Earnings call transcript Q2 2023

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Operator

Good morning. Thank you for standing by, and welcome to the Madison Square Garden Sports Corp. Fiscal 2023 Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s remarks, there will be a question-and-answer session. Instructions] [Operator

like Please call go now Danes, to turn Relations. Investor ahead. to would over the Ari I

Ari Danes

Thank you. begin, Good David provide Fiscal welcome XXXX an morning new Hopkinson and welcome quarter our call. conference to to earnings update today’s call. David and on To President I’d earnings Officer, to second like our Victoria COO, MSG will followed of our review remarks, company’s and Mink, EVP, open call the our a up strategy After operations. for by This and Chief will we questions. Financial results prepared will with Treasurer. be the financial Sports

If the not a Investors earnings today's in our you of do website. corporate copy it of section available have is release,

meaning of Private Reform note differ Any forward-looking and of materially from results Litigation of such actual the XXXX. in following. could Act forward-looking risks involve to take or are uncertainties future may performance the that statements. of the cause the not contain and guarantees statements discussion Securities Please within Today's forward-looking those statements results

we call. to reconciliation X today's On this measure. company's to provide or statements financial The and operating of Pages uncertainties. a AOI, for operations consolidated income of earnings X of of discussion obligation adjusted refer the release, discussed SEC filings statements and Please disclaims income be during may update any risks any and that to forward-looking company a with operating a the non-GAAP

to the turn over now David. I'll call that, with And

David Hopkinson

the I role Sports. Thank honored and speaking look with on I at I’m taken you many meeting you, with all leadership coming to new am Good Ari. forward morning, you months. today, MSG have everyone. in of delighted to this here to be of

business for and professional and has collection forward to growth the realize a drive significant opportunities Our iconic sports potential. this I am excited ahead, company assets, of with

this I'm off on remains who pleased XXXX Our year's record Knicks in the corporate their performance, following And highlighted build financial last that continued on as we kicked robust. portfolio by have the positive consumer October. Rangers, and to season season momentum and to say XXXX, is regular that demand

The quarter year results $XXX period. with This merchandise XX% revenue total adjusted $XX as food and tickets, to of based million, and sponsorship, the strength fiscal game growth as increase XX% million, of in income revenues our operating of XXXX and revenues, prior as was year-over-year all compared per as broad up business up second suites, well reflected our the quarter. second of year-over-year is fiscal with beverage, to across compared an

key And growth our execute to our confidence this strengthening with focused look shareholders our to our sports deliver ahead, professional remains of we this announcement deeper for and franchises. marquee premium on the brands $XXX underlying October to on ticketing current return we fiscal our Based across globally. reflected in strategy continuing trajectory, forging year-over-year value momentum, opportunities with our year. are positioned in lines revenue million to coupled hospitality on our growth our fans, As relationships products offering to our from many new to

And in discuss now, our performing. how let's detail is business

selected NBA Rangers’ the than Panarin, rosters, look talented recently and of participated are we our Igor teams and to Shesterkin, in playoff Both All weekend. exciting the And this currently Rangers game Knicks’ Fox, to Randle and the Star. halfway as Artemi NBA a more are the past teams XXXX and competition. Knicks have season. Julius coming Star in who was Our the regular both including All forward month NHL through contention Adam And NHL who

few during teams have whose fans, grown only be to last the continue enthusiasm We our years. our stronger energized by for

new season is also seen combined strong rate we and packages. XX% renewal average of above Our season sales have ticket ticket

majority significant full our tourism, a to marketing. As of which well sales force, a returned data that ticket as revenue. reflects group tickets We're efficiencies our improved in pricing ticketing have and individual say analytics as in and pleased also results dynamic season across and improving our represent reminder, enhanced

tickets leaders yields groups through with demand game both Rangers and combined XXXX. Knicks growth ticket per robust has the amongst only and has but for of year also quarter the the this the quarter the In fact, in prior fiscal gate ticketing exceeded their year-over-year so quarter receipts average far higher second this exceeded individuals average league pre-pandemic quarter, sold drove with position in substantial not average maintaining season. revenue second This significantly fiscal

