Madison Square Garden Q4 Earnings Call Highlights

Key Points

• Fiscal 2026 results surged as the Knicks’ championship run lifted ticketing, merchandise, sponsorship and arena spending. Revenue reached $1.15 billion, while fourth-quarter revenue rose 37% to $278.7 million and adjusted operating income improved to $39.6 million from a $16.8 million loss.
• Management expects continued fiscal 2027 growth across tickets, sponsorships, suites, food and beverage, and merchandise, supported by strong renewals, partnerships and planned suite renovations. However, higher team compensation, luxury-tax payments and revenue-sharing costs are expected to pressure results.
• The proposed Rangers spin-off remains targeted for completion by the end of October, pending board approval and other conditions. The transaction would create separately traded Knicks and Rangers companies, while MSG Sports continues evaluating potential future minority stake sales.

Madison Square Garden NYSE: MSGS reported fiscal 2026 revenue of $1.15 billion and adjusted operating income of $58.7 million, as the New York Knicks’ championship run drove higher ticketing, merchandise, sponsorship and in-arena spending.

For the fiscal fourth quarter, revenue rose to $278.7 million from $204.0 million a year earlier, while adjusted operating income was $39.6 million, compared with an adjusted operating loss of $16.8 million in the prior-year quarter. The company said the two periods included the same number of regular-season and playoff home games, although the Knicks advanced to the NBA Finals in fiscal 2026 after reaching the Eastern Conference Finals in fiscal 2025.

Knicks Championship Drives Postseason Results

Chief Operating Officer Jamaal Lesane said the Knicks’ championship season generated substantial engagement across New York City, including home-game crowds, citywide watch parties, marketing activations and a championship parade attended by millions of fans.

The company said the Knicks set NBA records for per-game gate revenue on multiple occasions during the postseason. Within 24 hours of the team clinching the NBA title, the Knicks also produced their highest-ever single day of merchandise sales, according to Lesane.

Chief Financial Officer Paul DiCicco said playoff-related revenue in the fourth quarter reached $182.0 million, compared with $115.2 million in the prior-year period. The company hosted nine playoff games at Madison Square Garden in each quarter, with fiscal 2026 playoff revenue averaging about $20.2 million per game, including the benefit of strong non-game-day merchandise sales.

Those results were accompanied by higher costs. DiCicco said direct operating, marketing and administrative costs associated with the playoffs averaged approximately $11.2 million per game. Fourth-quarter costs also included $2.9 million related to the company’s proposed spin-off transaction.

Fourth-quarter event-related revenue, which includes ticketing, food, beverage and merchandise, increased 43% year over year to $200.7 million. Suites, sponsorship and signage revenue increased 23% to $39.1 million. National and local media rights fees of $27.7 million were essentially unchanged from the prior year.

The company attributed the media-rights result to its amended local telecast rights agreement with MSG Networks and fewer games exclusively available to MSG Networks, partly offset by higher NBA national media-rights fees under the league’s new agreements.

Demand Trends and Fiscal 2027 Outlook

Lesane said consumer and corporate demand was strong throughout the regular seasons for both the Knicks and Rangers. The company recorded higher per-game ticket revenue during the 2025-2026 regular seasons and expects combined season-ticket renewal rates to again exceed 90%.

The company raised season-ticket prices for the Knicks but did not raise Rangers season-ticket prices after the hockey team did not qualify for the playoffs. Lesane also cited year-over-year increases in merchandise and food-and-beverage spending per customer at the arena.

Madison Square Garden Sports signed multiyear marketing partnerships with PwC and Polymarket and renewed agreements with Lexus, Anheuser-Busch and Infosys. The company also reported strong suite sales and renewals, including for renovated Lexus Level Suites. Additional suite renovations are underway and are expected to produce incremental revenue in fiscal 2027.

DiCicco said the company expects revenue growth across all in-arena categories in fiscal 2027, including tickets, sponsorships, suites, food and beverage, and merchandise. Sponsorship revenue more than doubled year over year during the postseason, he said, and management expects the Knicks’ title to support further sales activity in the coming year.

However, fiscal 2027 results are also expected to reflect higher team compensation, luxury-tax expense and revenue-sharing costs. The NBA salary cap increased by $10.4 million for the 2026-2027 season, while the NHL salary cap rose by $8.5 million. The NBA luxury-tax threshold increased by $12.5 million to approximately $200.4 million, DiCicco said.

The Rangers will have one additional regular-season home game and one fewer preseason home game in fiscal 2027 under the NHL’s new collective bargaining agreement. The new agreement is also expected to result in higher Rangers revenue-sharing expense.

Rangers Spin-Off Remains Targeted for October

The company continues to pursue a proposed spin-off of its Rangers business from its Knicks business. Lesane said the transaction would create two separately traded public companies, allowing shareholders to evaluate the assets and growth prospects of each business separately while providing greater strategic and financial flexibility.

Madison Square Garden Sports confidentially filed a Form 10 registration statement with the Securities and Exchange Commission in May. Lesane said the company expects to publicly file an updated Form 10 during the week of the call and currently expects to complete the transaction by the end of October, subject to conditions including board approval.

Management said it would not rule out future minority stake sales in either team but had no additional developments to report. DiCicco said the company expects tax-law changes to add approximately $60 million in income-tax expense in fiscal 2028, excluding the effect of the proposed spin-off. If the separation is completed, combined tax expense across the two companies would be higher, although the final impact will depend largely on team rosters at that time.

At the end of the quarter, the company had approximately $164.5 million in cash and $258.5 million in debt, including $242.0 million outstanding under the Knicks senior secured revolving credit facility and $16.5 million advanced from the NHL.

About Madison Square Garden (NYSE:MSGS)

Madison Square Garden Sports Corp NYSE: MSGS is a leading sports and entertainment holding company focused on professional sports franchises and related media assets. The company owns and operates teams such as the NBA's New York Knicks, the NHL's New York Rangers and the WNBA's New York Liberty. Through these flagship franchises, MSG Sports offers a range of products and services including ticketing, premium seating and sponsorship opportunities, targeting fans in the New York metropolitan area and beyond.

In addition to team operations, Madison Square Garden Sports Corp holds a majority stake in MSG Networks, a regional cable network that broadcasts live sporting events, news and original programming.

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