MADISON SQUARE GARDEN SPORTS CORP. REPORTS FISCAL 2025 THIRD QUARTER RESULTS

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Madison Square Garden Sports Corp. (NYSE: MSGS) reported its fiscal Q3 2025 results, showing revenues of $424.2 million, down 1% year-over-year. Operating income decreased 59% to $32.3 million, while adjusted operating income fell 58% to $36.9 million. The decline was primarily attributed to reduced local media rights fees and higher operating expenses. Key highlights include:

• Local media rights fees decreased $18.6 million due to proposed amendments with MSG Networks
• Sponsorship and signage revenues increased $8.9 million
• Suite revenues grew by $3.4 million
• Direct operating expenses increased 16% to $316.3 million

The company announced amendments to Knicks' and Rangers' media rights agreements, including 28% and 18% reductions in annual rights fees respectively, elimination of annual escalators, and contract extensions through 2028-29 seasons.

Positive

• Strong demand for 2025-26 Knicks and Rangers season ticket renewals
• Increased sponsorship and signage revenues by $8.9 million
• Growth in suite revenues by $3.4 million
• Higher average per-game revenues for tickets and premium hospitality
• Increase in revenues from league distributions by $2.4 million

Negative

• 28% and 18% reduction in annual media rights fees for Knicks and Rangers respectively
• Overall revenue decreased by $5.8 million (1%) to $424.2 million
• Operating income declined 59% to $32.3 million
• Direct operating expenses increased 16% to $316.3 million
• Elimination of annual rights fee escalators in media agreements

Insights

Financial Analyst

MSGS reports 59% drop in operating income due to reduced media rights fees, despite growth in per-game revenues.

Madison Square Garden Sports Corp's fiscal Q3 2025 results reveal significant financial challenges stemming from the evolving media rights landscape. Despite a modest 1% revenue decline to $424.2 million, operating income plummeted 59% to $32.3 million, with adjusted operating income dropping 58% to $36.9 million.

The primary driver behind this sharp profitability decline is a $18.6 million reduction in local media rights fees following proposed amendments to agreements with MSG Networks. These amendments include substantial fee reductions of 28% for the Knicks and 18% for the Rangers, elimination of annual escalators, and contract extensions through the 2028-29 seasons. This represents a fundamental shift in the company's revenue model, as high-margin media rights have historically been a cornerstone of sports franchise economics.

While MSGS successfully grew several revenue streams - including an $8.9 million increase in sponsorship and signage, $3.4 million increase in suite revenues, and $2.4 million more from league distributions - these gains couldn't offset the media rights decline. The company also faced significant cost pressures, with direct operating expenses rising 16% to $316.3 million, primarily due to $33.8 million in higher league revenue sharing and $14.7 million in increased team personnel compensation.

This dramatic margin compression highlights the challenges of replacing high-margin media revenue with alternative income streams. The penny warrants for 19.9% equity in MSG Networks appear to be an attempt to recapture some value from the reduced rights fees.

The earnings report indicates MSGS is navigating a transitional period for sports business models, focusing on maximizing game-day revenue while managing the structural decline in traditional media rights. The company's statement that it remains "confident as ever in the value of owning marquee professional sports franchises" suggests it views these challenges as industry-wide rather than company-specific.

Sports Business Expert

Major restructuring of MSGS media deals reflects industry-wide disruption, with teams pivoting to direct fan monetization.

The restructuring of MSGS's media rights agreements represents a seismic shift in sports business economics. The substantial reductions in rights fees - 28% for the Knicks and 18% for the Rangers - signal fundamental changes in how sports content is valued in today's fragmented media landscape. These downward adjustments reflect the broader challenges facing regional sports networks as cord-cutting accelerates and viewing habits shift to streaming platforms.

The elimination of annual escalators is particularly significant, as guaranteed growth in media payments has been a cornerstone of franchise valuation models. Without these automatic increases, MSGS must now generate organic growth through alternative revenue streams.

