Madison Square Garden Entertainment Corp. Q1 FY2025 earnings call

• New fiscal year underway, portfolio benefits from demand for shared experiences. - Garden had record concerts in Q1, Knicks and Rangers returned, Christmas Spectacular kicked off 91st season. - Marketing partnerships announced notable agreements, strong corporate demand for premium hospitality. - Venues hosted nearly 800,000 guests at over 120 events. - Concert-related revenues down due to mix shift and fewer concerts at theaters, but more concerts at Garden including first-time headliners. - Majority of concerts sold out, per cap spending down modestly year-over-year but up vs fiscal 2024 full year. - Christmas Spectacular advanced ticket sales up, added 2 shows, expects over 1 million guests and record revenues. - Marketing partnerships had new deals, strong premium hospitality sales and suite renewals. - Ended agreement with Oak View Group, expect mid to high single-digit AOI increase.

In the bookings business, concert-related revenues were lower year-over-year due to a mix shift at the Garden from promoted events to rentals and fewer concerts at theaters, partially offset by more concerts at the arena. Arena license fees and other leasing categories saw growth. Entertainment offerings had lower concert-related revenues. Food beverage and merchandise revenues were down modestly year-over-year but up compared to the fiscal 2024 full year average. Revenues for the fiscal '25 first quarter were $138.7 million compared to $142.2 million in the prior year quarter.

• Expect mid to high single-digit percentage increase in adjusted operating income for fiscal 2025. - Concert bookings pacing is a factor, with some headwinds, but Christmas Spectacular and other non-concert categories offer upside. - Sponsorship sales pipeline monitored, but specifics on incremental overhead from bringing sponsorship in-house not provided.

• Potential headwinds from slower concert bookings pacing. - Uncertainties related to the transition of sponsorship sales back in-house. - Mix shifts in events affecting revenues.

Q: Mike, you mentioned slowing in concert bookings in recent weeks. Discuss causes, updated thoughts on concert bookings for Garden, theaters, and comparison to last year.

A: Bookings slowed due to tough year-over-year comp, more cancellations, supply shortage in spring for arena shows. 2Q theater bookings down very modestly, 3Q same softness as arena, 4Q modestly up. Fiscal 2025 expectations down since August, but theater bookings for back half of 2025 up vs last year.

Q: Dig in on Christmas Spectacular ticket sale trends and opportunity to add more shows, and booking pipeline for family shows, special events, marquee sports.

A: Christmas Spectacular ticket sales up 15% year-over-year, added 2 shows, monitor demand for more. Family shows have Annie and Riverdance, special events include Tony Awards, marquee sports have UFC, Tennis, etc.

Q: Talk about swing factors for AOI guidance and impact of shifting from Oak View.

A: Challenges from concert bookings pacing, Christmas Spectacular upside, one-time OpEx pickups. Shift from Oak View is due to returning to in-house management, no specifics on incremental overhead today.

Q: Color on why parted ways with Oak View and outlook for sponsorship sales.

A: Historically managed sponsorship in-house, outsourced a year ago, now returning to in-house as initial structure better. Seeing decent traction with new deals, strong core partners, unique assets.

Q: Market size for Garden and artists moving up from theaters.

A: Strategy of having venues at different capacities to create pipeline for artists, seen success with first-time arena acts, long-term supply growth potential.

Q: Elaborate on lower per caps and consumer health.

A: Lower per caps due to mix of shows vs prior year, but up in October, Knicks/Rangers games have positive momentum, sell-through high, consumer demand for live experiences strong.

Q: Consumer health across markets, food and beverage revenue down but OpEx flat, capital returns.

A: Consumer demand strong, food and beverage down due to mix, labor costs from new CBA, implementing dynamic pricing and self-service terminals. Capital allocation priorities are debt paydown and return of capital, repaid revolver, expect cash to build in busy season, will evaluate returns when cash appropriate.