.1 million as
compared to the prior year period. These decreases were partially
offset by an increase of $4.6 million
in net provisions for certain team personnel transactions as
compared to the prior year period.
Selling, general and administrative expenses of $57.9 million increased $0.4 million, or 1%, as compared to the prior
year period.
Operating income decreased $35.9
million to a loss of $12.2
million and adjusted operating income decreased $37.3 million to a loss of $7.8 million, both as compared to the prior year
period, primarily due to the decrease in revenues, partially offset
by lower direct operating expenses.
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
The Company has amended
its definition of adjusted operating income (loss) so that the
non-cash portion of operating lease costs related to the Company's
arena license agreements with MSG Entertainment is no longer
excluded in all periods presented.
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 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
|
|
Conference Call Information:
The conference call
will be Webcast live today at 10:00 a.m.
ET at investor.msgsports.com
Conference call
dial-in number is 888-660-6386 / Conference ID Number
6996895
Conference call replay number is 800-770-2030 /
Conference ID Number 6996895 until August
24, 2023
MADISON SQUARE
GARDEN SPORTS CORP.
CONSOLIDATED
STATEMENTS OF OPERATIONS
(In thousands,
except per share data)
(Unaudited)
|
|
|
|
Three Months
Ended
|
|
Twelve Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Revenues
|
|
$ 126,920
|
|
$ 175,205
|
|
$ 887,447
|
|
$ 821,354
|
Direct operating
expenses
|
|
80,377
|
|
92,866
|
|
548,811
|
|
500,564
|
Selling, general and
administrative expenses
|
|
57,866
|
|
57,438
|
|
249,885
|
|
229,668
|
Depreciation and
amortization
|
|
874
|
|
1,195
|
|
3,577
|
|
5,042
|
Operating income
(loss)
|
|
(12,197)
|
|
23,706
|
|
85,174
|
|
86,080
|
Other income
(expense):
|
|
|
|
|
|
|
|
|
Interest
income
|
|
765
|
|
168
|
|
2,392
|
|
313
|
Interest
expense
|
|
(6,489)
|
|
(2,577)
|
|
(22,884)
|
|
(11,735)
|
Miscellaneous income
(expense), net
|
|
5,696
|
|
(536)
|
|
25,239
|
|
(726)
|
Income (loss) before
income taxes
|
|
(12,225)
|
|
20,761
|
|
89,921
|
|
73,932
|
Income tax (expense)
benefit
|
|
2,731
|
|
5,887
|
|
(44,293)
|
|
(25,052)
|
Net income
(loss)
|
|
(9,494)
|
|
26,648
|
|
45,628
|
|
48,880
|
Less: Net loss
attributable to nonredeemable noncontrolling
interests
|
|
(237)
|
|
(540)
|
|
(2,165)
|
|
(2,251)
|
Net income (loss)
attributable to Madison Square Garden Sports
Corp.'s stockholders
|
|
$
(9,257)
|
|
$
27,188
|
|
$
47,793
|
|
$
51,131
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss)
per common share attributable to Madison
Square Garden Sports Corp.'s stockholders
|
|
$
(0.39)
|
|
$
1.12
|
|
$
1.90
|
|
$
2.11
|
Diluted earnings (loss)
per common share attributable to Madison
Square Garden Sports Corp.'s stockholders
|
|
$
(0.39)
|
|
$
1.11
|
|
$
1.89
|
|
$
2.10
|
|
|
|
|
|
|
|
|
|
Basic weighted-average
number of common shares outstanding
|
|
23,961
|
|
24,277
|
|
24,090
|
|
24,246
|
Diluted
weighted-average number of common shares outstanding
|
|
23,961
|
|
24,487
|
|
24,194
|
|
24,405
|
MADISON SQUARE GARDEN SPORTS
CORP.
ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS)
TO
ADJUSTED OPERATING INCOME (LOSS)
(In
thousands)
The following is a description of the adjustments to operating
income (loss) to arrive at adjusted operating income (loss) 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
|
|
Twelve Months
Ended
|
|
|
June
30,
|
|
June
30,
|
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Operating income
(loss)
|
|
$
(12,197)
|
|
$
23,706
|
|
$
85,174
|
|
$
86,080
|
Depreciation and
amortization
|
|
874
|
|
1,195
|
|
3,577
|
|
5,042
|
Share-based
compensation
|
|
3,144
|
|
5,067
|
|
25,203
|
|
24,245
|
Remeasurement of
deferred compensation plan liabilities
|
|
377
|
|
(461)
|
|
1,091
|
|
(461)
|
Adjusted operating
income (loss)(1)
|
|
$
(7,802)
|
|
$
29,507
|
|
$
115,045
|
|
$
114,906
|
|
____________________
|
(1)
|
The Company has
amended its definition of adjusted operating income so that the
impact of the non-cash portion of operating lease costs related to
the Company's arena license agreements with MSG Entertainment is no
longer excluded. Pursuant to GAAP, recognition of operating lease
costs is recorded on a straight-line basis over the term of the
agreement based upon the value of total future payments under the
arrangement. As a result, operating lease costs is comprised of a
contractual cash component plus or minus a non-cash component for
each period presented. Operating expense includes operating lease
costs of (i) $2,290 and $41,524 of expense paid in cash for the
three and twelve months ended June 30, 2023, respectively and
$5,483 and $40,314 of expense paid in cash for the three and twelve
months ended June 30, 2022, respectively, and (ii) a non-cash
expense of $1,439 and $26,096 for the three and twelve months ended
June 30, 2023, respectively, and $3,715 and $27,305 for the
three and twelve months ended June 30, 2022,
respectively.
|
MADISON SQUARE
GARDEN SPORTS CORP.
