Madison Square Garden Entertainment Q4 2025 Earnings Call Transcript

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Provided by Quartr
August 13, 2025

Key Takeaways

  • Positive Sentiment: MSG reported full-year revenue of $942.7 million and adjusted operating income of $222.5 million, a 5% increase year-over-year, and repurchased $40 million of Class A common stock.
  • Negative Sentiment: Fourth-quarter revenue fell 17% to $154.1 million, and adjusted operating income swung to a $1.3 million loss, driven by fewer Garden concerts and lower game-day food, beverage and merchandise sales.
  • Positive Sentiment: The Christmas Spectacular achieved a record $170 million in revenue from 1.1 million tickets sold across 200 performances, and 211 shows are on sale for the next season to drive further growth.
  • Positive Sentiment: Booking momentum remains strong, with concerts pacing at 80% of Garden targets and expectations of event growth across concerts, family shows, marquee sports and a planned multi-date residency in fiscal 2027.
  • Positive Sentiment: Management forecasts substantial free cash flow in fiscal 2026, $70 million remaining under the share buyback authorization, and continued investment in suite renovations and venue enhancements.
AI Generated. May Contain Errors.
Earnings Conference Call
Madison Square Garden Entertainment Q4 2025
00:00 / 00:00

There are 8 speakers on the call.

Operator

Good morning. Thank you for standing by, and welcome to the Madison Square Garden Entertainment Corp. Fiscal twenty twenty five Fourth Quarter and Year End Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' remarks, there will be a question and answer session.

Operator

I would now like to turn the call over to Ari Daines, Senior Vice President, Investor Relations and Treasury. Please go ahead.

Speaker 1

Thank you. Good morning, and welcome to MSG Entertainment's fiscal twenty twenty five fourth quarter earnings conference call. On today's call, David Collins, our EVP and Chief Financial Officer, will provide an update on the company's operations and review our financial results for the quarter. After our prepared remarks, we will open up the call for questions. If you do not have a copy of today's earnings release, it is available in the Investors section of our corporate website.

Speaker 1

Please take note of the following. Today's discussion may contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Any such forward looking statements are not guarantees of future performance or results and involve risks and uncertainties that could cause actual results to differ materially from those in the forward looking statements. Please refer to the company's filings with the SEC for a discussion of risks and uncertainties. The company disclaims any obligation to update any forward looking statements that may be discussed during this call.

Speaker 1

On Pages four and five of today's earnings release, we provide consolidated statements of operation and a reconciliation of operating income to adjusted operating income or AOI, a non GAAP financial measure. And with that, I'll now turn the call over to David.

Speaker 2

Thanks, Ari, and good morning, everyone. During fiscal twenty twenty five, we again benefited from strong demand across our portfolio of entertainment assets, which resulted in full year revenues of $942,700,000 along with adjusted operating income of $222,500,000 a 5% increase on a year over year basis. In addition, we repurchased approximately $40,000,000 of our Class A common stock during fiscal twenty twenty five, delivering on one of our core capital allocation priorities. As we enter the new fiscal year, we see a number of avenues for growth across our business, which include continuing to increase the number of events at our venues, driving growth in per event profitability, building on the success of Christmas Spectacular and growing our sponsorship and premium hospitality businesses. And when combined with the strong consumer and corporate demand we continue to see, we believe our company is well positioned to drive solid growth in revenue and adjusted operating income in fiscal twenty twenty six.

Speaker 2

Now let's review some key operational highlights from this past year. During fiscal twenty twenty five, we hosted nearly 6,000,000 guests at over nine seventy five live events. The majority of these events were delivered by our bookings business where we saw modest growth in the number of events held at our venues compared to the prior year. This growth was led by special events, family shows and marquee sporting events. The number of concerts at our theaters also increased versus fiscal twenty twenty four, while the number of concerts at The Garden was down year over year.

Speaker 2

Highlights in the special events category included multi day takeovers for Saturday Night Live's fiftieth anniversary special and the Tony Awards, both of which were held at Radio City. In our family show category, we welcome back the Westminster Dog Show to the Garden for the first time since 2020. Our sports booking business delivered another strong year featuring marquee college basketball matchups, UFC three zero nine and return of professional tennis to the Garden. On the concert front, The Garden's year over year decrease in events included the impact of the end of Billy Joel's residency, while the growth across our theaters reflected our success in attracting a number of multi night runs from both first time and returning acts. At Radio City, we set our new record for the number of concerts.

