Madison Square Garden Entertainment Q2 2026 Earnings Report

Madison Square Garden Entertainment EPS Results

• Actual EPS: $1.94
• Consensus EPS: $2.35
• Beat/Miss: Missed by -$0.41
• One Year Ago EPS: $1.56

Madison Square Garden Entertainment Revenue Results

• Actual Revenue: $459.94 million
• Expected Revenue: $448.21 million
• Beat/Miss: Beat by +$11.73 million
• YoY Revenue Growth: +12.90%

Madison Square Garden Entertainment Announcement Details

• Quarter: Q2 2026
• Date: 2/3/2026
• Time: Before Market Opens
• Conference Call Date: Tuesday, February 3, 2026
• Conference Call Time: 10:00AM ET

Madison Square Garden Entertainment (NYSE:MSGE) is a live entertainment company that owns, operates and produces events at prominent venues in the United States. Its portfolio includes Madison Square Garden and Radio City Music Hall in New York City, as well as the Beacon Theatre in New York and The Chicago Theatre in Illinois.

The company presents concerts, comedy shows, family entertainment, sporting events and other live performances. Its productions include the annual Christmas Spectacular Starring the Radio City Rockettes, along with original entertainment and special events. Madison Square Garden Entertainment also generates revenue through venue bookings, sponsorships, premium hospitality and related media and entertainment activities.

Madison Square Garden Entertainment was established as a separate public company in 2020 following the restructuring of the former Madison Square Garden Company. Its operations are concentrated primarily in New York and Chicago, while its productions and entertainment offerings can reach audiences in other markets. James L. Dolan serves as the company’s executive chairman and chief executive officer.

Madison Square Garden Entertainment Q2 2026 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Reported strong fiscal Q2 results with revenues of $459.9 million (up 13% YoY) and adjusted operating income of $190.4 million (up 16%), driven largely by the holiday season.
• Positive Sentiment: The Christmas Spectacular had its best season in 25 years—215 paid performances, >1.2 million tickets sold, ~$195 million in total revenue, mid-single-digit per-show revenue growth, and management sees room to add shows and raise yields.
• Positive Sentiment: Concert bookings are pacing strongly—The Garden has exceeded its concert bookings goal and the company announced a 30-night Harry Styles residency (rental) plus other multi-night runs, which should materially support fiscal 2027 concert growth.
• Positive Sentiment: Marketing partnerships and premium hospitality are improving after bringing sponsorship sales in-house, highlighted by multiyear renewals (Anheuser-Busch), the Infosys naming-rights agreement for the theater, and continued suite sales momentum.
• Negative Sentiment: SG&A was elevated due to nonrecurring items and higher labor—including a $4M executive transition charge, a $2M prior-period true-up, and an expected ~$8M severance from a voluntary exit program—though management expects SG&A to start normalizing by the June quarter.

Presentation

[Operator]

Good morning. Thank you for standing by, and welcome to the Madison Square Garden Entertainment Corp. fiscal 2026 second quarter earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's remarks, there will be a question-and-answer session. I would now like to turn the call over to Ari Danes, Senior Vice President, Investor Relations and Treasury. Please go ahead.

[Ari Danes, SVP of Investor Relations and Treasury at Madison Square Garden Entertainment Corp.]

Thank you. Good morning, and welcome to MSG Entertainment's Fiscal 2026 second 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 period. 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 investor section of our corporate website. 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.

[Ari Danes, SVP of Investor Relations and Treasury at Madison Square Garden Entertainment Corp.]

The company disclaims any obligation to update any forward-looking statements that may be discussed during this call. On pages five and six of today's earnings release, we provide consolidated statements of operations and a reconciliation of operating income to Adjusted Operating Income, or AOI, non-GAAP financial measure. With that, I'll now turn the call over to David.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

Thank you, Ari, and good morning, everyone. For the company's fiscal second quarter, we reported revenues of $460 million and adjusted operating income of $190 million, both representing double-digit percentage increases year-over-year. These results were led by another record-setting year for the Christmas Spectacular in its 90th holiday season run. This quarter's results also reflected growth across virtually every other aspect of our business. That included bookings, sponsorship, and suites, as well as the various revenue streams related to the Knicks and Rangers. So with a successful first half of the year behind us, we're confident that we are well on our way to delivering robust growth in revenue and adjusted operating income this fiscal year. Let's now review some second quarter operational highlights.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

