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Madison Square Garden Sports Corp. Reports Record Full-Year Results for Fiscal 2022

08/18/2022

Record Revenues of $821.4 Million, Operating Income of $86.1 Million and AOI of $142.2 Million for FY2022(1)(2)

FY2022 Fourth Quarter Revenues of $175.2 Million, Operating Income of $23.7 Million and AOI of $33.2 Million(1)

NEW YORK--(BUSINESS WIRE)--

Madison Square Garden Sports Corp. (NYSE: MSGS) today reported financial results for the fourth quarter and fiscal year ended June 30, 2022.

The fiscal 2022 fourth quarter was highlighted by the New York Rangers' ("Rangers") participation in the NHL playoffs, which included 10 home playoff games at the Madison Square Garden Arena ("The Garden") and culminated in the team's return to the Eastern Conference Finals. This followed the completion of full 2021-22 regular season schedules for both the New York Knicks (“Knicks”) and Rangers. The Company continued to benefit from robust consumer and corporate demand through the end of the seasons, capping off a year that saw record full-year financial results for revenues, operating income and adjusted operating income, with every major revenue category – tickets, media rights, suites and sponsorships, as well as food, beverage and merchandise – exceeding results for fiscal 2019, which was the last full year prior to the pandemic.(1)(2)

Results for the fourth quarter and fiscal year ended June 30, 2022 reflect significant improvement compared to the COVID-19 impacted fourth quarter and fiscal year ended June 30, 2021. For fiscal 2022, the Company generated revenues of $821.4 million as compared to $415.7 million in revenues in the prior year. In addition, the Company had operating income of $86.1 million and adjusted operating income of $142.2 million, compared to an operating loss of $78.4 million and an adjusted operating loss of $12.5 million in the prior year.(1)

For the fiscal 2022 fourth quarter, the Company generated revenues of $175.2 million as compared to $146.9 million in revenues in the prior year quarter. In addition, the Company had operating income of $23.7 million and adjusted operating income of $33.2 million, compared to an operating loss of $20.8 million and an adjusted operating loss of $5.8 million in the prior year quarter.(1)

Madison Square Garden Sports Corp. President and CEO Andrew Lustgarten said, “Over the course of the fiscal year, we continued to see significant demand for the Knicks and Rangers from our fans and corporate partners, which drove record-high financial results for our Company. Looking ahead, we already see this momentum carrying over into fiscal 2023 and remain confident that we are well positioned to drive long-term growth and shareholder value.”

Results from Operations

Results for the quarter and year ended June 30, 2022 and 2021 are as follows:

 

 

Three Months Ended

 

 

 

 

 

Twelve Months Ended

 

 

 

 

 

 

June 30,

 

Change

 

June 30,

 

Change

$ millions

 

2022

 

2021

 

$

 

%

 

2022

 

2021

 

$

 

%

Revenues

 

$

175.2

 

$

146.9

 

 

$

28.3

 

19

%

 

$

821.4

 

$

415.7

 

 

$

405.6

 

98

%

Operating income (loss)

 

$

23.7

 

$

(20.8

)

 

$

44.5

 

NM

 

 

$

86.1

 

$

(78.4

)

 

$

164.5

 

NM

 

Adjusted operating income (loss)(1)

 

$

33.2

 

$

(5.8

)

 

$

39.0

 

NM

 

 

$

142.2

 

$

(12.5

)

 

$

154.7

 

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 2019, 2020, and all prior fiscal full-year results adjusted for the spin-off of Madison Square Garden Entertainment Corp. ("MSG Entertainment"). The financial results of MSG Entertainment, as well as the sports booking business previously owned and operated by the Company through its MSG Sports segment, are reflected as discontinued operations in all periods prior to the spin-off.

Summary of Reported Results from Operations for the Fiscal 2022 Fourth Quarter

For the fiscal 2022 fourth quarter, the Company generated revenues of $175.2 million, as compared to revenues of $146.9 million in the prior year period, an increase of $28.3 million, or 19%.

Playoff-related revenues increased $49.6 million primarily due to the Rangers playing ten home playoff games as the team advanced to the Eastern Conference Finals in the current year period as compared to the Knicks playing three home playoff games in the prior year period.

Pre/regular season ticket-related revenues increased $27.0 million, suite license fee revenues increased $13.6 million, and food, beverage and merchandise sales increased $3.5 million, all as compared to the prior year period, primarily as a result of the elimination of attendance restrictions at The Garden that were in place during the prior year period. The increase in ticket-related revenues and food, beverage and merchandise sales were partially offset by the impact of the compressed timing of the shortened NBA and NHL 2020-21 seasons, which resulted in 11 fewer regular season home games in the current year period as compared to the prior year period.

League distribution revenues decreased $39.7 million as compared to the prior year period primarily due to the compressed timing of the shortened NBA and NHL 2020-21 seasons, which resulted in revenue being recognized over a shorter time frame in the prior fiscal year, as well as the recognition of a $21.0 million NHL expansion fee in the prior year period, partially offset by the impact of the new U.S. national media rights agreements for the NHL and higher rates for NBA national media rights in the current year period.