Speaker 2

From a consumer demand standpoint, the majority of concerts at our venues continue to sell out this past fiscal year including in our fiscal fourth quarter. In addition, during this past quarter food and beverage per caps at concerts at The Garden were up while per caps at our theaters were modestly down as compared to the prior year quarter. Looking ahead to fiscal twenty twenty six, we expect to grow the number of events at our venues on a year over year basis. We plan to again host a wide range of events across concerts, special events, family shows and marquee sports with our anticipated growth in total events primarily driven by an increase in concerts including a return to growth in concerts at the Garden. Turning to the Christmas Spectacular production, during fiscal twenty twenty five we sold approximately 1,100,000 tickets across 200 performances and generated over $170,000,000 in revenue, a new record for the production in its ninety first season.

Speaker 2

We are currently on sale with two eleven shows for the 2025 holiday season and expect revenue growth for the production to be driven by the increased number of shows as well as higher per show revenue. Turning to our agreements with MSG Sports, in fiscal twenty twenty five, the Knicks and Rangers played a combined 97 home games at The Garden compared to 103 games in the prior year. This decrease reflected fewer home playoff games at The Garden during our fiscal fourth quarter. However, we did see growth on a per game basis in our Knicks and Ranger shared revenue streams including sweets, food, beverage and merchandise and we expect this to carry forward into fiscal twenty twenty six. In addition, the cash component of the Arena license fees will be approximately $45,000,000 in fiscal twenty twenty six and will continue to grow 3% each year through fiscal two thousand and fifty five.

Speaker 2

Turning to our marketing partnerships business, during fiscal twenty five, we welcomed several new partners including Lenovo and its subsidiary Motorola as well as the Department of Culture and Tourism Abu Dhabi. In addition, we we reached multiyear renewals with Verizon and Pepsi. As you know, earlier in fiscal twenty five, we made the strategic decision to bring our sponsorship sales effort back in house. Since then, we have made progress in building out our internal team and we believe we're well positioned to capitalize on upcoming opportunities in fiscal twenty twenty six. Turning to our premium hospitality business.

Speaker 2

During fiscal twenty twenty five, we saw another year of strong demand for our premium hospitality offerings. We also benefited from our expanded event level club space as well as from a number of event and Lexus level suites that were renovated at the start of the fiscal year. Following this successful initiative, several more suites are in the process of being renovated, which we believe will again drive incremental revenue. So as we look to fiscal twenty twenty six, I'm pleased to say we expect another year of growth in this area of our business. Now let's turn to our financial results.

Speaker 2

For the fiscal twenty twenty five fourth quarter, we reported revenues of $154,100,000 a decrease of 17% as compared to the prior year period. This mainly reflected a decrease in revenues across our entertainment offerings and food, beverage and merchandise revenue categories. The decrease in revenues from entertainment offerings primarily reflected a decrease in event related revenues from concerts. This was mainly due to a decrease in the number of concerts at The Garden as well as lower per concert revenues primarily due to a mix shift at The Garden from promoted events to rentals, partially offset by an increase in the number of concerts at our theaters. In addition, revenue subject to the sharing of economics with MSG Sports pursuant to the Arena license agreements decreased year over year, primarily due to the impact of fewer Knicks and Rangers home games during the fourth quarter.

Speaker 2

This was partially offset by an increase revenues from other live entertainment and sporting events primarily due to higher per event revenues. The decrease in food, beverage and merchandise revenues primarily reflected the impact of fewer Knicks and Ranger games at The Garden as well as fewer concerts at The Garden, partially offset by an increase in the number of concerts at the company's theaters as compared to the prior year quarter. Fourth quarter adjusted operating income decreased $14,400,000 to a loss of $1,300,000 as compared to the prior year quarter. The decrease in AOI primarily reflects lower revenues and to a lesser extent higher SG and A expenses partially offset by a decrease in direct operating expenses. Now turning to our balance sheet.