During the quarter, our venues welcomed approximately 2.9 million guests at over 475 events, which was led by this year's Christmas Spectacular production. Across its entire holiday season run, which ended in January, we had 215 paid performances of the Christmas Spectacular, an increase compared to the 200 shows we ran last year. In light of the demand we saw, we added several shows to this year's run, and across 8.5 weeks of performances, we sold over 1.2 million tickets. This reflected growth in both individual and group tickets and was the production's highest attendance in 25 years. We also saw a year-over-year increase in average ticket yields as we remain focused on strategically managing, marketing, and pricing our ticketing inventory.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

In addition, the enthusiasm from guests for this holiday tradition helped drive record level per caps on food, beverage, and merchandise. As a result of these positive factors, per-show revenue increased by a mid-single-digit percentage as compared to fiscal 2025, and the Christmas Spectacular generated approximately $195 million in total revenue this season. The 2025 season also marked the introduction at Radio City Music Hall of new groundbreaking audio technology called Sphere Immersive Sound. This system is now in use for all concerts at the venue following its debut last week with the New York Philharmonic. Turning to bookings, during the fiscal second quarter, we saw an increase in the number of events year-over-year across our venues. This was primarily driven by growth in concerts at the company's theaters, family shows, and marquee sporting events.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

However, the number of concerts at The Garden was down as compared to the prior year quarter due to the timing of events within the fiscal year. On the family show front, Cirque du Soleil's 'Twas the Night Before completed a 63-show run across The Chicago Theatre and The Theater at Madison Square Garden in December, helping to drive improved financial results in this category on a year-over-year basis. In marquee sports, we welcome back UFC, WWE, and professional tennis to the Garden during the quarter, while our robust schedule of college sports also got underway. From a demand standpoint, the majority of concerts across our portfolio of venues were again sold out during the second quarter.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

In terms of in-venue spending, merchandise per caps at concerts were up in the quarter, while food and beverage per caps were down, both of which we primarily attribute to the mix of events. Looking ahead, we have continued to add a wide array of events to our calendar. That includes concerts across our venues, marquee sporting events at The Garden, and special events like the Tony Awards, which will return to Radio City in June. We also recently announced a 30-night Harry Styles residency at The Garden. This run will begin in August, setting us up for continued momentum in the first half of the next fiscal year. With regards to the Knicks and Rangers, the teams began their 2025-26 seasons at The Garden in October.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

So far, we have seen higher per-game revenues across our various revenue and profit-sharing arrangements with the teams as compared to the prior year. Turning to our marketing partnerships business, fiscal 2026 has been highlighted by a number of sponsorship announcements so far. For example, we recently reached a multiyear renewal with Anheuser-Busch, as well as an expanded multiyear partnership with Infosys. That includes making Infosys the official naming rights partner of the theater at Madison Square Garden, which is now called the Infosys Theater at Madison Square Garden. These marketing partnerships demonstrate the headway we are making with our sponsorship sales effort back in-house. In terms of premium hospitality, we continue to see strong new sales and renewal activity for suites at the Garden, including for a number of Lexus Level suites that were recently renovated.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

Our progress in these businesses puts us on track for growth across both marketing partnerships and premium hospitality in fiscal 2026. Now let's turn to our financial results. For the fiscal 2026 second quarter, we reported revenues of $459.9 million, an increase of 13% versus the prior year quarter. This reflected increases in revenues from entertainment offerings, arena license fees, and other leasing revenues, as well as food, beverage, and merchandise revenues. The increase in revenues from entertainment offerings primarily reflected growth in the Christmas Spectacular production, mainly due to higher ticket-related revenues. This reflected 14 additional performances and higher per-show revenues, both as compared to the prior year quarter.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

In addition, revenues from other live entertainment and sporting events increased year-over-year due to higher per-event revenues and, to a lesser extent, an increase in the number of events held at The Garden. Revenues subject to sharing of economics with MSG Sports, pursuant to the arena license agreements and revenues from venue-related sponsorship, signage, and suite licenses fees also grew year-over-year. I would also note that as a result of this year's schedule, the Knicks and Rangers played a combined four more home games during the fiscal second quarter as compared to the prior year quarter. This timing impact will reverse over the balance of the fiscal year.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

