Madison Square Garden Sports Reports 9% Revenue Increase, Significant Decline in Operating Income

Madison Square Garden Sports Corp. reported a revenue increase of 9% for the three months ended December 31, 2024, totaling $357.8 million, compared to $326.9 million in the same period last year. For the six months ended December 31, 2024, revenues rose 11% to $411.1 million from $369.9 million. The growth in revenue was primarily driven by increased ticket sales, suite revenues, and sponsorship income, attributed to the New York Knicks and New York Rangers playing additional home games at Madison Square Garden. However, the company experienced a significant decline in operating income, which fell 54% to $13.3 million for the quarter and 64% to $5.0 million for the six-month period, largely due to rising direct operating expenses.

Direct operating expenses surged by 19% to $275.8 million for the three months ended December 31, 2024, and by 20% to $284.0 million for the six months, reflecting higher team personnel compensation and increased provisions for league revenue sharing and NBA luxury tax. Selling, general, and administrative expenses also rose, albeit at a slower rate, increasing 4% to $67.9 million for the quarter and 2% to $120.5 million for the half-year. The company reported a net loss of $6.4 million for the six months, compared to a loss of $4.6 million in the prior year.

In terms of operational metrics, Madison Square Garden Sports reported a total of 35 home games played by the Knicks and Rangers during the current fiscal period, compared to 32 in the previous year. This increase contributed to higher average per-game revenues across ticket sales, food, beverage, and merchandise. The company also noted a significant rise in deferred revenue, which reached $222.1 million, primarily due to advanced ticket and suite sales.

Looking ahead, Madison Square Garden Sports anticipates continued challenges related to rising team personnel costs and the corresponding NBA luxury tax implications, particularly as the Knicks are expected to be significant luxury tax payers for the 2024-25 season. The company maintains a positive outlook on its liquidity, with $107.8 million in cash and cash equivalents and an additional $250 million available under existing credit facilities as of December 31, 2024. However, the company remains cautious about potential impacts from market conditions and the performance of its sports teams on future revenues.