Speaker 2

As of June 30, we had approximately $43,000,000 of unrestricted cash while our debt balance was approximately $6.00 $9,000,000 During the quarter, we refinanced our credit facility. This refinancing extended the facility's maturity for a new five year term ending June 2030 with a modest improvement in the borrowing rate and no change to the term loan or revolver capacity. Looking ahead to fiscal twenty twenty six, we currently expect our company to have another year of substantial free cash flow generation. This reflects the following expectations: solid growth in adjusted operating income ongoing net interest payments related to our National Properties debt, which totaled $45,000,000 in fiscal twenty twenty five, our status as a full cash taxpayer and capital expenditures, which will include both maintenance CapEx as well as some incremental spend related to enhancements at Radio City Music Hall and the Beacon Theatre and certain suite renovations at The Garden. As I mentioned earlier, during fiscal twenty twenty five, we repurchased approximately 1,100,000.0 shares of our Class A common stock for $40,000,000 Following these repurchases, we have approximately $70,000,000 remaining under our current share repurchase authorization.

Speaker 2

Going forward, we will continue to explore ways to opportunistically return capital to shareholders. In summary, fiscal twenty twenty five reflected strong demand for our entertainment assets. And as we look ahead to fiscal twenty twenty six, we are focused on organically growing the business and remain confident in our ability to deliver long term shareholder value. With that, I will now turn the call back over to Ari. Thank you.

Speaker 1

Thank you, David. Operator, can we open up the call for questions please?

Operator

Certainly. We will now begin the question and answer session. Your first question today comes from the line of Peter Henderson from Bank of America. Your line is open.

Speaker 3

Thank you. Good morning and thank you for taking the question. So I'm just wondering, can you provide an update on how ticket sales are pacing for the Christmas Spectacular? How to think about the growth opportunities for the production with the show count increasing to two eleven? How do think about the sort of balance between sell through and ticket pricing for this upcoming season's run?

Speaker 2

Yes, Peter. Thanks for the question. As a reminder, we initially went on sale in March as opposed to April. So that impacts our year over year comparison. Without sales while it's still early in the sales cycle, our advanced ticket revenue continues to pace well ahead of last year at the same time.

Speaker 2

The pacing is reflected in both higher individual and group ticket sales. And that is driven by increases in our average ticket yield across both individual and group sales as as higher volume from our individual tickets. In terms of growth drivers this year, we are on sale for two eleven shows for this upcoming season as compared to 200 this past season and that represents a mid single digit percent increase in show count. We can also increase the show count if demand warrants it and that's something that we'll be watching closely. We also continue to see opportunities to improve our per show revenue for this year.

Speaker 2

As you know, the Christmas Spectacular is a premium entertainment product this market and it is still well priced I mean, priced well below average ticket prices for comparable entertainment options. So given that, we will be strategically managing and marketing and pricing our ticketing inventory to maximize revenue, for every show. So with all that said and all that's going on there, we remain confident in our ability to continue to grow this business this fiscal year. Thank you.

Operator

Your next question comes from the line of Cameron Mancin Perrone from Morgan Stanley. Your line is open.

Speaker 4

Thanks. Good morning. First, was wondering if you could just provide some more color on forward bookings trends as we look further out into the year and some color on kind of levels of visibility into fiscal twenty twenty six at this point in the year. And then somewhat relatedly, but separately outside of concert bookings and more specific to kind of special and other events. Just any detail you can give us on the outlook for fiscal twenty twenty six.

Speaker 4

You highlighted some of the strength you had this year, with SNL, and other events. How's the calendar looking for fiscal twenty twenty six? And how should we think about kind of the growth and calendar outlook, across non concerts would be helpful. Thank you.

Speaker 2

Sure Cameron. No problem. As I mentioned earlier, we expect to increase the number of booking events including concerts in fiscal twenty twenty six. So if you look on a full year basis, we are currently pacing ahead in concerts versus fiscal twenty twenty five at this point in time. In fact, we are 80% to our bookings goal for the year at The Guardian and we're about two thirds of the way to our goal for our theaters.

Speaker 2

Our fiscal first quarter is already underway and we are still on track for a new record number of concerts in a quarter at The Garden. We also expect our concerts to be up across our theatres in the September as well. And taking a look at the December, we are again pacing ahead at our theaters in terms of the number of concerts, but still behind at The Garden. So with all that said, I would say overall we feel good about our start and we expect to grow the number of events at our venues this year. Now in terms of your question about special events and bookings growth, let me take you through how we think about all our key booking categories for this upcoming year including special events.