sales, our spending capita relative ticket beverage lead to quarter the spending. and second to fiscal may last seen from increases we as the which a enthusiasm year in across food and per again you year, was fans robust recall guest for Beyond have in merchandise

fans impactful We forge rest customers in experience. to are growing strengthening using to and at our points with multipronged approach their community a touch multiple relationships our

to guests, continued we've offerings with front, to driving results. merchandise connections build while business bespoke product the introduce On

once again brand, popular Jeff partnering Kith new success. the to the this And Staple Knicks such prior are We collaborative as year's streetwear with create with collections Rangers. fashion with season, following

November, also CEO Kith Creative named in Founder Knicks’ we ever Ronnie Director. and first our fact, Fieg In as

feel develop is to and helping extremely brand. distinctive merchandise further and In a focused our to community us developing in-house will look continued excited we expanded around for content a of addition join to our an global on Knicks Ronnie line across believe collaboration marketing, that this We're and Ronnie have iconic initiative. products, provide

to personal in also unique welcomed And and Rangers develop [ph]. Garden the ways the fans connect our ever their of close next players with of [generation great fan first watch we fans] opportunity of at we On with our them and example efforts foster which The side, favorite thousands extend look the and to [indiscernible]. [indiscernible] another our up outside to team's our recently community get to giving open

clear locker player lifestyle footage, rolling scenes It's we've including Across our social and resonating. media interactions, been room platforms, looking. content, compelling is content exclusive the up behind this

added have bringing we year, teams social our over followers fiscal XXX,XXX new channels. [XX across both net combined [ph] across this over million] social our following to total far So

co-branded marketing demonstrate content social things] content, to media as this partners through to we As unique with [ph]. the casual avenue and global our [avid connect view social our both continue

Our of marketing fiscal continued our assets also partners solid across demonstrate demand in have all XXXX. to

In partner Jägermeister. and in At the same brokerage as MSG leading and such partnership into signature time, Dunkin' Entertainment, other new the with with brands by Hub first the signature categories company this as of was half highlighted Spectrum, year. strides firm, we year has the made the expanding International, with as Verizon earlier as extensions and fiscal welcome partners well insurance the

year and are we of the companies realizing this run As fiscal the with for Caesars Sportsbook, full our a deals time, first BetMGM, DraftKings. gaming reminder, expansive sports also impact rate

year, momentum sponsorship NBA's on sponsorship of this expansive Knicks. opportunity the our beginning with globally expanded Our New growing are commercial York and the And increasingly brand in demonstrates our beyond. focused international reach our market the strength we the and for opportunities

to first internationally. remain reach we hospitality MSC and official business. cruise and premium the as this the appeal the Knicks. To line Knicks Corporate be global expect confident partnership official that end, partner as first partner Cruises extended global in our will many announced recently the the has we of also We demand of of fully

of robust this continued positioning category. growth We sales renewals the us year, new in licenses first of have seen half and for the suite through

the On see in due we in And rights rate season, NBA, media and XXXX, due the to opportunity XXXX side, renewals coming media contractual continue increases with confident to annual remain we local media escalators. national rights the the rights fees after ahead.

third-party That at increase Rangers updated valuation I estimated Before mix team the valuation month, at the be from recent billion, Rangers. like NHL News. call its day turn And year. on an In the as sports the Phoenix for to by ranking Knicks XX% continue with team X% and to $X.X record $X.X franchises last December, up published transactions Victoria, there spot professional annual billion, Sportico maintaining of I'd NBA Suns the coming over to its top with year-over-year. for the Forbes in recent evidenced valuation touch the a

[NBA were great by that Suns have position, largest fan of play two dedicated bases billion, in franchises the months and Forbes an our for now, about the billion] sale delivering iconic two ever Suns the $X the [ph]. the [$X.X ago, owning Just feel sale price at We [ph]. And are valued with reported a highest estimated country. media team] market in the