The company appears to be pivoting accordingly, with notable success in direct fan monetization. The earnings report highlights growth in average per-game revenues across tickets, sponsorship, and premium hospitality, despite playing fewer home games. The "strong demand" cited for 2025-26 season ticket renewals indicates robust customer loyalty that can be further leveraged.

MSGS's strategic response involves maximizing the in-person experience value through premium offerings, as evidenced by increased suite and sponsorship revenues. These high-margin, direct-to-consumer revenue streams are becoming increasingly important as traditional broadcast models decline.

The acquisition of warrants for 19.9% of MSG Networks suggests vertical integration as a potential long-term strategy, giving MSGS equity participation in distribution while securing rights through 2028-29. This provides stability during a transitional period while the company develops alternate monetization strategies.

This restructuring reflects an industry-wide recalibration of how sports content is valued and monetized, with greater emphasis on direct consumer relationships rather than intermediary broadcast partners.

NEW YORK, May 2, 2025 /PRNewswire/ -- Madison Square Garden Sports Corp. (NYSE: MSGS) today reported financial results for the fiscal third quarter ended March 31, 2025.

Fiscal 2025 third quarter operating results reflected growth in average per-game revenues, including for tickets, sponsorship and premium hospitality offerings, across a combined two fewer New York Knicks ("Knicks") and New York Rangers ("Rangers") games played at the Madison Square Garden Arena ("The Garden") as compared to the prior year quarter. In addition, fiscal 2025 third quarter operating results reflected the impact of expected reductions in local media rights fees as a result of proposed amendments to the Knicks' and Rangers' local media rights agreements with MSG Networks Inc. ("MSG Networks") (as announced on April 25, 2025 and discussed in further detail in the Other Matters section of this earnings release), as well as the impact of the Knicks' and Rangers' rosters for the 2024-25 seasons.

In March, the Company launched its 2025-26 Knicks and Rangers season ticket renewal initiative, which has seen strong demand to date. Subsequent to the end of the fiscal 2025 third quarter, both teams concluded their regular seasons, with the Knicks currently competing in the NBA playoffs.

For the fiscal 2025 third quarter, the Company generated revenues of $424.2 million, a decrease of $5.8 million, or 1%, as compared to the prior year period. In addition, the Company reported operating income of $32.3 million, a decrease of $47.4 million, or 59%, and adjusted operating income of $36.9 million, a decrease of $51.8 million, or 58%, both as compared to the prior year period.⁽¹⁾

Madison Square Garden Sports Corp. Executive Chairman and CEO James L. Dolan said, "Our third quarter results reflect growth in per-game revenues driven by continued robust demand for the Knicks and Rangers. And while the Company is now seeing the impact of the evolving landscape for local media rights, we remain as confident as ever in the value of owning marquee professional sports franchises."

Financial Results for the Three and Nine Months Ended March 31, 2025 and 2024: 

		Three Months Ended								Nine Months Ended
		March 31,				Change				March 31,				Change
$ millions		2025		2024		$		%		2025		2024		$		%
Revenues		$     424.2		$     430.0		$     (5.8)		(1) %		$     835.3		$     799.9		$     35.4		4 %
Operating income		$       32.3		$       79.7		$   (47.4)		(59) %		$       37.4		$       93.7		$    (56.4)		(60) %
Adjusted operating income(1)		$       36.9		$       88.7		$   (51.8)		(58) %		$       54.9		$     115.7		$    (60.8)		(53) %

Note: Does not foot due to rounding
1.	See page 4 of this earnings release for the definition of adjusted operating income (loss) included in the discussion of non-GAAP financial measures.

Summary of Financial Results
For the fiscal 2025 third quarter, revenues of $424.2 million decreased $5.8 million, or 1%, as compared to the prior year period. The decrease was primarily due to lower local media rights fees and, to a lesser extent, lower food, beverage and merchandise sales, partially offset by higher sponsorship and signage revenues, suite revenues, revenues from league distributions and ticket-related revenue. The Knicks and Rangers played a combined two fewer regular season games at The Garden during the fiscal 2025 third quarter as compared to the prior year period.

