Summary of Reported Results from Continuing Operations
For the fiscal 2021 fourth quarter, the Company reported revenues of $146.9 million as compared to negative revenues of $7.0 million in the prior year period. The overall increase in revenue was primarily driven by higher league distributions, local media rights fees from MSG Networks, sponsorship and signage revenues, playoff-related revenues and regular season ticket-related revenues.
League distributions increased $82.8 million and local media rights fees from MSG Networks increased $29.3 million, both as compared to the prior year quarter, primarily due to the impact of the suspended 2019-20 regular seasons in the prior year period and the timing of the 2020-21 NBA and NHL regular seasons in the current year period. The increase in league distributions was also due to the recognition of a $21.0 million NHL expansion fee in the current period. In addition, local media rights fees were negatively impacted in the current year quarter by the reduced 2020-21 NBA and NHL regular season schedules.
Sponsorship and signage revenues increased $16.7 million and regular season ticket-related revenues increased $10.4 million, both as compared to the prior year quarter, primarily due to the impact of regular season home games played with limited attendance in the current year quarter as compared to no games played in the prior year period. Playoff-related revenues were $15.2 million in the current year quarter, which reflects the impact of the Knicks’ three first round playoff home games.
For the fiscal 2021 fourth quarter, direct operating expenses were $98.9 million as compared to a $17.6 million credit recorded in the prior year period, primarily due to the impact of the suspended 2019-20 regular seasons in the prior year period and the timing of the shortened 2020-21 NBA and NHL regular seasons in the current year period. Team personnel compensation increased $46.7 million, while net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax were a $15.3 million credit in the current year quarter as compared to a $42.7 million credit in the prior year period. Other team operating expenses increased $16.9 million as compared with the prior year quarter. Direct operating expenses for the fiscal 2021 fourth quarter also included $12.9 million of operating lease costs, including deferred operating lease costs, under the Arena License Agreements with MSG Entertainment and $9.8 million of playoff related expenses. In addition, net provisions for certain team personnel transactions increased $6.4 million as compared to the prior year period.
For the fiscal 2021 fourth quarter, selling, general and administrative expenses were $68.0 million, an increase of 27%, or $14.6 million, as compared to the prior year period primarily due to higher teams-related compensation and benefits, including severance related to team executives, playoff-related expenses and fees related to the Company’s Sponsorship Sales and Service Representation Agreements with MSG Entertainment. The overall increase in expenses was partially offset by lower corporate overhead costs, which in the prior year period included certain corporate expenses that the Company has not incurred since the spin-off of MSG Entertainment and does not expect to incur in future periods, but which did not meet the criteria for inclusion in discontinued operations (see note 1 on previous page).
Fiscal 2021 fourth quarter operating loss of $20.8 million improved 54%, or $24.2 million, and adjusted operating loss of $5.8 million improved 83%, or $27.8 million, both as compared with the prior year period. This primarily reflects the overall increase in revenues, partially offset by higher direct operating expenses and, to a lesser extent, higher selling, general and administrative expenses.
Other Matters
As of June 30, 2021, the Company had $309.9 million of liquidity, comprised of the following components:
| | • | | $64.9 million of cash and cash equivalents; |
| | • | | $55 million in borrowing capacity under the Knicks senior secured revolving credit facility; |
| | • | | $115 million in borrowing capacity under the Rangers senior secured revolving credit facility; and |
| | • | | $75 million available under the Knicks Holdings unsecured revolving credit facility. |
As of June 30, 2021, total debt outstanding was $385 million, comprised of $355 million under the Company’s Knicks and Rangers senior secured revolving credit facilities and $30 million advanced from the NHL.(3) The Company’s deferred revenue obligations as of the end of fiscal 2021 were approximately $146 million, net of billed, but not yet collected deferred revenue, as compared to approximately $133 million as of March 31, 2021. The increase was primarily due to the collection of season ticket deposits, partially offset by the recognition of local and national media rights revenue during the fiscal fourth quarter. The majority of the deferred revenue balance as of year-end was comprised of tickets and suites, which will be addressed through games played and, to the extent necessary, through make-goods, credits and/or refunds, as well as the $30 million from the NBA that was provided in the fiscal second quarter.
| (3) | All borrowings under the 2021 Rangers NHL Advance Agreement bear interest at 3.0% annually and are classified as current debt on the balance sheet as they are payable to the NHL upon demand. It is expected that the advancement amount will be set off against funds that would otherwise be paid, distributed or transferred by the NHL to the Rangers. |
2