We continue above estimated transaction remain in team in those encouraged the well increases valuation by the continued estimates. to with along come to

recognizing a stock sports our our of intrinsic is the program franchises. that persists buyback to trading current share demonstration of the marquee gap of value between the confidence, recent that relative price Our

confident remain shareholder are And and our in XXXX so, generate already fiscal to business is ability proud behind with we value. more how performing we half than us, our of long-term of

turn With things Victoria. that, I'll now to over

Victoria Mink

second and morning, good financial performance to seasons second everyone. the reflect regular balance and XXXX, start the and sheet. would fiscal by David, fiscal our play then XXXX Rangers. I start reviewing quarter XXXX the like quarter you, on provide update for of Thank the pre-season an Results and our for Knicks

compared third our year our and eight games, games impacted six to season home last will reflect which compared year home to games quarter we more additional aggregate, In reflect fiscal fewer regular note prior quarter as that both both for fourth period. games, will XX two while regular games, hosted the this XX also results. positively season I'd quarter's pre across as teams

Turning million related increased both quarter, game with the merchandise million, revenues lines. to enthusiasm ticket saw as revenue, fans. food, related compared total fiscal period in key all second $XXX.X of prior of $XXX.X revenue our which mainly results $XXX.X were consists as for across driven well revenue per and the average year higher to by from the million, year-over-year. of increases as revenue, XX% This beverage, sales, Event

agreements. higher per quarter of media sponsorships. sponsorship well to The prior $XX National played period. as related the game revenue of $XXX.X national XX%, impact additional fees of compared of as primarily our million and event the reflected to X%, Suites year revenue suites Garden revenues increase games for current rights year both number games a and local of contractual due at rights increase million as during increased increased local due year-over-year, escalators and and in an also both in the The media the to

by expenses. while impact the higher sponsorship digitally These we run of Adjusted DasherBoards. reflect the was a increase operating at as seen extent have $XX.X lesser offset results million expenses prior increase the the XX% to This our improvement revenues, partially includes impact to full in to robust licenses and an year SG&A and enhanced partnerships rate the and renewals, period. from sports in increased NHL's by of The compared operating demand income direct driven betting suite Garden news new the

as costs. well due as The team The employee as in compensation, expenses management other increase year operating team expenses compensation, was reflects higher as SG&A to the primarily well current recorded higher in operating marketing transition direct costs higher period, executive expenses. personnel increase in reflecting

As team operations revenue ahead, continue look while business expect we lines reflect our deliver also AOI higher we key growth will XXXX, in fiscal across to to our expenses.

sheet. balance our to Turning

As and a share $XX to David implemented of shareholders. approximately mentioned earlier, was million in to October, which special $XXX an return million approximately was accelerated comprised January. program, program dividend $XXX our million in repurchase we completed This a cash

existing XXX,XXX $XXX, common total, now the X% share $XXX to representing shares have Class per approximately the authorization. million an of prior at approximately our We price approximately A outstanding of repurchase repurchased In share average buyback. remaining company shares under about

had and dividend special repaid subsequently the Rangers and additional under $XX from and the advanced secured revolving we million million the the borrowed in $XX credit of comprised facility outstanding total with facility debt the facility, credit was and $XXX million connection Knicks credit quarter, repurchase, $XXX senior the which million the of end the revolving million Rangers under $XX under during NHL. mix facility $XXX an $XXX under of share revolving the company million At the In secured quarter. senior of million

revolver. debt of I million we last in would Ranger's the on also $XX add week an total quarter, $XX additional million down paid the addition repayment to that in the

represented cash balance $XX XX September compared quarter-end million, a our $XX decrease net to approximately of balance of Our million, $XX million. of

unrestricted for XX, With in regards of equivalents, cash as million the $XXX continue we in and million term in the our to million ahead, opportunities on $XXX drive momentum the team's of creation and we to Based capacity we the liquidity, our cash of under and business see of borrowing had to growth remain ability long confident liquidity December facilities. shareholders. revolving value comprised $XX credit

I will to With now call that, back turn the over Ari.

