News Details

View all news

Madison Square Garden Sports Corp. Reports Fiscal 2022 Third Quarter Results

05/05/2022

FY2022 Third Quarter Revenues of $337.8 Million, Operating Income of $61.4 Million and AOI of $81.5 Million(1)

Strong FY2022 Third Quarter Results Driven by Revenues Well Above Pre-Pandemic Levels(2)

NEW YORK--(BUSINESS WIRE)-- Madison Square Garden Sports Corp. (NYSE: MSGS) today reported financial results for the fiscal third quarter ended March 31, 2022.

During the quarter, the Company continued to benefit from robust consumer and corporate demand at New York Knicks (“Knicks”) and New York Rangers (“Rangers”) regular season games at the Madison Square Garden Arena ("The Garden"), which is reflected in strong results across all key revenue lines. Fiscal 2022 third quarter average per-game revenues across tickets, suites and sponsorship, as well as food, beverage and merchandise per-caps, all exceeded results for the fiscal 2020 third quarter, prior to the suspensions of the 2019-20 NBA and NHL seasons. Fiscal 2022 third quarter total revenues also exceeded results for the fiscal 2019 third quarter, which was the last full third quarter prior to the pandemic.(2) Subsequent to the end of the fiscal 2022 third quarter, both teams concluded their regular seasons, with the Rangers currently competing in the first round of the NHL playoffs.

As a result of this positive momentum, the Company generated revenues of $337.8 million, operating income of $61.4 million and adjusted operating income of $81.5 million for the fiscal 2022 third quarter.(1) The Company’s financial performance in the fiscal 2022 third quarter reflects significant improvement compared to the COVID-impacted fiscal 2021 third quarter in which the Company generated $183.0 million in revenues, operating income of $8.1 million and adjusted operating income of $30.0 million.

Madison Square Garden Sports Corp. President and CEO Andrew Lustgarten said, “We are proud of how we have navigated the last two years. Our business has demonstrated its resiliency and is now benefiting from robust corporate and consumer demand, which drove revenues well above pre-pandemic levels this quarter. As we look towards the end of this fiscal year and beyond, we see numerous opportunities on the horizon to continue driving sustained growth for our business as well as generate long-term shareholder value.”

Results from Operations
Results for the three and nine months ended March 31, 2022 and 2021 are as follows:

 

 

 

Three Months Ended

 

 

 

 

 

Nine Months Ended

 

 

 

 

 

 

March 31,

 

Change

 

March 31,

 

Change

$ millions

 

2022

 

2021

 

$

 

%

 

2022

 

2021

 

$

 

%

Revenues

 

$

337.8

 

$

183.0

 

$

154.8

 

85%

 

$

646.1

 

$

268.8

 

 

$

377.3

 

NM

Operating income (loss)

 

$

61.4

 

$

8.1

 

$

53.3

 

NM

 

$

62.4

 

$

(57.7

)

 

$

120.1

 

NM

Adjusted operating income (loss)(1)

 

$

81.5

 

$

30.0

 

$

51.4

 

NM

 

$

109.0

 

$

(6.7

)

 

$

115.7

 

NM

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 non-GAAP financial measures.
  2. Fiscal 2020 third quarter and Fiscal 2019 third quarter results adjusted for the spin-off of Madison Square Garden Entertainment Corp. ("MSG Entertainment").

Summary of Reported Results from Operations for the Fiscal 2022 Third Quarter
For the fiscal 2022 third quarter, the Company generated revenues of $337.8 million, as compared to revenues of $183.0 million in the prior year period, an increase of $154.8 million, or 85%. This increase in revenues was driven by the impact of the COVID-19 pandemic on the prior year period's results.

Pre/regular season ticket-related revenues increased $105.8 million, suite license fee revenues increased $38.6 million, sponsorship and signage revenues increased $12.8 million, and food, beverage and merchandise sales increased $9.7 million, all as compared to the prior year period, as a result of the elimination of attendance restrictions at The Garden that were in place during the prior year period.

