Madison Square Garden Sports Corp. Q4 FY2025 earnings call

• Operations: Knicks capped season with Eastern Conference finals run, welcomed new coach; Rangers had productive off-season with new coach. Season ticket renewal rate ~90%, Knicks had season ticket price increase, Rangers didn't. Optimizing pricing and mix of sales. Food and beverage per cap spending up in arena. Merchandise in-arena per cap up modestly, social media followers up. Planning Rangers 100th anniversary season. - Media rights: Fiscal 2025 full year reflected partial year impact of amended local media rights agreements. NBA new national media deals start in upcoming season, NHL new Canadian media rights deal starts '26 - '27 season. Amended local media rights agreements with MSG Networks had 28% and 18% reductions in annual rights fees for Knicks and Rangers respectively, effective Jan 1, 2025, with contract expirations shortened. - Marketing partnerships: Welcomed new partners like Abu Dhabi's Department of Culture and Tourism, Lenovo, Motorola; had multiyear renewals with Verizon, Pepsi, Benjamin Moore. - Premium hospitality: Record suite revenues in fiscal '25, more suites being renovated for fiscal '26.

Fiscal 2025 full year results: Total revenues were $1.04 billion and adjusted operating income was $38.2 million. For the fiscal 2025 fourth quarter: Total revenues were $204 million. Event-related revenues (mainly ticket, food, beverage and merchandise) were $140.3 million, down 8% year-over-year. Suites, sponsorship and signage revenues were $31.9 million, down 8% year-over-year. National and local media rights fees were $27.8 million, down 2%. Adjusted operating income decreased to an adjusted operating loss of $16.8 million. The Knicks had a run to the Eastern Conference finals with highest per game gate revenues in team history, and Rangers had a productive off-season. Combined average ticket yield and paid attendance for both teams were up in the past regular season, season ticket renewal rate for 2025 - 2026 seasons is ~90%, food and beverage per cap spending at arena was higher in fiscal '25, merchandise in-arena per cap spending was modestly up but overall merchandise revenues including online didn't reach prior year levels. Social media followers for Knicks and Rangers grew by over 775,000 in fiscal '25.

• Believes poised to drive revenue growth across all in arena categories in fiscal '26. - Results will reflect impact of NBA's new national media rights deals, full year of amended local media rights agreements, and continued investment in teams. - Expect overall media rights revenue to increase in fiscal '26 even with lower local media rights fees, but local rights agreements have thresholds on live games telecast which could cause further reduction in local media rights fees if thresholds not met.

• Media rights landscape is evolving with changes in national and local rights, which could impact revenue. - Tax regulations changes scheduled for 2027 could affect earnings as they would impact tax deductibility of compensation. - Uncertainties in the sports industry overall that could impact business performance.

Q: With the rework of the MSG Networks media rights, will that mean anything for capital returns going forward? And secondly, wondering if MSGS to look to sell some small minority stakes in the Knicks or the Rangers.

A: Victoria M. Mink said they believe liquidity position is strong, have substantial financial flexibility, long-term priorities include maintaining liquidity, strong balance sheet, and being opportunistic with cash, and would add return of capital program in future. Jamaal T. Lesane said they remain confident in team value but have nothing to report on minority stake sale at this time Q: A question about the NBA's current looking for a national RSN possibility, one that might include several different or mini teams, we're wondering if you'd be open to participating in something like this once you deal with MSG Networks expires? Or how else do you see the RSN business evolving over the long term?

A: Jamaal T. Lesane said media rights are complex, monitor changes, continue to believe local media coverage is valuable as RSNs drive fan engagement, will continue to monitor changes as a rights holder for two marquee sports franchises Q: There are some scheduled changes to the tax deductibility of compensation for 2027. Could you help us think about that for earnings purposes?

A: Victoria M. Mink said they are assessing the impact of these changes in tax regulations, and those changes would become effective for their year ended June 30, 2028, and at this time have nothing further to share on that front Q: A little bit more on the rights front, please. Can you remind us of the net financial impact of the national deal versus the local deal in terms of the cadence of how the NBA revenues would be reflecting throughout the year? And what is changing in the availability of games on either of those platforms. And then if you could also delve in more to the impact of the Knicks playoff game from a financial perspective?

A: Victoria M. Mink said starting with upcoming season, NBA will see step-up in average annual value for national media rights and increased escalators, so expect increase in overall media rights revenue in fiscal '26 despite lower local media rights fees; local rights agreements have thresholds on live games telecast. Jamaal T. Lesane talked about playoffs driving benefits like increased ticketing demand, fan engagement, corporate business, and Victoria M. Mink added playoffs result in significant incremental business with premium priced playoff tickets, higher food and beverage and merchandise per cap spending, and specific numbers on playoff-related revenues and expenses in fourth quarter Q: Wondering if you could talk about your OpEx outlook in the upcoming season, in particular, how to think about team comp and other relevant inputs? And then for my second question, kind of given the success of the season last year, Jamaal, you had mentioned a number of the sponsorship, renewals and relationships that you have, what's the right way to think about sponsorship growth in the upcoming season, please?

A: Victoria M. Mink said expect higher team operating expenses in fiscal '26 including higher team personnel compensation and luxury tax due to salary cap increases. Jamaal T. Lesane said seeing good momentum in marketing partnerships following fiscal '25 growth, with multiyear extensions and new partnerships, and believe well positioned to drive growth in fiscal '26