Ari Danes

for Operator, Victoria. up we you, open Thank questions? can the now call

Operator

Partners. the from comes question from Ross first Brandon your line And Instructions] of [Operator LightShed

open. is line Your

Brandon Ross

David, at relevantly, morning. as but mentioned Knicks either for illustrative sale those Phoenix the Sun teams mark. recent in but good at nothing or without that's minority Rangers investors Forbes a a you your hefty the least those most sales Hey, really sale, of of pretty the Are valuations consideration prices, or a of things sale set? and

David Hopkinson

morning. Hi Brandon, good

we're saying we they've got Let long-term that value of opportunities These the that scarce believe got by assets. just significant as confident me are ever and we start for our as incredibly fundamentals strong business reviewed They've growth. teams. in

So, as stock one I price. don't in that to just in we reflected our is my we of share reasons repurchase. that mentioned the the think current was made And recent remarks, that appropriately

come The the NBA in wealth marketplace, the changes into recently also ecosystem. equity There's well private as sovereign has to funds. as for allowed

capital of pools So, we've new got available.

and no plans possibility of rule stake or [indiscernible] Rangers. in we question, selling minority Knicks your the would if team a but answer the to there, you certainly we either plans not to current sell no out So, the have

Brandon Ross

it. Thank Got you.

Operator

comes question JP from of next line David the Your Morgan. from Karnovsky

Your is open. line

David Karnovsky

next are Thank thinking you. could if to or games? David, NBA, need for the just given and maybe sustainable distribution wider adjust significantly how or your terms payments own about to for a NHL, you for existing your that carriage the potential space establish the bankruptcies risk several you receive more major impact over the to in the RSN distribution years, potential only

David Hopkinson

strongly the nation's the the a That's value the we Rangers. and case landscape largest but all and media evolving, a live in If happy in David. in we see step the can we here Thanks, is like believe and professional of content question. that Yes. of we sports know back, take operate we content premium especially good We're media Knicks market. that

networks. So benefits and that our partner us it benefits MSG

especially seen Sports over investment, long-term. over rights, proven a and over great we've the is

your local media MSG content, flag as partner those question have with of our digital distribution agreements want all contracts And Networks. local our answering live I that in look place we specifically, So, we confidence you ahead. And for to got rights. long-term we've exclusive provide our of including

new through on a we're announced appeal have that designed supportive to and terms package. been Networks Networks market, not what MSG sports been direct-to-consumer partners Recently, a they've of currently digital including to distribution in offering plans of the front, really fans to linear do great a offerings. in doing our launch that's MSG product subscribe traditional

engagement media We're on us variety it's and live media. look-ins footage, additional locker scenes, of exclusive is amongst delivering interactions, our pursuing room giving base, the a to our grow increase we also fan working. ways reach and social our fans social especially content, think behind for A priority player compelling

followers ecosystem alone across our season XXX,XXX million new added total so just channels. followers of XX and teams social have now this both We've social media far across a all social

offerings, us with Social going is DTC using and social we're evolves media. media a complement for priority landscape to distribution outreach the as

David Karnovsky

as fiscal today about Rangers potentially which run? guess I means use how have flow think year-end guys the playoff revenue? you And should assuming and potential are of Knicks deep then maybe investors of both teams, Victoria, cash for playoff

Victoria Mink

Sure. Thanks, David.

months looking me the let sure to be exciting say, what's forward First, we competition. of really really are to coming

that Just we as the playoff a financial games, played. AOI increases XX and which home year pleased for were playoff reminder, last with impact revenue really drove in we games performance, the of significant the Ranger's

think addition we as borrowed to shareholders. [indiscernible] we of generated million in focus talked So, with what that to to the flow, cash potential had we're $XXX the But do order our the down near-term when hand in end excess the we our million to definitely be continues excited about debt the we return for season. on cash of to on $XXX about, paying

a heard course, year as the of our you've discuss, value fiscal in return has business, of confidence As capital our continued which of this us was reflection so franchises. this as our of of well strength the sports far, through

they're in near-term a appropriate strong keep balance generally about certainly think is invest our to capital that importantly And look business. as our our fund same, maintain core operations liquidity of to sheet. So, to and ahead when priorities, course, we the and

future. So, quarter course we another considerations, would third, the we time, and capital over capital, million week, our of XX Right, mentioned, will, paying paid focus as the consider million return debt last other right, to then the in down on near-term. the but the potentially $XX our continue I in over another longer-term including of we of flow uses in cash

David Karnovsky

Thank you.