These increases were slightly offset by a decrease in revenues from concerts due to a decrease in the number of concerts at The Garden, which was mostly offset by higher per-concert revenues and an increase in the number of concerts at the company's theaters. The increase in food, beverage, and merchandise revenues mainly reflected higher F&B sales at Knicks and Rangers games, the Christmas Spectacular production, and other live entertainment and sporting events. These increases were partially offset by lower F&B sales at concerts, primarily due to a decrease in the number of concerts at The Garden. Second quarter adjusted operating income of $190.4 million increased 16% as compared to the prior year quarter. This primarily reflects the increase in revenues, partially offset by higher direct operating SG&A expenses.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

Turning to our balance sheet, as of December 31, we had $157 million of unrestricted cash, up from $30 million as of September 30, reflecting our strong cash flow generation during our seasonally busiest time of the year. In addition, our debt balances at quarter end was $594 million. This reflects the paydown of the full $20 million revolver balance during the quarter. As a reminder, we have repurchased approximately 623,000 shares of our Class A common stock for $25 million fiscal year to date. We have approximately $45 million remaining under our current buyback authorization, and going forward, we will continue to explore ways to opportunistically return capital to shareholders.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

In summary, with the continued momentum in our business, we are confident we are on a clear path to delivering a robust fiscal 2026 and believe we remain well positioned to drive long-term value for our shareholders. I will now turn the call back over to Ari.

[Ari Danes, SVP of Investor Relations and Treasury at Madison Square Garden Entertainment Corp.]

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

[Operator]

Thank you. We will now begin the question-and-answer session. If you would like to ask a question, please press star one on your telephone keypad. If you would like to withdraw your question, simply press star one again. Your first question comes from the line of Stephen Laszczyk from Goldman Sachs. Your line is open.

[Stephen Laszczyk, Analyst at Goldman Sachs]

Hey, guys. Thanks for taking the questions. David, on the Christmas Spectacular, nice performance this year. I was just curious if you could maybe talk a little bit more about the pricing, sell-through, and audience demographic trends that played out throughout the 2025 holiday season, and how those might have compared to prior years for the Spectacular. And then, looking ahead, would also be curious to your thinking on the opportunity to grow the Spectacular from here. How much more headroom do you feel like still exists in things like show count and pricing as you look ahead into next year's run? Thank you.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

Great, Stephen. Thanks, thanks for the question. Yeah, obviously, we had a great, great run this year, you know. You know, and in this year's run, we saw a number of positive signs across ticket demand and pricing. And, you know, we continue to optimize our schedule, our pricing, and our marketing for the production. And, you know, we believe we are set up for success in the future years. You know, on an overall basis, this year, per-show revenue increased by a mid-single-digit percentage, and that reflected a number of positive factors, including growth in per-show ticketing revenue, as well as record-high food, beverage, and merchandise per caps. The growth in per-show ticketing revenue was driven by, you know, increased per-show sell-through and as well as an improvement in average ticket prices.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

So if we take a look at the sell-through demand, demand was broad-based across the production, with growth in both individuals and groups. We also saw growth across every geographic category that we track, with the one exception of international tourism, which was down versus last year. I'd add that, you know, the decline in international ticket sales is consistent with lower international tourism to New York this past holiday season. So while I think it may be a little premature to give specifics, you know, based on the demand we saw this year, we believe there is room to again increase the Christmas show count for next holiday season. We're also able to increase our average ticket yield by managing, marketing, and pricing our ticket inventory effectively.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

The Christmas Spectacular, you know, continues to be a premium entertainment product, and, you know, it's still priced well below average ticket prices for comparable entertainment options. And going forward, we continue to believe that, you know, there are opportunities to improve our yield. So overall, with that said, you know, we're optimistic that there is continued ticket pricing upside, along with the potential to increase our show count as we look ahead to next year and beyond.

[Stephen Laszczyk, Analyst at Goldman Sachs]

Great. Thank you very much.

[Operator]

Your next question comes from a line of Cameron Mansson-Perrone from Morgan Stanley. Your line is open.