Local media rights fees decreased $9.5 million and league distribution revenues decreased $3.0 million, both as compared to the prior year period. The decrease in local media rights fees was primarily due to the net impact of the compressed timing of the shortened NBA and NHL 2020-21 seasons in the prior year period, which resulted in revenue being recognized over a shorter time frame in the prior fiscal year, partially offset by the impact of contractual rate increases. The decrease in league distribution revenues was primarily due to the compressed timing of the NBA and NHL 2020-21 seasons in the prior year period, partially offset by the impact of the new U.S. national media rights agreements for the NHL, higher rates for NBA national media rights, and higher other league distributions in the current year period.

Direct operating expenses of $206.3 million increased $79.8 million, or 63%, as compared with the prior year period, primarily due to the impact of the COVID-19 pandemic in the prior year period. Net provisions for league revenue sharing expense (net of escrow) and NBA luxury tax increased $58.2 million as compared to the prior year period, primarily due to significantly higher escrow recoveries and, to a lesser extent, significantly lower revenue sharing expense, both in the prior year period, which reflected the impact of the COVID-19 pandemic. Other team operating expenses increased $11.1 million and operating lease costs, including deferred operating lease costs, under the arena license agreements with MSG Entertainment increased $9.1 million, both compared to the prior year period, as a result of the elimination of attendance restrictions at The Garden that were in place during the prior year period. These increases were partially offset by a $3.0 million decrease in net provisions for certain team personnel transactions as compared to the prior year period.

Selling, general and administrative expenses of $68.9 million increased $22.1 million, or 47%, as compared to the prior year period. This increase was primarily due to higher employee compensation and related benefits (including separation-related costs), marketing costs and commissions related to the Company's sponsorship sales and service representation agreements with MSG Entertainment.

Operating income of $61.4 million increased $53.3 million and adjusted operating income of $81.5 million increased by $51.4 million, both as compared to the prior year period, primarily due to the increase in revenues, partially offset by higher direct operating expenses and, to a lesser extent, higher selling, general and administrative 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); two development league teams – the Westchester Knicks (NBAGL) and the Hartford Wolf Pack (AHL); and esports teams through Counter Logic Gaming, a North American esports organization, and Knicks Gaming, an NBA 2K League franchise. MSG Sports also operates two professional sports team performance centers – the MSG Training Center in Greenburgh, NY and the CLG Performance Center in Los Angeles, CA. More information is available at www.msgsports.com.

Non-GAAP Financial Measures
We define adjusted operating income (loss), which is a non-GAAP financial measure, as operating income (loss) excluding (i) deferred rent expense under the arena license agreements with MSG Entertainment, (ii) depreciation, amortization and impairments of property and equipment, goodwill and other intangible assets, (iii) share-based compensation expense or benefit, (iv) restructuring charges or credits, (v) gains or losses on sales or dispositions of businesses, and (vi) the impact of purchase accounting adjustments related to business acquisitions. 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. We believe that given the length of the arena license agreements and resulting magnitude of the difference in deferred rent expense and the cash rent payments, the exclusion of deferred rent expense provides investors with a clearer picture of the Company's operating performance.

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 U.S. generally accepted accounting principles (“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, the impact of the COVID-19 pandemic 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.

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 833-942-2482 / Conference ID Number 4339507
Conference call replay number is 855-859-2056 / Conference ID Number 4339507 until May 12, 2022

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31,

 

March 31,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues

 

$

337,774

 

 

$

183,010

 

 

$

646,149

 

 

$

268,819

 

Direct operating expenses

 

 

206,273

 

 

 

126,510

 

 

 

407,698

 

 

 

182,957

 

Selling, general and administrative expenses

 

 

68,902

 

 

 

46,803

 

 

 

172,230

 

 

 

138,708

 

Depreciation and amortization

 

 

1,206

 

 

 

1,573

 

 

 

3,847

 

 

 

4,840

 

Operating income (loss)

 

 

61,393

 

 

 

8,124

 

 

 

62,374

 

 

 

(57,686

)

Other income (expense):

 

 

 

 

 

 

 

 

Interest income

 

 

52

 

 

 

9

 

 

 

145

 

 

 

9

 

Interest expense

 

 

(2,470

)

 

 

(2,939

)

 

 

(9,158

)

 