Operator

Stanley. Ben from comes of question line Morgan next Your Swinburne from the

Your line is open.

Ben Swinburne

morning. of call. demand sort ask Good welcome phone. David, to Thanks. corporate Nice the you to about, backdrop. meet the the to you Wanted over

we renewals are advertising in and you suite trends, corporate pretty sponsorship know strong marketplace. really seeing soft but the mentioned You spending,

layoffs also, tell the you're in us have obviously know your in seeing And Can us? be might of when what ahead like seeing nature it you a sectors multi-year already tech. bookings? up of you if into We're the were lot just these of you you to show business that a forward seen or out look just contracts, weakness would

teams capacity would a debt] plays league you've or ask want obviously and it whether there And last more, more [ph], maybe it the, if paying to you're would I use answer, to a way then lot [debt terms seem to – oversight metrics, as just traditional pick know of of her if company on this in but the on to of at because you got role debt-to-EBITDA like up she debt sort but think I value it's wanted is about Victoria could leverage well. a

you curious there. thoughts Thank your in I’d So, be both.

David Hopkinson

We're we're question. if sort The but half demand part other Ben. environment, I'll sectors of then an our strong like of the business look really our mindful are macro of short impact for broader Thanks really the I that I'll answer big second all the not seeing you your tackle Look, Victoria let the them than of no. is, of three and just on a really product. strong. Great. of first answer across, business,

Ticketing, packages, sales strong group, strong ticket as strong we I teams and ticket that for mentioned, both sales. rules had new exceeded XX%, demand for individual season

As I pre-pandemic above QX, sales year's but QX individual also mentioned XXXX. in ticket they exceeded the in my remarks, group the were last

So, better basis individual look an tickets than ever. on

introduced our mobile us. respect rate to the Spectrum, think DasherBoards year. for remains We're in a we're sponsorships, offerings our I demands marketplace, full new inventory partners. full-year in We – seeing demand, if the NHL on gaming sports that enhanced partners our partners, business with digitally great with with the Dunkin', about Jägermeister, I Verizon, their the have in the the and renewals first of demand with corporate see strong deal this seeing, new great introduced as from new Specifically, mentioned, and from And run three Hub.

new so whatsoever, having follow for absolutely renewals. every great And demand. softening but in in of for We're headroom we're With as like as products, from think and opportunity year we're that got So, far with the an yet to We're respect sales. seeing strong for Knicks Rangers. hard both we're had you sector. well really robust a suites we we seeing for the opportunity the a corporate We and mix do, working and patch both fact, the come no And for great demand none we've partners premium economy year conclusion, and international taking granted. for yes, to day.

Ben Swinburne

Great.

David Hopkinson

Will there? take over from

Victoria Mink

Sure.

position, to excess our have will carry, of feel target. And either yes, correct, but we So, flow about that say of it leagues we teams certainly it's something that oversight the you're as mentioned, discussing liquidity to debt I is are could good at we're But provided the just Again, cash thinking publicly amount we amount outstanding. right. official debt sort that as will to the we internally, of the this going prudent overall do one an and that not have we our have very currently about think of we're use time.

to we borrowing the free to variety and lot when just were back, we going something that business cost about. generate the end including to the there, our are So, of good but is it days, to thinking potential continue take allocation what did be these feel capital shareholders a that step of ability of to to we do. day, cash said, and cash that it down out the about forward. to it's really time can money do returning I we opportunities of as that some spend then the given I and that pay like it's as that able the pleased Again, with at But we trajectory overall flow really certainly with very of

Ben Swinburne

Great. Thank you.