[Cameron Mansson-Perrone, Analyst at Morgan Stanley]

Thanks for taking the question, and good morning. Focusing in on the concert business, I'm wondering if you could give us an update on bookings trends more generally at The Garden and across the portfolio. You know, how are those trending through the remainder of fiscal 2026? And acknowledging it's early right now, any indication on pacing for early 2027? Thanks.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

Sure. Good morning, Cameron. Thanks. Sure, if we take a look at, you know, concert bookings for the rest of fiscal 2026, first, let me reiterate that we had a successful first half of the year in our bookings business. You know, we saw an increase in the total number of bookings in the fiscal first half, including for concerts, with robust growth in our financial results year to date. In terms of the rest of the fiscal year in our concerts business, you know, at our theaters, similar to what we had said on our last call, we do continue to pace behind for the March and June quarters. However, given, you know, that the typical booking windows for our theaters is three to six months, we are still actively booking concerts for the remainder of the fiscal year.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

take a look at The Garden, we are currently pacing up strongly for both the fiscal third and fourth quarters. In fact, you know, we have now exceeded our concert bookings goal for the year at The Garden, and that puts us on track for a robust growth in the number of concerts at the arena, this fiscal year. As far as I think the second part of your question was, you know, how are concert bookings looking for the first half of 2027? I would say, you know, it's a bit early to discuss pacing for our theaters, given the short booking window that's typical there.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

However, with The Garden, we typically book 6-9 months out, so at this stage, we do have strong visibility into the September 2026 quarter and increasing visibility into the December 2026 quarter. In short, I would say that we are off to a really strong start at the arena. We are pacing well ahead in the first half of fiscal 2027 as compared to, you know, the first half of fiscal 2026, and that, of course, includes the impact of the recently announced Harry Styles residency, as well as a number of other notable acts, including multi-night runs from Bon Jovi and Rush, as well as first-time headliners such as Olivia Dean, Alex Warren, and Louis Tomlinson.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

So also, as you probably remember, the September of 2025 quarter was a record for the number of concerts in any quarter at The Garden, and we are now on pace to shatter that record in the upcoming September quarter. So we are encouraged by the early indicators for next year and believe that The Garden is likely headed towards another year of really strong concert growth in fiscal 2027.

[Cameron Mansson-Perrone, Analyst at Morgan Stanley]

That's all really helpful. Thanks.

[Operator]

Your next question comes from a line of Brandon Ross from LightShed Partners. Your line is open.

[Brandon Ross, Analyst at LightShed Partners]

Good morning. Thanks for taking the questions. Just wanted to follow up on Cameron's question or the second half of this question about fiscal 2027. A lot of residency activity there with 30 nights of Harry Styles and 9 nights of Bon Jovi, and who knows what else? Investors are trying to understand exactly how incremental this is gonna be versus fiscal 2026, both, I guess, in terms of the amount of nights filled and then the associated revenue. So any color you could provide to help us get there, including if this is a promoted run or rental on the Harry Styles?

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

Okay, sure. Brandon, thank you. Thanks for the question. Well, first let me say, you know, we are pleased to welcome back Harry Styles to The Garden for this record-breaking run. You know, these 30 nights will start in late August and conclude in October, which, you know, is within our fiscal 2027 first and second quarters. The shows will take place every Wednesday, Friday, and Saturday night at the Garden for 10 straight weeks during that period. And, you know, we are already seeing strong momentum in presales. I don't know if you saw, but with, you know, Ticketmaster reported 11.5 million registrations, making this presale the largest-ever presale for a single artist in the New York market.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

You know, as it relates to our outlook for fiscal 2027, while we don't think all 30 nights will be incremental, we do expect this to be a meaningful contributor to our concert growth at the Garden next year. You know, by taking place three nights per week, it still leaves a lot of available inventory in August and September, you know, which is a time when the Knicks' and Rangers' seasons are not quite yet underway. I would also say that New York is a unique market, and the Garden is a unique venue, and, you know, we have a good track record of booking and selling out shows that no matter what day of the week it may be, we can sell them.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

You know, we are already seeing positive signs outside of this residency with a number of other notable headlines announced, you know, including several multi-night runs. As I mentioned earlier, we are pacing well ahead for fiscal 2027. Once again, we believe the Garden is likely headed towards, you know, another year of strong concert growth. I think your last question was whether this was a co-promote or a rental. This, you know, will be a rental deal.

[Brandon Ross, Analyst at LightShed Partners]

Okay. And then, well, first of all, there are more pre-registrations for Harry Styles than people live in New York City. Pretty, pretty impressive.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

Yeah.

[Brandon Ross, Analyst at LightShed Partners]

Um-

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

Yeah.

[Brandon Ross, Analyst at LightShed Partners]

Thinking about future years, should we expect these longer residencies to become an annual thing, or is this really just a one-off year in fiscal 2027?