Speaker 2

So starting there, we're expecting a modest increase in the number of special events fiscal twenty six. However, we will face a tough comparison in this category in terms of financial results given the absence of our SNL's fiftieth anniversary special. But looking at the rest of the booking business, our growth in fiscal twenty twenty six, we expect to be driven primarily by concerts, family shows and sports properties. From a concert category perspective, our expectations include a return to concert event growth at The Garden as well as continuing our growth across our theaters. In terms of our family show category, while we are not expecting growth in the number of events, we do expect to see improved financial results and that's mainly due to a return of Cirque du Soleil for 63 shows for the holiday season at the theater at MSG and the Chicago Theater.

Speaker 2

And lastly in terms of our marquee sports business, we expect to see modest event growth next year as well. We are expecting another robust year of college basketball and boxing. So given all that, I would say we are we definitely are expecting growth across a number of our bookings categories and feel good about our booking calendar for fiscal twenty twenty six. That's helpful. Thank you.

Operator

Your next question comes from the line of Peter Cipino from Wolfe Research. Your line is open.

Speaker 5

Hello. Good morning. With the Garden's utilization such an important part of your business, I just wondered if you could share some progress on utilization, driving that higher presumably. And maybe if you could talk about any new residencies at the Garden that would fill the gap left by Billy Joel? Thanks.

Speaker 2

Sure. No problem. Thanks, Peter. Starting with the utilization question. As you know we have a track record of successfully driving event growth at our venues.

Speaker 2

I would say from fiscal twenty fifteen which was our first full year following The Gardens renovation through fiscal twenty twenty four, we drove mid single digit annual growth in the number of concerts at The Garden and across our venues. As you know, we did see a decrease in concerts at The Garden this past fiscal year. And as a result, the venue had an effective utilization of a little over 65% based on approximately two thirty events in fiscal twenty twenty five. And that includes our Knicks and Ranger games. We continue to believe there is real upside to utilization at the Garden and we're looking to get back on track with event growth at the Arena in fiscal twenty twenty six.

Speaker 2

In terms of our four theaters, we hosted over five forty events excluding, the 200 Christmas Spectacular shows in fiscal twenty five, which averages to approximately 135 events or so at each venue. And if you look at that on a three sixty five day a year, you can see our theaters have a large slate of available dates to work from. So that's an opportunity that we are really targeting. Across our venues, we expect to benefit in future years and this year from continued industry growth and we will continue to leverage our industry relationships to identify new events that include potential residencies, multi night runs, additional marquee sports and special events. So given all that, we are confident in our ability to continue to grow our bookings business including in fiscal twenty twenty six.

Speaker 2

Now you had mentioned a potential new residency at the Garden. What I would say is that we are in the late planning stages for a residency next calendar year. This residency would include a substantial number of dates at the arena and would create potential for concert growth at The Garden in fiscal twenty twenty seven. And keeping in mind that will be following what we expect to be a strong performance here in fiscal twenty twenty six. So we're looking forward to sharing more details on that residency when it's a more appropriate time.

Operator

Your next question comes from the line of Steven Lezek from Goldman Sachs. Your line is open.

Speaker 6

Hey, good morning. This is Antares on for Steven. Thanks for taking the question. How would you describe the approach to capital returns coming up here in fiscal twenty twenty six? Specifically, is there a plan to continue to be opportunistic with share buybacks?

Speaker 6

Or is there a chance you guys become more methodical in buying back stock from here? Thanks.

Speaker 2

Sure. Thanks for the question. Let me provide an update on how we're thinking about our capital allocation including our capital returns. As I mentioned earlier, we expect fiscal twenty twenty six to be another year of AOI growth and significant free cash flow generation. As you've heard us discuss before, we have three main priorities in terms of capital allocation.

Speaker 2

The first is making sure we continue to have a strong balance sheet. Our net debt leverage was approximately 2.5 times at quarter end and we should continue to delever as the business grows. Second is to ensure that we have flexibility to invest in our core business when we see compelling opportunities. And as we look to fiscal twenty twenty six, while there aren't any major capital projects to flag, we are always looking at ways in which we can enhance our current portfolio of offerings and generate attractive returns. And as I mentioned earlier, we are in the process of renovating several Vent and Lexus level suites which should drive incremental revenue and we also expect some incremental spend related to Radio City and the Beacon Theatre which will enhance the guest experience at those theatres.