 

(7,415

)

Miscellaneous expense, net

 

 

(63

)

 

 

(46

)

 

 

(190

)

 

 

(236

)

Income (loss) from operations before income taxes

 

 

58,912

 

 

 

5,148

 

 

 

53,171

 

 

 

(65,328

)

Income tax (expense) benefit

 

 

(34,993

)

 

 

(53

)

 

 

(30,939

)

 

 

275

 

Net income (loss)

 

 

23,919

 

 

 

5,095

 

 

 

22,232

 

 

 

(65,053

)

Less: Net loss attributable to nonredeemable noncontrolling interests

 

 

(584

)

 

 

(373

)

 

 

(1,711

)

 

 

(1,479

)

Net income (loss) attributable to Madison Square Garden Sports Corp.’s stockholders

 

$

24,503

 

 

$

5,468

 

 

$

23,943

 

 

$

(63,574

)

 

 

 

 

 

 

 

 

 

Basic earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders

 

$

1.01

 

 

$

0.23

 

 

$

0.99

 

 

$

(2.64

)

Diluted earnings (loss) per common share attributable to Madison Square Garden Sports Corp.’s stockholders

 

$

1.00

 

 

$

0.22

 

 

$

0.98

 

 

$

(2.64

)

 

 

 

 

 

 

 

 

 

Basic weighted-average number of common shares outstanding

 

 

24,275

 

 

 

24,156

 

 

 

24,235

 

 

 

24,120

 

Diluted weighted-average number of common shares outstanding

 

 

24,394

 

 

 

24,344

 

 

 

24,377

 

 

 

24,120

 

 
 

ADJUSTMENTS TO RECONCILE OPERATING INCOME (LOSS) TO
ADJUSTED OPERATING INCOME (LOSS)

The following is a description of the adjustments to operating income (loss) in arriving at adjusted operating income (loss) as described in this earnings release:

  • Deferred rent. This adjustment eliminates the impact of the non-cash portion of rent expense associated with the arena license agreements with MSG Entertainment.
  • 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.
  • Restructuring charges. This adjustment eliminates costs related to termination benefits provided to employees as part of the Company's workforce reduction in August 2020.

 

 

Three Months Ended

 

Nine Months Ended

 

 

March 31,

 

March 31,

 

 

 

2022

 

 

2021

 

 

2022

 

 

2021

 

Operating income (loss)

 

$

61,393

 

$

8,124

 

$

62,374

 

$

(57,686

)

Deferred rent

 

 

11,882

 

 

16,478

 

 

23,590

 

 

18,280

 

Depreciation and amortization

 

 

1,206

 

 

1,573

 

 

3,847

 

 

4,840

 

Share-based compensation

 

 

6,973

 

 

3,867

 

 

19,178

 

 

26,193

 

Restructuring charges

 

 

 

 

 

 

 

 

1,644

 

Adjusted operating income (loss)

 

$

81,454

 

$

30,042

 

$

108,989

 

$

(6,729

)

 
 

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share data)

 

 

 

March 31,
2022

 

June 30,
2021

 

 

(Unaudited)

 

 

ASSETS

 

 

 

 

Current Assets:

 

 

 

 

Cash and cash equivalents

 

$

49,176

 

$

64,902

Restricted cash

 

 

979

 

 

7,134

Accounts receivable, net of allowance for doubtful accounts of $0 and $0 as of March 31, 2022 and June 30, 2021, respectively

 

 

92,694

 

 

74,197

Net related party receivables

 

 

51,391

 

 

6,420

Prepaid expenses

 

 

21,696

 

 

16,724

Other current assets

 

 

48,133

 

 

15,869

Total current assets

 

 

264,069

 

 

185,246

Property and equipment, net of accumulated depreciation and amortization of $45,869 and $42,673 as of March 31, 2022 and June 30, 2021, respectively

 

 

33,490

 

 

35,716

Right-of-use lease assets

 

 

689,580

 

 

703,521

Amortizable intangible assets, net

 

 

900

 

 

1,695

Indefinite-lived intangible assets

 

 

112,144

 

 

112,144

Goodwill

 

 

226,955

 

 