Local media rights fees decreased $18.6 million as compared to the prior year period, primarily due to a reduction in expected local media rights fees for the 2024-25 season as a result of proposed amendments to the Knicks' and Rangers' local media rights agreements with MSG Networks, which were announced on April 25, 2025 and are discussed in further detail in the Other Matters section of this earnings release.

Food, beverage and merchandise sales decreased $2.5 million as compared to the prior year period, primarily due to lower average per-game revenue, lower online sales of merchandise and the Knicks and Rangers playing fewer games at The Garden during the fiscal 2025 third quarter. Merchandise sales in the fiscal 2024 third quarter included the positive impact of new Rangers' jersey launches.

Sponsorship and signage revenues increased $8.9 million as compared to the prior year period, primarily due to higher net sales of existing sponsorship and signage inventory, partially offset by the Knicks and Rangers playing fewer games at The Garden during the fiscal 2025 third quarter.

Suite revenues increased $3.4 million as compared to the prior year period, primarily due to higher net sales of suite products, partially offset by the Knicks and Rangers playing fewer games at The Garden during the fiscal 2025 third quarter.

Revenues from league distributions increased $2.4 million as compared to the prior year period, primarily due to higher national media rights fees.

Ticket-related revenues increased $0.5 million as compared to the prior year period, primarily due to higher average Knicks and Rangers per-game revenue, partially offset by the Knicks and Rangers playing fewer games at The Garden during the fiscal 2025 third quarter.

Direct operating expenses of $316.3 million increased $43.3 million, or 16%, as compared to the prior year period. This increase was primarily driven by higher net provisions for league revenue sharing expense (net of escrow and excluding playoffs) and NBA luxury tax of $33.8 million and higher team personnel compensation of $14.7 million, both as compared to the prior year period. These increases were partially offset by lower net (credits) provisions for certain team personnel transactions of $2.8 million, lower operating lease costs under the arena license agreements with Madison Square Garden Entertainment Corp. ("MSG Entertainment") of $2.0 million, as well as other cost decreases.

Selling, general and administrative expenses of $74.7 million decreased $1.7 million, or 2%, as compared to the prior year period. This decrease was primarily driven by (i) lower employee compensation and related benefits of $12.4 million, mainly due to executive management transition costs recognized in the prior year period, partially offset by (ii) higher professional fees of $7.6 million, (iii) higher costs related to the Company's services agreement with MSG Entertainment of $1.8 million, and (iv) higher operating lease costs of $1.4 million.

Operating income of $32.3 million decreased $47.4 million, or 59%, and adjusted operating income of $36.9 million decreased $51.8 million, or 58%, both as compared to the prior year period, primarily due to the increase in direct operating expenses and, to a lesser extent, the decrease in revenues.

Other Matters
On April 24, 2025, New York Knicks, LLC and New York Rangers, LLC entered into a Transaction Support Agreement (the "Transaction Support Agreement") with Sphere Entertainment Co., MSG Networks and certain subsidiaries of MSG Networks, pursuant to which the teams agreed to support certain proposed transactions to reduce and restructure MSG Networks' debt (collectively, the "Proposed Transactions"). As part of this debt restructuring, the teams agreed to certain amendments to the Knicks' and Rangers' local media rights agreements, effective as of January 1, 2025, as follows: (i) 28% and 18% reductions in annual rights fees for the Knicks and Rangers, respectively; (ii) an elimination of annual rights fee escalators; and (iii) a change to the contract expiration dates to the end of the 2028-29 seasons, subject to a right of first refusal in favor of MSG Networks. The Transaction Support Agreement also contemplates the issuance by MSG Networks of penny warrants to the Company exercisable for 19.9% of the equity interests in MSG Networks. The Proposed Transactions, including the proposed amendments to the local media rights agreements, are subject to the execution of definitive documentation, which is expected to be completed on or before June 27, 2025.       