CONSOLIDATED BALANCE
SHEETS
(In thousands,
except per share data)
|
|
|
|
June
30,
|
|
|
2023
|
|
2022
|
ASSETS
|
|
|
|
|
Current
Assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$
40,398
|
|
$
91,018
|
Restricted
cash
|
|
61
|
|
—
|
Accounts receivable,
net
|
|
40,139
|
|
47,240
|
Net related party
receivables
|
|
15,969
|
|
28,333
|
Prepaid
expenses
|
|
24,768
|
|
18,810
|
Other current
assets
|
|
27,898
|
|
19,868
|
Total current
assets
|
|
149,233
|
|
205,269
|
Property and equipment,
net
|
|
30,501
|
|
32,892
|
Right-of-use lease
assets
|
|
715,283
|
|
686,782
|
Amortizable intangible
assets, net
|
|
—
|
|
636
|
Indefinite-lived
intangible assets
|
|
103,644
|
|
112,144
|
Goodwill
|
|
226,523
|
|
226,955
|
Investments
|
|
67,374
|
|
4,736
|
Other assets
|
|
22,459
|
|
32,552
|
Total
assets
|
|
$
1,315,017
|
|
$
1,301,966
|
MADISON SQUARE
GARDEN SPORTS CORP.
CONSOLIDATED BALANCE
SHEETS (continued)
(In thousands,
except per share data)
|
|
|
|
June
30,
|
|
|
2023
|
|
2022
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Current
Liabilities:
|
|
|
|
|
Accounts
payable
|
|
$
9,093
|
|
$
11,263
|
Net related party
payables
|
|
5,842
|
|
19,624
|
Debt
|
|
30,000
|
|
30,000
|
Accrued
liabilities:
|
|
|
|
|
Employee related
costs
|
|
144,310
|
|
119,279
|
League-related
accruals
|
|
106,926
|
|
75,269
|
Other accrued
liabilities
|
|
17,561
|
|
6,796
|
Operating lease
liabilities, current
|
|
49,745
|
|
43,699
|
Deferred
revenue
|
|
157,051
|
|
132,369
|
Total current
liabilities
|
|
520,528
|
|
438,299
|
Long-term
debt
|
|
295,000
|
|
220,000
|
Operating lease
liabilities, noncurrent
|
|
746,437
|
|
699,587
|
Defined benefit
obligations
|
|
4,526
|
|
5,005
|
Other employee related
costs
|
|
49,070
|
|
43,411
|
Deferred tax
liabilities, net
|
|
24,024
|
|
8,917
|
Deferred revenue,
noncurrent
|
|
12,666
|
|
31,122
|
Other
liabilities
|
|
—
|
|
1,002
|
Total
liabilities
|
|
1,652,251
|
|
1,447,343
|
Commitments and
contingencies
|
|
|
|
|
Madison Square Garden
Sports Corp. Stockholders' Equity:
|
|
|
|
|
Class A Common
stock, par value $0.01, 120,000 shares authorized; 19,364 and
19,697
shares outstanding as of June 30, 2023 and 2022,
respectively
|
|
204
|
|
204
|
Class B Common
stock, par value $0.01, 30,000 shares authorized; 4,530 shares
outstanding as of June 30, 2023 and 2022
|
|
45
|
|
45
|
Preferred stock, par
value $0.01, 15,000 shares authorized; none outstanding as of
June 30, 2023 and 2022
|
|
—
|
|
—
|
Additional paid-in
capital
|
|
16,846
|
|
17,573
|
Treasury stock, at
cost, 1,084 and 751 shares as of June 30, 2023 and 2022,
respectively
|
|
(179,410)
|
|
(128,026)
|
Accumulated
deficit
|
|
(173,910)
|
|
(35,699)
|
Accumulated other
comprehensive loss
|
|
(1,009)
|
|
(1,186)
|
Total Madison Square
Garden Sports Corp. stockholders' equity
|
|
(337,234)
|
|
(147,089)
|
Nonredeemable
noncontrolling interests
|
|
—
|
|
1,712
|
Total
equity
|
|
(337,234)
|
|
(145,377)
|
Total liabilities and
equity
|
|
$
1,315,017
|
|
$
1,301,966
|
MADISON SQUARE
GARDEN SPORTS CORP.
SELECTED CASH FLOW
INFORMATION
(In
thousands)
(Unaudited)
|
|
|
|
Twelve Months
Ended
|
|
|
June
30,
|
|
|
2023
|
|
2022
|
Net cash provided by
operating activities
|
|
$
152,473
|
|
$
178,056
|
Net cash used in
investing activities
|
|
(17,759)
|
|
(2,932)
|
Net cash used in
financing activities
|
|
(185,273)
|
|
(156,142)
|
Net (decrease) increase
in cash, cash equivalents and restricted cash
|
|
(50,559)
|
|
18,982
|
Cash, cash equivalents
and restricted cash from beginning of period
|
|
91,018
|
|
72,036
|
Cash, cash equivalents
and restricted cash at end of period
|
|
$
40,459
|
|
$
91,018
|
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SOURCE Madison Square Garden Sports Corp.