226,955

Deferred income tax assets, net

 

 

 

 

15,943

Other assets

 

 

36,635

 

 

28,719

Total assets

 

$

1,363,773

 

$

1,309,939

CONSOLIDATED BALANCE SHEETS (continued)

(In thousands, except per share data)

 

 

 

March 31,
2022

 

June 30,
2021

 

 

(Unaudited)

 

 

LIABILITIES AND EQUITY

 

 

 

 

Current Liabilities:

 

 

 

 

Accounts payable

 

$

3,324

 

 

$

2,226

 

Net related party payables

 

 

31,812

 

 

 

17,089

 

Debt

 

 

30,000

 

 

 

30,000

 

Accrued liabilities:

 

 

 

 

Employee related costs

 

 

129,949

 

 

 

90,269

 

League-related accruals

 

 

87,008

 

 

 

39,276

 

Other accrued liabilities

 

 

26,929

 

 

 

16,442

 

Operating lease liabilities, current

 

 

43,412

 

 

 

41,951

 

Deferred revenue

 

 

102,053

 

 

 

131,025

 

Total current liabilities

 

 

454,487

 

 

 

368,278

 

Long-term debt

 

 

285,000

 

 

 

355,000

 

Operating lease liabilities, noncurrent

 

 

703,718

 

 

 

691,152

 

Defined benefit obligations

 

 

6,106

 

 

 

6,283

 

Other employee related costs

 

 

45,119

 

 

 

57,740

 

Deferred tax liabilities, net

 

 

15,030

 

 

 

 

Deferred revenue, noncurrent

 

 

31,180

 

 

 

31,603

 

Other liabilities

 

 

999

 

 

 

1,749

 

Total liabilities

 

 

1,541,639

 

 

 

1,511,805

 

Commitments and contingencies

 

 

 

 

Madison Square Garden Sports Corp. Stockholders’ Equity:

 

 

 

 

Class A Common stock, par value $0.01, 120,000 shares authorized; 19,697 and 19,587 shares outstanding as of March 31, 2022 and June 30, 2021, respectively

 

 

204

 

 

 

204

 

Class B Common stock, par value $0.01, 30,000 shares authorized; 4,530 shares outstanding as of March 31, 2022 and June 30, 2021

 

 

45

 

 

 

45

 

Preferred stock, par value $0.01, 15,000 shares authorized; none outstanding as of March 31, 2022 and June 30, 2021

 

 

 

 

 

 

Additional paid-in capital

 

 

12,862

 

 

 

23,102

 

Treasury stock, at cost, 751 and 861 shares as of March 31, 2022 and June 30, 2021, respectively

 

 

(128,026

)

 

 

(146,734

)

Accumulated deficit

 

 

(62,887

)

 

 

(78,898

)

Accumulated other comprehensive loss

 

 

(1,960

)

 

 

(2,027

)

Total Madison Square Garden Sports Corp. stockholders’ equity

 

 

(179,762

)

 

 

(204,308

)

Nonredeemable noncontrolling interests

 

 

1,896

 

 

 

2,442

 

Total equity

 

 

(177,866

)

 

 

(201,866

)

Total liabilities and equity

 

$

1,363,773

 

 

$

1,309,939

 

 

SELECTED CASH FLOW INFORMATION

(Dollars in thousands)

(Unaudited)

 

 

 

Nine Months Ended

 

 

March 31,

 

 

 

2022

 

 

 

2021

 

Net cash provided by (used in) operating activities

 

$

64,233

 

 

$

(54,367

)

Net cash used in investing activities

 

 

(1,136

)

 

 

(437

)

Net cash (used in) provided by financing activities

 

 

(84,978

)

 

 

42,155

 

Net decrease in cash, cash equivalents and restricted cash

 

 

(21,881

)

 

 

(12,649

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

72,036

 

 

 

90,673

 

Cash, cash equivalents and restricted cash at end of period

 

$

50,155

 

 

$

78,024

 

 

Ari Danes, CFA
Investor Relations and Financial Communications
(212) 465-6072

Source: Madison Square Garden Sports Corp.

Multimedia Files:

Categories: Press Releases
View all news