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), as well as two development league teams – the Westchester Knicks (NBAGL) and the Hartford Wolf Pack (AHL). MSG Sports also operates a professional sports team performance center – the MSG Training Center in Greenburgh, NY. 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) depreciation, amortization and impairments of property and equipment, goodwill and other intangible assets, (ii) share-based compensation expense or benefit, (iii) restructuring charges or credits, (iv) gains or losses on sales or dispositions of businesses, (v) the impact of purchase accounting adjustments related to business acquisitions, and (vi) gains and losses related to the remeasurement of liabilities under the Company's Executive Deferred Compensation Plan. 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. 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 provides investors with a clearer picture of the Company's operating performance given that, in accordance with U.S. generally accepted accounting principles ("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 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 earnings 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, 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.  

Contacts:
Ari Danes, CFA Investor Relations and Financial Communications     (212) 465-6072	Justin Blaber Financial Communications (212) 465-6109
Grace Kaminer Investor Relations (212) 631-5076

 

MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited)
		Three Months Ended				Nine Months Ended
		March 31,				March 31,
		2025		2024		2025		2024
Revenues		$     424,197		$     429,954		$     835,263		$     799,898
Direct operating expenses		316,335		273,026		600,299		508,771
Selling, general and administrative expenses		74,697		76,398		195,184		195,020
Depreciation and amortization		823		788		2,396		2,372
Operating income		32,342		79,742		37,384		93,735
Other income (expense):
Interest income		1,051		477		2,605		1,549
Interest expense		(5,020)		(6,921)		(16,662)		(21,269)
Miscellaneous expense, net		(5,743)		(1,403)		(13,478)		(11,077)
Income before income taxes		22,630		71,895		9,849		62,938
Income tax expense		(36,857)		(34,018)		(30,507)		(29,658)
Net (loss) income		$     (14,227)		$       37,877		$     (20,658)		$       33,280
Basic (loss) earnings per common share attributable to Madison Square Garden Sports Corp.'s stockholders		$         (0.59)		$           1.58		$         (0.86)		$           1.39
Diluted (loss) earnings per common share attributable to Madison Square Garden Sports Corp.'s stockholders		$         (0.59)		$           1.57		$         (0.86)		$           1.38
Basic weighted-average number of common shares outstanding		24,103		24,028		24,084		24,005
Diluted weighted-average number of common shares outstanding		24,103		24,100		24,084		24,076

MADISON SQUARE GARDEN SPORTS CORP.
ADJUSTMENTS TO RECONCILE OPERATING INCOME TO
ADJUSTED OPERATING INCOME
(In thousands)
(Unaudited)

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

• 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.
• Remeasurement of deferred compensation plan 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				Nine Months Ended
		March 31,				March 31,
		2025		2024		2025		2024
Operating income		$           32,342		$           79,742		$           37,384		$           93,735
Depreciation and amortization		823		788		2,396		2,372
Share-based compensation		3,900		7,350		14,159		18,069
Remeasurement of deferred compensation plan liabilities		(134)		821		973		1,556
Adjusted operating income		$           36,931		$           88,701		$           54,912		$         115,732

 

MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED BALANCE SHEETS (In thousands, except per share data) (Unaudited)
		March 31, 2025		June 30, 2024
ASSETS
Current Assets:
Cash and cash equivalents		$             96,536		$             89,136
Restricted cash		8,500		5,771
Accounts receivable, net of allowance for doubtful accounts of $0 as of March 31, 2025      and June 30, 2024		110,044		33,781
Net related party receivables		29,149		32,255
Prepaid expenses		35,297		30,956
Other current assets		39,761		25,043
Total current assets		319,287		216,942
Property and equipment, net of accumulated depreciation and amortization of $52,813      and $52,281 as of March 31, 2025 and June 30, 2024, respectively		29,407		28,541
Right-of-use lease assets		763,469		694,566
Indefinite-lived intangible assets		103,644		103,644
Goodwill		226,523		226,523
Investments		53,425		62,543
Other assets		8,743		13,533
Total assets		$        1,504,498		$        1,346,292