Local media rights fees decreased $21.7 million 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 in the current year period. In addition, sponsorship and signage revenues decreased $4.6 million primarily due to the compressed timing of the shortened NBA and NHL 2020-21 seasons, partially offset by the elimination of attendance restrictions at The Garden that were in place during the prior year period.

Direct operating expenses of $92.9 million decreased $6.1 million, or 6%, as compared to the prior year period. Team personnel compensation decreased $35.0 million and other team operating expenses decreased $8.1 million, both as compared to the prior year period, primarily due to the compressed timing of the shortened NBA and NHL 2020-21 seasons, which resulted in expenses being recognized over a shorter time frame in the prior fiscal year. In addition, net provisions for certain team personnel transactions decreased $6.5 million as compared to the prior year period. These decreases were partially offset by an increase in net provisions for league revenue sharing expense (net of escrow) of $24.6 million as compared to the prior year period, primarily due to significantly higher escrow recoveries in the prior year period, which reflected the impact of the COVID-19 pandemic. In addition, playoff-related expenses increased $20.1 million as compared to the prior year period primarily due to the greater number of home playoff games in the current year period as compared to the prior year period.

Selling, general and administrative expenses of $57.4 million decreased $10.6 million, or 16%, as compared to the prior year period, primarily due to lower employee compensation and related benefits, including the absence of severance expense related to team executives which was recognized in the prior year period. The overall decrease in expenses was partially offset by higher playoff-related expenses as compared to the prior year period.

Operating income of $23.7 million increased $44.5 million and adjusted operating income of $33.2 million increased by $39.0 million, both as compared to the prior year period, primarily due to the increase in revenues, the decrease in selling, general and administrative expenses and, to a lesser extent, 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); 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, (vi) the impact of purchase accounting adjustments related to business acquisitions, and (vii) gains and losses related to the remeasurement of liabilities under the Company’s Executive Deferred Compensation Plan (which was established in November 2021). 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 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 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, which are included for the first time this period, provides investors with a clearer picture of the Company’s operating performance given that, in accordance with 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 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 888-660-6386 / Conference ID Number 6996895
Conference call replay number is 800-770-2030 / Conference ID Number 6996895 until August 25, 2022

 

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,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Revenues

 

$

175,205

 

 

$

146,902

 

 

$

821,354

 

 

$

415,721

 

Direct operating expenses

 

 

92,866

 

 

 

98,933

 

 

 

500,564

 

 

 

281,890

 

Selling, general and administrative expenses

 

 

57,438

 

 

 

67,992

 

 

 

229,668

 

 

 

206,700

 

Depreciation and amortization

 

 

1,195

 

 

 

734

 

 

 

5,042

 

 

 

5,574

 

Operating income (loss)

 

 

23,706

 

 

 

(20,757

)

 

 

86,080

 

 

 

(78,443

)

Other income (expense):

 

 

 

 

 

 

 

 

Interest income

 

 

168

 

 

 

23

 

 

 

313

 

 

 

32

 

Interest expense

 

 

(2,577

)

 

 

(3,146

)

 

 

(11,735

)

 

 

(10,561

)

Miscellaneous expense, net

 

 

(536

)

 

 

(110

)

 

 

(726

)

 

 

(346

)

Income (loss) from operations before income taxes

 

 

20,761

 

 

 

(23,990

)

 

 

73,932

 

 

 

(89,318

)

Income tax (expense) benefit

 

 

5,887

 

 

 

73,146

 

 

 

(25,052

)

 

 

73,421

 

Net income (loss)

 

 

26,648

 

 

 

49,156

 

 

 

48,880

 

 

 

(15,897

)

Less: Net loss attributable to nonredeemable noncontrolling interests

 

 

(540

)

 

 

(464

)

 

 

(2,251

)

 

 

(1,943

)

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

 

$

27,188

 

 

$

49,620

 

 

$

51,131

 

 

$

(13,954

)

 

 

 

 

 

 

 

 

 

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

 

$

1.12

 

 

$

2.05

 

 

$

2.11

 

 

$

(0.58

)

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

 

$

1.11

 

 

$

2.03

 

 

$

2.10

 

 

$

(0.58

)

 

 

 

 

 

 

 

 

 

Basic weighted-average number of common shares outstanding

 

 

24,277

 

 

 

24,157

 

 

 

24,246

 

 

 

24,129

 

Diluted weighted-average number of common shares outstanding

 

 

24,487

 

 

 

24,422

 

 

 

24,405

 

 

 

24,129

 

 
 

MADISON SQUARE GARDEN SPORTS CORP.

