Madison Square Garden Sports Corp. Q4 FY2026 earnings call

Proposed Rangers Spinoff

• Management plans to spin off the Rangers business into a separate publicly traded company from the Knicks business, which will enable shareholders to more clearly value each business and provide both entities with enhanced strategic and financial flexibility
• A confidential Form 10 registration statement was filed with the SEC in May, an updated public filing is expected this week, and completion is targeted by the end of October 2026, subject to conditions including board approval

2026 Postseason and Full Year Operational Milestones

• The Knicks' 2026 NBA championship run drove unprecedented fan engagement and financial results: the team set an NBA record for highest per-game gate revenue multiple times during the playoffs, achieved the highest single-day merchandise sales in franchise history within 24 hours of winning the title, and added 2.2 million net new combined social media followers for the Knicks and Rangers over the full fiscal year, bringing the total to nearly 22 million
• The 2026 NBA Finals was the most watched in 28 years nationwide, with widespread fan interest extending beyond New York City

Regular Season Business Performance

• Both the Knicks and Rangers saw higher per-game regular season revenue year-over-year; season ticket renewal rates for the upcoming 2027 fiscal year are tracking to exceed 90%: season ticket prices were raised for the championship-winning Knicks, and held flat for the Rangers who did not qualify for the 2026 playoffs
• Per-capita merchandise and food & beverage spending at the arena grew year-over-year in fiscal 2026, driven by new collaborative merchandise collections with third-party brands
• Fiscal 2026 saw multiple new multi-year marketing partnerships with PWC and Polymarket, plus multi-year renewals with core partners including Lexus, Anheuser-Busch, and InfoFist
• Premium suite renovation work is ongoing at Madison Square Garden, following the completion of initial renovations at the start of fiscal 2026, and these renovations are expected to drive incremental premium hospitality revenue in fiscal 2027

Team Roster Updates

• The Rangers made multiple key player acquisitions over the 2026 offseason in preparation for the 2026-27 season, and will cap their centennial celebration with a 100th anniversary game in November 2026 against the Montreal Canadiens, marking 100 years since the franchise's first game
• The Knicks will open the 2026-27 season with a championship banner-raising ceremony as defending champions

Full fiscal 2026: Total consolidated revenue of $1.15 billion, with adjusted operating income of $58.7 million. Fourth quarter fiscal 2026: Total revenue reached $278.7 million, up from $204 million in the prior year quarter. Breakdown by revenue segment: 1) Event-related revenue (ticket, food, beverage, merchandise including playoffs): $200.7 million, representing 72% of total Q4 revenue, a 43% year-over-year increase. 2) Sponsorship, and signage revenue (including playoffs): $39.1 million, representing 14% of total Q4 revenue, a 23% year-over-year increase. 3) National and local media rights fees: $27.7 million, representing 10% of total Q4 revenue, which was essentially flat year-over-year. Q4 adjusted operating income was $39.6 million, a swing from an adjusted operating loss of $16.8 million in the prior year quarter.

• Management expects revenue growth across all in-arena business categories (ticketing, sponsorship, suites, food & beverage, merchandise) for fiscal 2027, driven by sustained elevated fan and partner enthusiasm from the Knicks' championship
• Fiscal 2027 results will reflect increased investments in team rosters, higher team compensation, higher NBA luxury tax expense, and higher league revenue sharing expense. Higher revenue sharing for the Rangers will come from a modified calculation under the new NHL collective bargaining agreement that takes effect in the 2026-27 season
• The pending tax law change will become effective for the fiscal year ending June 30, 2028; excluding the impact of the completed Rangers spinoff, the change is expected to add approximately $60 million in incremental income tax expense for that fiscal year. If the spinoff is completed, combined tax expense across the two separate companies will be higher, with the final impact dependent on future team roster compositions
• Under the new NHL collective bargaining agreement, the Rangers will have one additional regular season home game and one fewer preseason home game in fiscal 2027

• Forward-looking statements (including the spinoff timeline and expected business performance) are not guarantees of future results and are subject to risks and uncertainties that could cause actual outcomes to differ materially from projections, as detailed in the company's SEC filings
• The proposed Rangers spinoff creates incremental tax challenges under pending tax law changes that will raise combined income tax expense for the two separated companies
• Final financial impacts of upcoming tax law changes are uncertain, as they are dependent on future team roster compositions that cannot be confirmed in advance
• Any future expansion of the NBA or NHL would result in pro rata reduction of league revenue distributions (including national media rights and expansion fees) across an increased number of teams

Q: What is the core rationale for the Rangers spinoff, does it signal openness to minority stake sales, and why proceed with the spinoff amid new tax rules that will create higher tax obligations for two separate companies?

A: The spinoff will let investors clearly value each franchise's unique assets and growth prospects, and give both businesses greater strategic and financial flexibility. Management has not changed its long-standing position: it does not rule out future minority stake sales for either team, but has no updates to announce on that front. Management acknowledges the tax implications of the spinoff, but argues the long-term strategic and financial flexibility benefits, including improved individual access to liquidity and funding that accounts for the tax change impacts, outweigh the incremental tax costs.

Q: What is your strategy for local media rights as the industry shifts between traditional RSNs, direct-to-consumer streaming, and centralized league management? Will the approach differ for the Knicks vs Rangers?

A: MSG Sports has existing long-term local media agreements with MSG Networks running through the 2029 season, and views MSG Networks as a strong partner that effectively connects the teams to their local fanbase. The company supports MSG Networks' current distribution evolution, including its new partnership with streaming platform DAZN, and does not speculate on potential future league-wide changes to media rights structure. Management remains confident in the high value of marquee local professional sports content for both franchises regardless of broader industry shifts.

Q: What was the incremental financial impact of the Knicks' championship run, and what is your operating expense outlook for fiscal 2027, particularly for player compensation?

A: The Knicks hosted the same nine playoff games in Q4 2026 as they did in the 2025 Eastern Conference Finals, but total playoff revenue grew from $115.2 million to $182 million, averaging $20.2 million per game, driven by premium playoff pricing and strong non-game day merchandise sales. The run also brought incremental average costs of $11.2 million per game for playoff-related operating and SG&A expenses. Management expects higher team compensation and luxury tax in fiscal 2027, reflecting increases to the NBA salary cap and luxury tax threshold, plus higher revenue sharing expense from growth and the new NHL CBA.

Q: What is the outlook for sponsorship revenue in fiscal 2027 following the Knicks' championship?

A: The championship run created extensive new activation opportunities for partners beyond arena signage, including citywide watch parties, on-road partner events for away playoff series, and brand presence at the championship parade, which drove high partner satisfaction. Management expects to see full year run rate benefits from the partnerships signed and renewed in fiscal 2026, plus increased demand for new sponsorship inventory and higher pricing from the championship momentum, positioning the company for another year of sponsorship growth in fiscal 2027.