 

MADISON SQUARE GARDEN SPORTS CORP.
CONSOLIDATED BALANCE SHEETS (continued) (In thousands, except per share data) (Unaudited)
		March 31, 2025		June 30, 2024
LIABILITIES AND EQUITY
Current Liabilities:
Accounts payable		$                6,948		$                9,900
Net related party payables		6,530		6,718
Debt		24,000		30,000
Accrued liabilities:
Employee related costs		138,962		133,930
League-related accruals		170,159		120,876
Other accrued liabilities		53,652		21,613
Operating lease liabilities, current		51,015		50,267
Deferred revenue		165,923		148,678
Total current liabilities		617,189		521,982
Long-term debt		267,000		275,000
Operating lease liabilities, noncurrent		848,534		749,952
Defined benefit obligations		944		4,103
Other employee related costs		47,257		43,493
Deferred tax liabilities, net		6,305		16,925
Deferred revenue, noncurrent		718		1,147
Total liabilities		1,787,947		1,612,602
Commitments and contingencies
Madison Square Garden Sports Corp. Stockholders' Equity:
Class A Common Stock, par value $0.01, 120,000 shares authorized; 19,486 and 19,423      shares outstanding as of March 31, 2025 and June 30, 2024, respectively		204		204
Class B Common Stock, par value $0.01, 30,000 shares authorized; 4,530 shares      outstanding as of March 31, 2025 and June 30, 2024		45		45
Preferred stock, par value $0.01, 15,000 shares authorized; none outstanding as of      March 31, 2025 and June 30, 2024		—		—
Additional paid-in capital		11,855		19,079
Treasury stock, at cost, 961 and 1,025 shares as of March 31, 2025 and June 30, 2024,      respectively		(158,826)		(169,547)
Accumulated deficit		(135,816)		(115,139)
Accumulated other comprehensive loss		(911)		(952)
Total equity		(283,449)		(266,310)
Total liabilities and equity		$        1,504,498		$        1,346,292

 

MADISON SQUARE GARDEN SPORTS CORP.
SELECTED CASH FLOW INFORMATION (In thousands) (Unaudited)
		Nine Months Ended
		March 31,
		2025		2024
Net cash provided by (used in) operating activities		$           41,884		$          (16,220)
Net cash used in investing activities		(5,349)		(5,689)
Net cash (used in) provided by financing activities		(26,406)		26,234
Net increase in cash, cash equivalents and restricted cash		10,129		4,325
Cash, cash equivalents and restricted cash at beginning of period		94,907		40,459
Cash, cash equivalents and restricted cash at end of period		$         105,036		$           44,784

 

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SOURCE Madison Square Garden Sports Corp.

FAQ

What were MSGS's Q3 2025 financial results?

MSGS reported Q3 2025 revenues of $424.2 million (down 1%), operating income of $32.3 million (down 59%), and adjusted operating income of $36.9 million (down 58%) compared to the previous year.

How much will MSG Networks reduce the media rights fees for the Knicks and Rangers?

MSG Networks will reduce annual rights fees by 28% for the Knicks and 18% for the Rangers, effective January 1, 2025, with eliminated annual escalators and contract extensions through 2028-29 seasons.

What drove the increase in MSGS's direct operating expenses in Q3 2025?

Direct operating expenses increased 16% primarily due to higher net provisions for league revenue sharing expense and NBA luxury tax ($33.8 million increase) and higher team personnel compensation ($14.7 million increase).

How did MSGS's sponsorship and suite revenues perform in Q3 2025?

Sponsorship and signage revenues increased by $8.9 million due to higher net sales of existing inventory, while suite revenues grew by $3.4 million from higher net sales of suite products.

What is the status of MSGS's 2025-26 season ticket sales?

The company reported strong demand for its 2025-26 Knicks and Rangers season ticket renewal initiative launched in March 2025.