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

Yeah, sure. Yeah, I mean, let me say a few things. First, obviously, let me reiterate that, you know, we're off to a strong start in terms of bookings for 2027, and that, of course, includes the Harry Styles residency for 30 nights. And, you know, we also have, as I mentioned before, Bon Jovi for a 9-show residency at the Garden this summer. And in fact, we are in discussions for another potential residency at one of our theaters also in fiscal 2027. So, you know, you can see that, you know, we believe there's a great value in bringing residencies to our venues.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

You know, as it you know, we view it as it building more of a recurring base of business, and it also increases our visibility into the forward calendar, which is really important to us as well. So, you know, this remains an important area for our booking business. And I think while it's a little too early to discuss fiscal 2028 and beyond, we are continuing to have discussions with other artists about future residencies at all of our venues, including the Garden. And, you know, we look forward to keeping you updated on that progress.

[Brandon Ross, Analyst at LightShed Partners]

Perfect. Thank you.

[Operator]

Your next question comes from the line of Peter Henderson from Bank of America. Your line is open.

[Peter Henderson, Analyst at Bank of America]

Good morning. Thank you for taking the questions. Can you just talk about what you're seeing for consumer demand trends across the portfolio, you know, both from an attendance and per cap perspective, and just how they're tracking versus last quarter and maybe last year? And then also just looking forward, what you're seeing in terms of onsale activity. And then on capital returns, maybe can you talk about how you decide to lean in and how you size what you're going to return? You know, what the key inputs are that you weigh, whether it be valuation or visibility into free cash flow or leverage comfort? Thank you.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

Sure. Thanks, Peter. Sure. Let's start with your consumer demand question. You know, I mean, we certainly keep a close eye on the macro environment, but I have to say, we continue to see strong consumer demand. There are a number of factors that support our view. I mean, first of all, as we've discussed, you know, we saw exceptional demand for the Christmas Spectacular's 2025 holiday run. You know, we had another year of record revenues there. We had our highest attendance in 25 years, and we had record high food, beverage, and merchandise per caps. In terms of bookings, the majority of our concerts at our venues were again sold out this past quarter.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

And year to date, we have seen concerts perform better than we initially expected, and a number of upcoming acts across our venues have added additional shows due to strong demand, I'm sorry, strong demand. You know, and as we look at the next two quarters, the sell-through rate for concerts is currently pacing ahead of where it was the same time last year. And I guess the last thing I would say, as, you know, as I mentioned earlier, that Ticketmaster reporting of 11.5 million registrations during the Harry Styles presale, you know, the largest ever presale for a single artist in New York. I would say given all this, you know, we, we continue to see strong demand from consumers for sure.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

As far as your question about capital, you know, as we've discussed before, here at MSG, we have three key priorities in terms of our capital allocation, and that first one being, you know, ensuring that we have a strong balance sheet. At the quarter end, we had net debt of approximately $437 million, and we expect the business to naturally delever as it grows over time. Second is to ensure we have appropriate flexibility to pursue, you know, compelling opportunities that come along and, you know, if and when they arrive. In terms of capital projects, right now, there aren't any major ones to flag as we look out at the rest of the fiscal year. And I would say our third priority remains to opportunistically return capital to our shareholders.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

As you all know, we repurchased $25 million of stock during the fiscal first quarter of this year, and we still have $45 million remaining under our current buyback authorization. What I would say is, going forward, we will continue to explore ways to return capital to our shareholders.

[Peter Henderson, Analyst at Bank of America]

Thank you.

[Operator]

Your next question comes from the line of David Karnovsky from J.P. Morgan. Your line is open.

[David Karnovsky, Analyst at J.P. Morgan]

Hey, thank you. I wanted to see if there were any updates on the Penn Station process and whether that original May timeline is intact for a master developer selection. And on a related basis, assuming there was, you know, some involvement for the theater at MSG, like, how should investors think about the current contribution of that venue to the current company's financials? And, you know, could shows like, you know, Cirque, which you called out, you know, get rerouted to, like, another one of your venues, like the Beacon or Radio City in the event it needed to be? Thank you.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

Sure, David, thanks for the question. You know, as far as the plans on redevelopment, as you know, the U.S. Department of Transportation and Amtrak continue to reiterate their intended project schedule. As early as in January, they completed an initial step to select a shortlist of developers to participate in the RFP process. As far as we know, based on that RFP process, they are expected to select a master developer by May 2026. And I would say, as invested members of our community, we remain committed to improving Penn Station and the surrounding area. And as redevelopment of the area continues, you know, we are committed to collaborating closely with all stakeholders. That, you know...