Speaker 2

And finally, third priority is to opportunistically return capital to our shareholders. As I mentioned, we repurchased $40,000,000 of stock during fiscal twenty twenty five and we have $70,000,000 remaining under our current buyback authorization. Going forward, we will continue to explore ways to opportunistically return capital to our shareholders.

Speaker 6

Great. Thank you.

Operator

Your next question comes from the line of David Karnovsky from JPMorgan. Your line is open.

Speaker 3

Hi. Thank you. David, maybe just to the upcoming fiscal year, I wanted to see if you could just discuss how we should think about trajectory of various cost items or even margin if you can speak to it just recognizing that event mix is always a factor? Thanks.

Speaker 2

Sure. Thanks David. As I mentioned earlier, we expect to deliver solid AOI growth in fiscal twenty twenty six and that reflects a number of components. First of all, we expect to see growth across our core categories and that includes our bookings, the Christmas Spectacular, Suites, marketing partnerships. Our expectations for AO growth also reflect higher corporate costs however And that includes the impact of staffing up our sponsorship business as well as executive management and other hires that we have made in recent months.

Speaker 2

With that said, we are always looking for ways to run our business more efficiently and we'll look for opportunities to offset those cost increases. I would say from a margin standpoint that we have the opportunity to modestly expand our AOL margins in fiscal twenty twenty six even with the higher SG and A expenses. All of our key revenue lines carry attractive contribution margins and we expect broad based growth across our business this year. So taking into account all of those factors, we expect to deliver solid AOI growth in fiscal twenty twenty six and have the opportunity to modestly improve our AOI margins.

Speaker 3

Okay.

Speaker 1

Operator, we'll take one last caller.

Operator

Your final question comes from the line of David Joyce from Seaport Research Partners. Your line is open.

Speaker 7

Thank you. A couple, please. One on sponsorship, you did just mention staffing up some more for that infrastructure. What is your outlook for sponsorship over the course of the next fiscal year? Is there some sort of quarterly cadence we should expect?

Speaker 7

And then secondly, on the consumer demands for the concerts, given that you've got more events coming, how have you seen so far in this quarter the per cap spending on the ancillary trends? How are those pricing trends? Basically what's your outlook for the health of the consumer? Thanks.

Speaker 2

Sure. Thanks David. In terms of our sponsorship outlook, let's take a step back and let me say that we offer our marketing partners here at MSG a strong value proposition with our unique assets and brands here at MSG. We did see that this past year with a number of notable sponsorship announcements such as Lenovo, its subsidiary Motorola, the Department of Culture and Tourism Abu Dhabi, Verizon, Pepsi And we believe this positive momentum will continue as we look and go through fiscal twenty twenty six. Secondly, we have several premium sponsorship assets available and those include outdoor signage, naming rights at our theater at MSG as well as we have some notable presenting partnerships across our venues.

Speaker 2

So we also have a number of renewals coming up that we are optimistic about. And lastly, I would say from a sponsorship perspective, our sponsorship sales effort being back in house makes us truly believe that we are well positioned to execute on all of these opportunities in this year ahead. And taking a look at your question regarding consumer demand. While we're certainly keeping an eye on the macro environment, we continue to see strong consumer demand. A number of factors that support this view is we are seeing strong demand for the Christmas Spectacular twenty twenty five holiday run and our advanced tickets are pacing well ahead of last year at this time.

Speaker 2

In terms of bookings, the majority of concerts at our venues were again sold out this past quarter and a number of upcoming acts across our venues have also added additional shows due to strong demand. And looking at our fiscal first quarter, the sell through rate for concerts is currently pacing ahead of where it was same time last year. In addition, our overall F and B per cap spending at concerts at The Garden was up double digit percentages in our fiscal fourth quarter, while our per caps at our theaters were modestly down. And for the month of July, our concert F and B per caps on a combined basis across our venues were up a double digit percentage. So with all that said, we believe that we continue to see strong demand from consumers.

Speaker 7

Great. Thank you very much.

Operator

And that concludes our question and answer session. I will now turn the call back over to Ari Daines for closing remarks.

Speaker 1

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

Operator

That concludes today's conference call. Thank you for your participation. You may now disconnect.

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