Madison Square Garden Sports Corp. Q2 FY2023 earnings call

• David Hopkinson highlighted the strong performance of Knicks and Rangers, with high season ticket renewal rates above 90% and strong new season ticket sales. Ticket sales were robust with average tickets sold per game exceeding prior year and pre-pandemic levels. Food and beverage and merchandise per capita spending increased. Partnerships with fashion brands like Kith (Knicks) and Jeff Staple (Rangers) were mentioned. Social media followers grew by over 600,000 net new followers in the fiscal year. - Victoria Mink reviewed fiscal second quarter financial performance, noting increases in all key revenue lines, and discussed the balance sheet, including the $250 million return to shareholders via special dividend and share repurchase, and current debt and liquidity positions.

Total revenues for the fiscal second quarter were $353.7 million, up 22% year-over-year. Event related revenue was $142.3 million, increasing 30% year-over-year, driven by ticket, food, beverage, and merchandise sales with higher average per game revenue. National and local media rights fees were $118.2 million, up 5% due to contractual escalators. Suites and sponsorship revenues were $81 million, up 38% due to more games and increased per game revenue. Adjusted operating income was $76.6 million, up 38%. Event related revenue contribution: ~40% (142.3/353.7). Media rights contribution: ~33.4% (118.2/353.7). Suites and sponsorships contribution: ~22.9% (81/353.7)

Based on current trajectory, the company is positioned to deliver year-over-year growth across key revenue lines in fiscal 2023. Management remains confident in generating long-term shareholder value. The $250 million return to shareholders in October reflected momentum and confidence in the value of marquee franchises.

• Media landscape evolution poses potential risks to distribution, though the company has long-term local media contracts with MSG Networks. - Macroeconomic factors such as corporate spending softness in the advertising marketplace and layoffs in sectors like tech could impact corporate demand, though currently no softening seen. - League oversight plays a role in debt management and capital allocation decisions.

Q: Brandon Ross asked if there are plans to sell the Knicks or Rangers, and if minority stakes are being considered.

A: David Hopkinson stated they have no plans to sell either team but would not rule out selling a minority stake in the Knicks or Rangers.

Q: David Karnovsky inquired about risk to distribution due to RSN bankruptcies and potential leverage.

A: David Hopkinson mentioned confidence in live sports value, long-term local media contracts with MSG Networks, and social media as a distribution complement. Victoria Mink discussed capital priorities including paying down debt and potential future capital returns.

Q: Ben Swinburne asked about corporate demand backdrop and leverage.

A: David Hopkinson said no impact seen on corporate demand with strong suite renewals and sponsorship trends. Victoria Mink discussed thinking about leverage metrics but no official target provided yet.

Q: Devin Brisco asked about NBA National TV rights renewal impact.

A: Victoria Mink said the NBA will maximize opportunity, with financial impact to teams sharing equally, and capital allocation priorities remain maintaining liquidity and potential future returns.

Q: Paul Golding inquired about sponsorship cohort and jersey patch sponsorship.

A: David Hopkinson discussed strong performance of mobile sports betting partners, focus on key categories and inventory, and ongoing work on jersey patch deals for the right partner and economics.