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

I would say that's all, you know, we have to report at this time, but things seem to be still on target for that May 2026. In terms of the theater at MSG, first, I'd remind you that the significant majority of our company's economics are driven first and foremost by the Garden and second by the Christmas Spectacular, with the theaters in aggregate following that. Also, the theater at MSG is, you know, one of four theaters in our portfolio and one of three in New York of varying capacities. And if needed, we, you know, we believe that we have the ability to shift some events from the Infosys Theater at MSG to our other theaters in New York.

[David Karnovsky, Analyst at J.P. Morgan]

Thank you.

[Ari Danes, SVP of Investor Relations and Treasury at Madison Square Garden Entertainment Corp.]

Thanks, David. Operator, we have time for one last caller.

[Operator]

Certainly. Your final question comes from a line of Peter Supino from Wolfe Research. Your line is open.

[Jack DiDonato, Analyst at Wolfe Research]

Good morning. Jack DiDonato for Peter. Two questions for you, if I may. First, SG&A was elevated year-over-year. Could you unpack that for us, and how should we think about SG&A for the balance of the fiscal year?

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

Sure. Thanks, Jack. First, yeah, let me say that, you know, SG&A expense results were a bit noisy this quarter, you know, and included a couple of nonrecurring items. The largest one, which, you know, we called out in the earnings release, was $4 million in executive management transition costs. You know, we had also recorded executive management transition costs in the year-ago quarter. Additionally, the quarter included a one-time expense true-up of $2 million, which related to prior year periods. You know, with that being said, you know, even if we exclude the nonrecurring items, SG&A expense growth this quarter was elevated and above what I would expect our long-term expense growth to be.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

You know, the growth reflects higher employee compensation, which is consistent with what we've said in the past about higher labor costs for this fiscal year. And, you know, as we look to fiscal 2026 for the rest of fiscal 2026, you know, we similarly expect the March quarter to reflect higher labor costs on a year-over-year basis. In addition, I would note that we recently implemented a voluntary exit program at the company. This program is meant to support our goals around streamlining processes and supporting a more efficient and nimble organization. As a result, we do expect to incur approximately $8 million in severance expense related to the program, primarily in the March quarter. And we expect that SG&A will start to normalize by our June quarter.

[Jack DiDonato, Analyst at Wolfe Research]

Gotcha. I think yes, it's very helpful. And then secondly, you called out lower F&B per caps due to event mix this quarter. Could you unpack as well?

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

Sure. Let me just say, both F&B and merchandise per caps can fluctuate quarter to quarter, you know, based on the mix of, of artists and genres. For example, you know, rock acts typically generate higher F&B spend but lower merchandise spend, while pop acts tend to show the opposite, you know, primarily due to differences in, in audience demographics. So using the Garden as an example, which, you know, obviously is our largest and, and most economically significant venue, last year in the second quarter, the Garden was more heavily weighted towards rock, while this year, you know, the Garden featured a, a broader genre mix, including, you know, pop acts.

[David Collins, EVP and CFO at Madison Square Garden Entertainment Corp.]

So as a result, this quarter at the Garden, F&B per caps were down, but merchandise per caps were up year-over-year, you know, partly due to this mix that I'm talking about. However, if you look at it on a combined basis at the Garden, food, beverage, and merchandise per caps were up overall in the fiscal second quarter. So the shift to merchandise sales more than offsets a decrease in food and beverage at the arena. You know, I would also note that, you know, for the artists that played the Garden in both periods, we saw growth in their food, beverage, and merchandise per cap. So overall, we continue to see strong you know, consumer demand in this part of our business.

[Jack DiDonato, Analyst at Wolfe Research]

Thank you.

[Operator]

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

[Ari Danes, SVP of Investor Relations and Treasury at Madison Square Garden Entertainment Corp.]

Thanks. We look forward to speaking with you on our May earnings call. Have a good day.

[Operator]

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

Participants

Executives

• Ari Danes, SVP of Investor Relations and Treasury
• David Collins, EVP and CFO

Analysts

• Brandon Ross, Analyst at LightShed Partners
• Cameron Mansson-Perrone, Analyst at Morgan Stanley
• David Karnovsky, Analyst at J.P. Morgan
• Jack DiDonato, Analyst at Wolfe Research
• Peter Henderson, Analyst at Bank of America
• Stephen Laszczyk, Analyst at Goldman Sachs