Your line next the Wolfe question Brisco from from Research. Devin comes of

Your line open. is

Devin Brisco

than be current allocation a renewal. change related to is your to National and about the question The the flow are rights about how cash Could you My the NBA multiples strong TV from incremental of capital being that flow upcoming talk Thanks. new priorities? through if it deal. talked values revenue could And how would are higher deal?

Victoria Mink

Sure, Devin.

is particularly XXXX, runs as internationally. after So, trust to agreement right, which sports which of to the that's we just current maximize through. and opportunity going when and the season, NBA first-off, comes, fully reminder, live where XXXX the believe leagues appeal our domestically time the so as to in as be – continue And a well the value the we

from So, into AOI. media equally your teams about to impact the question, revenue fees in impact, say, But national half I sort fiscal across terms net out financial be to our with all would before in our talking of down what increase the that specifically XXXX. would which increase we're sharing a answer of share about of, dropping league, roughly

excess a earlier, and operating of the for several potential is the sheet, here play-offs. years, healthy I sort on – policy, out focused thinking a I then again, for And talked think perspective, certainly on talking terms about the more the longer-term for I is, some we're with of maintaining enough But that a capital financial little capital. maintaining we ongoing bit near think is cash a term a potential think needs, I flow So, same good what in terms for priorities positive the impact. returns about which when allocation our liquidity of additional opportunity from remain balance in of still

Devin Brisco

Thank you.

Operator

And from from Golding question Paul line Macquarie the comes your of Capital. next

open. is line Your

Paul Golding

we the Thanks comments earlier the little so space. around much. could into sponsorship I was dive hoping of deeper a some

color others cohort, has sort of mobile there is much the terms that as any mopping of are any sponsorship in sort they're able might you give? component that inventory, market spoken of the but sports apparent seemingly spot in deliver could In of It's the the cohort all excess been that from be your strong, of well supplier strength to media weaker or as for is they, betting pretty it largest revenue? up terms

just sponsorship And if jersey patch process? more then color a the could little much. Thanks get secondly, to we see on so wanted

David Hopkinson

a When good thing, big gaming from are for were that was able questions. BetMGM, also you maximize we’re focus introduced, was category opportunity we really three landed. we and and revenue know are we respect brand – With us. sure want that with perspective, to Yes, just sure perspective. Paul. not where we to Caesars, to really happy have, a Those but They that mobile from make the partners that a that we're DraftKings,

is that an and partner an ours category category, I and season, strategic brokerage category. new good new the was this those with is right in profit as such partners inventory. important we signature which that and opportunity important pleased one fully We that from and of underpinning mix for Hub us about right filled strong glad is business I'm economics to the deal. that We we believe found introduce mentioned. a partnerships a benefit One from opportunity. insurance two was partner think that dimensions to you the

So, key an available. comes basis, package. we opportunity the we'll your of a patches, question for currently not that. presents the we'll it that When on, jersey. we the deal patch we on and inventory, basis sort categories on that we're right on to of open partner the believe to the We've itself, And a look conclude second when got with which half are exclusive on that sell next working daily on jersey continue to and can right right playing

For and want because us, strategic economics, sit prepared the it's about sure category it's for that such right to the we a work make right and right to priority us. deal the we're done. partner, get We

same the the the at opportunity The of this beginning just approach. introduced that With ranges exact NHL taking year. we're

watching are closely baseball introduced year. very the opportunity because has We marketplace the sleeve also this

And out a so, it's there. marketplace noisy

really to work right quickest that the this – not we've not believe and I conclude deal. deals, day the got necessarily the every

the it's so, However, upside whether do ultimately the got business. or we we've when or partnership's Knicks Rangers our both, material in

Paul Golding

Great. the color. Thanks for

Operator

ends some turn session. question-and-answer Mr. for this And call comments. our over you back Danes, I'll final to closing Ari the

Ari Danes

earnings for good day. a Thank you all to call. joining forward us. We on next our look speaking with Have you

Operator

for you This your concludes call. Thank participation. conference today's

now You disconnect. may

Madison Square Garden Sports (MSGS) 7 Feb 232023 Q2 Earnings call transcript