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.
  • Remeasurement of deferred compensation 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,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Operating income (loss)

 

$

23,706

 

 

$

(20,757

)

 

$

86,080

 

 

$

(78,443

)

Deferred rent

 

 

3,715

 

 

 

10,025

 

 

 

27,305

 

 

 

28,305

 

Depreciation and amortization

 

 

1,195

 

 

 

734

 

 

 

5,042

 

 

 

5,574

 

Share-based compensation

 

 

5,067

 

 

 

4,244

 

 

 

24,245

 

 

 

30,437

 

Restructuring charges

 

 

 

 

 

(47

)

 

 

 

 

 

1,597

 

Remeasurement of deferred compensation plan liabilities

 

 

(461

)

 

 

 

 

 

(461

)

 

 

 

Adjusted operating income (loss)

 

$

33,222

 

 

$

(5,801

)

 

$

142,211

 

 

$

(12,530

)

 

MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share data)

 

 

 

June 30,

 

 

2022

 

2021

ASSETS

 

 

 

 

Current Assets:

 

 

 

 

Cash and cash equivalents

 

$

91,018

 

$

64,902

Restricted cash

 

 

 

 

7,134

Accounts receivable, net

 

 

47,240

 

 

74,197

Net related party receivables

 

 

28,333

 

 

6,420

Prepaid expenses

 

 

18,810

 

 

16,724

Other current assets

 

 

19,868

 

 

15,869

Total current assets

 

 

205,269

 

 

185,246

Property and equipment, net

 

 

32,892

 

 

35,716

Right-of-use lease assets

 

 

686,782

 

 

703,521

Amortizable intangible assets, net

 

 

636

 

 

1,695

Indefinite-lived intangible assets

 

 

112,144

 

 

112,144

Goodwill

 

 

226,955

 

 

226,955

Deferred income tax assets, net

 

 

 

 

15,943

Other assets

 

 

37,288

 

 

28,719

Total assets

 

$

1,301,966

 

$

1,309,939

 

MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED BALANCE SHEETS (continued)
(In thousands, except per share data)

 

 

 

June 30,

 

 

 

2022

 

 

 

2021

 

LIABILITIES AND EQUITY

 

 

 

 

Current Liabilities:

 

 

 

 

Accounts payable

 

$

11,263

 

 

$

2,226

 

Net related party payables

 

 

19,624

 

 

 

17,089

 

Debt

 

 

30,000

 

 

 

30,000

 

Accrued liabilities:

 

 

 

 

Employee related costs

 

 

119,279

 

 

 

90,269

 

League-related accruals

 

 

75,269

 

 

 

39,276

 

Other accrued liabilities

 

 

6,796

 

 

 

16,442

 

Operating lease liabilities, current

 

 

43,699

 

 

 

41,951

 

Deferred revenue

 

 

132,369

 

 

 

131,025

 

Total current liabilities

 

 

438,299

 

 

 

368,278

 

Long-term debt

 

 

220,000

 

 

 

355,000

 

Operating lease liabilities, noncurrent

 

 

699,587

 

 

 

691,152

 

Defined benefit obligations

 

 

5,005

 

 

 

6,283

 

Other employee related costs

 

 

43,411

 

 

 

57,740

 

Deferred tax liabilities, net

 

 

8,917

 

 

 

 

Deferred revenue, noncurrent

 

 

31,122

 

 

 

31,603

 

Other liabilities

 

 

1,002

 

 

 

1,749

 

Total liabilities

 

 

1,447,343

 

 

 

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 June 30, 2022 and 2021, respectively

 

 

204

 

 

 

204

 

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

 

 

45

 

 

 

45

 

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

 

 

 

 

 

 

Additional paid-in capital

 

 

17,573

 

 

 

23,102

 

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

 

 

(128,026

)

 

 

(146,734

)

Accumulated deficit

 

 

(35,699

)

 

 

(78,898

)

Accumulated other comprehensive loss

 

 

(1,186

)

 

 

(2,027

)

Total Madison Square Garden Sports Corp. stockholders’ equity

 

 

(147,089

)

 

 

(204,308

)

Nonredeemable noncontrolling interests

 

 

1,712

 

 

 

2,442

 

Total equity

 

 

(145,377

)

 

 

(201,866

)

Total liabilities and equity

 

$

1,301,966

 

 

$

1,309,939

 

 

MADISON SQUARE GARDEN SPORTS CORP.
SELECTED CASH FLOW INFORMATION
(Dollars in thousands)
(Unaudited)

 

 

 

Twelve Months Ended

 

 

June 30,

 

 

 

2022

 

 

 

2021

 

Net cash provided by (used in) operating activities

 

$

178,056

 

 

$

(35,326

)

Net cash used in investing activities

 

 

(2,932

)

 

 

(466

)

Net cash (used in) provided by financing activities

 

 

(156,142

)

 

 

17,155

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

18,982

 

 

 

(18,637

)

Cash, cash equivalents and restricted cash at beginning of period

 

 

72,036

 

 

 

90,673

 

Cash, cash equivalents and restricted cash at end of period

 

$

91,018

 

 

$

72,036

 

 

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

Source: Madison Square Garden Sports Corp.

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